Reforms pay off as Sharjah property market surges ahead

December 3, 2024, 2:53 PM

Arada's Masaar development features a 6.6km cycling track through woodland — Arada's Masaar development in Sharjah features a 6.6km cycling track through woodland

Rental prices up 16% year on year
Alternative to Dubai prices
Reforms bolster market

Successive reforms in Sharjah’s property market and sky-high rental prices in neighbouring Dubai are contributing to a surge in the price and popularity of the emirate’s rental properties.

According to a report by property management firm Asteco, rental prices for the third quarter of 2024 in Sharjah increased 16 percent year on year for typical properties, and 19 percent for high-end homes.

The same report found that sales prices have increased by between 5 and 9 percent in the same period, depending on the area, while office rental rates have increased by about 9 to 13 percent.

With 1.8 million residents, the emirate – which is the UAE’s third-largest by population of the seven emirates – has experienced a flurry of activity in the property market over the last year.

Property developer Alef has completed 80 percent of residential units in the new Al Mamsha Souks project, handing over more than 3,000 units. The company has also announced the launch of a new project, Nama 4, which will include more than 1,000 units and sold out within a month.

Other developments in the pipeline include the Sports City Stadium, a mixed-use project in Khorfakkan featuring a five-star hotel and six residential buildings.

Architecture, Building, Condo Apartments in Alef Group's Al Mamsha Souks development — Apartments in Alef Group’s Al Mamsha Souks development

Asteco said it had observed an increase in tenants relocating from Dubai to the Northern Emirates seeking out cheaper rents and more space as Dubai rents skyrocket.

“The ‘concertina effect’, where Dubai residents move to more affordable options in the Northern Emirates during periods of rising rents and return when rents are more subdued, is an established pattern,” Asteco’s report said.

“This movement was led by price-sensitive tenants that are seeking to mitigate the financial impact of rental increases.”

While Asteco’s data suggests that Dubai rents rose at a slower pace on average in Q3 2024 compared with those of Sharjah and other Northern Emirates – by between 4 and 21 percent, depending on location – Asteco points out that they are still significantly higher than those enjoyed in the Northern Emirates.

Beard, Face, Head Ahmed Alkhoshaibi says people are looking for a high quality of life as well as good value — Ahmed Alkhoshaibi says people are looking for a ‘high-quality lifestyle’ as well as good value

Ahmed Alkhoshaibi, group CEO of master developer Arada, which manages properties across Sharjah, says: “As sales and rental prices in Dubai and other markets have risen, so end-users are looking for locations with both a competitive price point and a high-quality lifestyle.”

An apartment in the city centre of Sharjah will cost on average AED13,250 per square metre, while in Dubai that rises to AED17,334, according to figures from Property Finder.

Beyond price, Alkhoshaibi also attributes the emirate’s success in building out its property market to effective policy by the local government.

“Successive decisions by the government of Sharjah since 2014 to open up the local real estate market and allow more nationalities to purchase homes have spurred an impressive increase in demand in Sharjah property,” Alkhoshaibi says.

“Those decisions have had a knock-on effect; with more investor demand, more developers are operating in the emirate, the standard of housing being delivered has soared and, as a result, the city is attracting interest from both end-users and renters from outside Sharjah.”

The number of properties traded by foreign investors in the emirate during the first six months of this year reached almost 6,000, up 84.6 percent on the same period in 2023.

Arada operates extensively in Sharjah and says it has a vacancy rate across its completed properties of 5 percent.

Architecture, Building, Pool Arada's Masaar features 3,000 villas and townhouses, most of which have been sold — Arada’s Masaar features 3,000 villas and townhouses, most of which have been sold

Among major developments in Sharjah is Masaar, a $2 billion development overseen by Arada, with 3,000 villas and townhouses. Arada says properties in this development are all but sold out, with only large properties left to sell.

Alkhoshaibi says: “In particular, there is increasing demand in what we call New Sharjah, or zones outside the traditional city centre where there is well-developed infrastructure and surrounding facilities, as well as space to build fully-fledged masterplans with all of the amenities that you would expect from world-class communities, such as you find in Dubai or Abu Dhabi.”