Dubai: Developers putting up prices on new releases; investors able to sell in the secondary market at rates higher than what they bought for — it’s all happening in Sharjah. And yes, at a time when other property sub-markets in the UAE continue to see a contraction in property values.
For a second straight year, Sharjah’s real estate sector is benefiting from coming late to the freehold space. According to Ahmed Al Khoshaibi, CEO of Arada, this momentum is good to go for a further 10 years.
“We are averaging Dh45 million in sales in each of the last two months from our Nasma development, and we should sell out by December/January.” (Nasma is a villa community in the Al Tayy suburb and feature 968 units in all. The first residents have already moved in.) “We increased our prices slightly in two subsequent releases at Nasma; we started at Dh650 a square foot and are now at around Dh700,” the CEO said. “For Sharjah, these are pretty good rates.
“Across Nasma and Aljada (its flagship development), we sold more than 1,800 units so far this year … and that’s an 86 per cent increase. In value terms, we are up 30 per cent year-on-year.”
The demand slowdown, it seems, hasn’t reached Sharjah yet. The emirate’s other leading developer, Sharjah Holding (a joint venture between Sharjah Asset Management and Majid Al Futtaim Properties, last week launched plot sales at its Al Zahia community. Ranging between 5,000 square feet to 12,000, these plots are exclusively for buyers to put up villas using their designs.
Quite a big pipeline
Eagle Hills, through a joint venture with Shurooq, is backing three projects in the emirate. More are on their way. Tilal Properties is offering discounts of up to Dh400,000 for its “Tilal City” at Cityscape Global, which opened in Dubai today. The Dh2 billion, 25 million square feet project on Emirates Road E611 features 1,447 plots.
In all, “Over 10,000 residential units throughout the emirate, under construction as of July, are expected to be handed over by 2021,” said Aditi Hariharan, Associate Partner for Strategic Consulting and Research at Cavendish Maxwell. “Other upcoming supply includes masterplanned communities such as Maryam Island, Al Mamsha, Al Zahia, Aljada and Sharjah Waterfront City.”
But it’s not all hunky-dory either. Rents in Sharjah are closely tracking the Dubai decline, and, not just that, feeling the squeeze from Ajman as well. Between January last year to last month, rents are down 10-15 per cent, depending on the location, the state of the building, how desperate the landlord is to get a tenant, etc.
A two-way migration
This time, the movement is happening in both directions. Each month sees more residents pull up sticks and head for a new home in Dubai. Now, if Dubai decides to implement a planned three-year freeze on rental increases, the movement could turn into a surge.
And there is the competition from Ajman, which has seen a significant spike in new residential high-rises getting complete. There are “increasingly appealing options in Ajman”, said Hariharan.
“The current market dynamics in Sharjah and the Northern Emirates have brought higher quality properties and larger unit sizes within the reach of residents, who were previously priced out. Rising vacancy levels have also led to property owners actively offering discounted rentals to retain and attract tenants. In addition, they are also willing to absorb fees and provide rent-free periods as part of the incentives offered.” (It’s a tactic landlords in Dubai have used to their advantage, most notably through multiple cheques, including in still-rare cases of allowing up to 12 cheques.)
One big difference with Dubai
In Dubai’s rental space, newly completed homes are adding to the rental pains of landlords ... and offer relief for tenants. There are so many of them coming through that today’s rental demands could be history within the next three months.
But over in Sharjah, new handovers — and there will be quite a few of them in the next 24 months — may not end up doing the same. “As most buyers of the new supply, including those recent handovers at freehold communities, are owner-occupiers, the volume of units added to the Sharjah rental market is limited,” said Aditi Hariharan of Cavendish Maxwell. “This restricts the impact of new stock on rents.”
That’s some relief for Sharjah’s legacy landlords.