Dubai: Developers in the UAE’s fastest growing freehold property market - Sharjah - could be looking to slow down the pace this year. Even if slightly.
In a tactical move, many of the bigger names are now focussed on reaching key construction milestones at their existing developments rather than keep pushing more property for sale in the offplan market. Market sources say it’s only natural after two years of high-profile launches that were met with unprecedented demand as Sharjah finally joined the freehold race.
The last thing anyone wants to hear in Sharjah’s real estate space is about looming oversupply worries. But about 192,000 plus residents are expected to move into the new freehold units entering the market between now and 2025, with the bulk of the handovers likely to happen in and around 2022, according to Asteco, the property services firm. The multi-phase “Tilal City” on its own could accommodate up to 65,000 residents by 2022.
In other words, that’s a whole lot of inventory developers will need to find buyers for.
In fact, developers there may be making pre-emptive moves — “Some masterplanned developments have been — or are in the process of — being scaled back, while others are progressing at a slow pace,” said John Stevens, Managing Director at Asteco. “This would cement the cautious approach developers are taking.
“We do not expect developers to keep the same pace as over the last two years, mainly due to the continuously bearish economic conditions and market sentiment.”
The most high-profile launch in the year to date was the “Nest”, a student housing scheme that the developer Arada is building within the “Aljada” master-development near University City. The developer has spiced up the offer by adding a rental guarantee of 10 per cent annually for five years after handover. Prices for a unit start from Dh310,000.
This is an instance of a developer testing demand for different types of property, and not being overly reliant on more plain-vanilla apartment blocks or villas. (Developers in Dubai as well as institutional funds will also be chasing prospects in student housing keenly, as this remains one category where significant demand already exists in pockets of the city.) Meanwhile, the developer behind the hugely ambitious Waterfront City project in Sharjah reckons that a lot of thinking needs doing ahead of any launch. But there are no doubts as to the longer term need for housing.
“Perhaps we have an excess of supply over demand,” said Shaikh Abdullah Al Shakrah, Chairman of Ajmal Makan. “But we are confident that recent (downward) price changes is a healthy one in any free market economy. And the declines have varied depending on the nature of the projects.
“But what’s most important is that Sharjah is still in need of quality developments unlike the other emirates. We have witnessed the launch of a few mixed-use projects recently — but I think they’re still not enough to meet demand.”
No one will dispute that — but the question is whether to launch now or hold off until the economy and the real estate market show more signs of a definitive upturn.
And if developers go the extra mile in offering something new, there are takers out there. The Alef Group confirmed that it has touched the 1,200 unit mark at its Dh3 billion Al Mamsha project in the Al Juraina area. It is being billed as “Sharjah’s first fully walkable community”.
“The first phase is likely to meet the set deadline of December 2020,” said Issa Ataya, Managing Director, in a statement. (This involves seven buildings and a further eight to be handed over in June 2021.) “More people now want to live in greener surroundings — Al Mamsha’s car-free community is an answer to their needs,” Ataya added. “We are highlighting this feature.”
So, if developers are confident enough about their project USPs, they can still put out more properties to sell — now. But if they do harbour doubts about what their launch timing should be, there is always a tomorrow.
Studies are on for the launch of a third phase at the Waterfront City in Sharjah.
The developer expects to do the “announcement soon”, according to Shaikh Abdullah Al Shakrah, Chairman of Ajmal Makan. “We have so far launched the Sun Island, which includes 321 luxury villas away from the hustle of the city. In the second phase, the Blue Bay Walk, there are six residential buildings.
“All construction related to the infrastructure and the island’s structure have been completed.”