Visitors at Al Mamsha development at the Al Mamsha stand at Sharjah Expo. Image Credit: Ahmed Ramzan/Gulf News

Dubai: In Sharjah, there is no such thing as difficult market conditions when it comes to selling property. Freehold and long-term leasehold sales have been on the up all through 2017 and developers are just as willing now to keep the supply pipeline humming with new launches.

“Since September 2017, there have been over 6,000 residential units released onto the market with more happening every month,” said Shane Breen, Director — Commercial Valuations & Consultancy, Cluttons. “Compared to Dubai this may seem small, but it’s a significant number for the Sharjah market.

“Developers are taking calculated steps with their launches to ensure they remain competitive and also taking care to not oversupply. As the market begins to mature and awareness and interest in Sharjah picks up we would expect developers to start to ramp up their releases.

“Sharjah has always been a bit of a surprise package and while it isn’t going to be overtaking the more established markets in the UAE just yet, it is definitely starting to get people’s attention.”

Certainly, the buyer attention is very much there. Recent launches have all had them clamouring for more, and developers such as Arada — owned by high-profile Sharjah and Saudi investors — and Tilal City have been tapping into demand. Another developer, Alef, is also expanding its residential interests, in the University City area.

It could be that Sharjah’s relatively late entry into the leasehold-for-all is a key reason why investors want to get in there. But developers say that is only one factor among many. Sharjah itself is going through a real estate transformation, opening up new areas for fast-track development and even taking on projects that would completely transform established locations.

And it is not just a focus on residential offerings — Shurooq, the emirate’s investment development agency, has been roping in big-league developers to bring about the desired changes to the hospitality and retail spaces. It is in this context that project alliances with Abu Dhabi based Eagle Hills and Kuwait’s Mabanee Group should be viewed.

Changes in legislation

But it is residential that will continue to drive the momentum. “The government of Sharjah announced major changes to the real estate legislation in 2014 as part of a move to open up the local property market to all nationalities,” said Ahmed Alkhoshaibi, CEO of Arada, which has two large-canvas projects — Nasma Residences and Aljada — going on simultaneously.

“That has certainly incentivised interest in Sharjah as a real estate investment destination. From our own experience, we have now sold 1,400 units in exactly one year since our first project, Nasma Residences was launched.” (For the rest of this year, it will be releasing a further 300 units at Nasma as well as phases 2 and 3 of Aljada, which will number 2,000 units. The multiphase Aljada has a projected gross development value.)

“We’ve seen a huge amount of interest for both Nasma Residences and Aljada, with the majority of buyers being Emirati nationals from all parts of the country,” said Alkhoshaibi. “We’ve also seen a growing number of investors from the Gulf and the wider Middle East and North Africa. Lastly, Indians are starting to take real interest in buying homes in an emirate that many of them have long called home, but have until now not had the opportunity to invest in.”

Real estate entities in Sharjah have also been highlighting the investment potential getting in now could bring. And even as a steady income generating asset for post-retirement funds.

Residency visa

The Arthur Mackenzy Property Group (APMG) is touting a programme that suggests 10-12 rental yield “covering all essential retirement expenses”.

“Forty per cent of our customer base are thinking about their retirement plans and interested in profitable long-term investment,” said Shaher Mousli, Chairman and CEO of AMPG. “We offer a solution to qualify for a residency visa in Sharjah, if you are an investor in Tilal City through us.

“Investors are entitled to apply for a residency permit and our competitive pricing will result in rental yields of 10 to 12 per cent.

“The cost of land in Sharjah is much more affordable compared to Dubai and Abu Dhabi downtown areas, which has led to more generous payment plans, lower deposits and accessible investment opportunities. Hence, rental returns on the same type of residential properties are higher too.”

Developers and investors in Sharjah will want to keep it that way.

Sharjah developers will need to do a balancing act on selling prices

The sharp rise in off-plan supply and sales still don’t seem to have had much impact on property prices in Sharjah on the upside.

“In 2017, residential prices in Sharjah went through a slight correction of up to 5 per cent annually which was consistent with quarter-on-quarter declines,” said Ivana Gazivoda Vucinic, Head of Consulting and Valuations and Advisory Operations, Chestertons Mena.

“We expect the correction trend to continue into 2018. The addition of new residential stock scheduled to be delivered will be a contributing factor and will ensure prices remain under pressure.”

For comparison, “In Dubai, early indicators showed some promising signs of recovery for the market in 2017. But that reversed itself after the last two quarters brought signs of declines that ultimately brought down values by approximately 5 per cent. It should be noted that different communities across Dubai have had various levels resilience to the declining trends.”

UAE and Arab nationals lead the charge

Not much of a surprise, UAE and Arab nationals have been leading the way in snapping up off-plan properties and plots in Sharjah’s designated investment zones. Other expatriates are also getting in, and this is where developers can give a little more attention.

“Expatriate investors are still hesitant to enter the market ... but this is slowly changing as people start to see the opportunities that are available in Sharjah as well as the stability the market offers,” said Shane Breen, Director — Commercial Valuations & Consultancy, Cluttons. “With reputable developers such as Arada and Eagles Hills entering the market, Sharjah’s profile as a real estate investment destination has improved significantly and this will only get better over the next couple of years.”

Industry sources say other fundamentals also play to Sharjah’s strength, with annual population growth rates of 7 per cent. “There’s no shortage on options which has helped to maintain a healthy environment for investors,” said Shaher Mousli, Chairman and CEO of AMPG. “Right now, Dh700 a square foot is currently the average market price and which can go up to Dh900. We are offering Dh450 — we have been able to lower our price point through our wholesale strategy to attract not only end users but bulk investors too.”