Siblings in competition: Sharjah's ambitions reaching new heights
The strong growth of the UAE economy has also been mirrored at an emirate level in Sharjah and this has boosted demand in both the residential and commercial property markets in the emirate, according to international real estate consultancy Cluttons.
There has been an increased occupier interest in both residential and office markets across the emirate, stated international real estate consultancy Cluttons in its 'Sharjah Spring 2014 Residential Market Outlook' report.
The report points to rising rents in neighbouring Dubai, an influx of residents from troubled parts of the region as well as renewed economic activity and job creation in Sharjah, which are making the emirate an attractive option for tenants.
According to Cluttons, the average residential rents climbed by 4.5 per cent during the first quarter, leaving them 19 per cent higher than this time last year, further building on a 3.4 per cent increase in the last quarter.
The average rents in Al Qassimiya have seen the strongest gains over the past 12 months, with rents now standing 36 per cent up on the first quarter of 2013. Villas on the other hand have registered a 13 per cent rise in rents in the first quarter, which compares to a 25 per cent increase throughout 2013.
Steve Morgan, Cluttons Middle East chief executive, said: "The strong growth in villa rates has been catalysed by rising demand for villa communities, particularly along the Sharjah Airport/Maliha Road corridor. This is being fuelled by a rising population, which in turn is being driven by the emirate’s expanding aviation sector, a growing number of international schools and the proximity to Sharjah International Airport."
"Sharjah International Airport, through the brisk expansion of Air Arabia is starting to extend its sphere of influence on surrounding areas and is emerging as another budding UAE aerotropolis, in much the same way that Al Maktoum International is spurring development in areas south of Jebel Ali," remarked Morgan.
“Developers are also keen to capitalise on this strong demand and we are recording a substantial rise in the number of feasibility studies requested for master planned residential communities in this area. Not only does the Maliha Road corridor provide easy access into Dubai, but the mushrooming of these new lifestyle destinations will start to put Sharjah’s residential offerings on par with Dubai and Abu Dhabi, albeit on a smaller scale,” he added.
The report also reveals that the current political instability across parts of the Middle East has caused an influx of people setting up home in Sharjah, due to largely affordable rents and its rich Islamic heritage.
The report points to these expatriates being flush with ‘refugee capital’, which is finding its way into Sharjah’s off-plan residential sales market. This has in turn encouraged some developers to return to the sales market, said the top property expert.
Although limited to a small number of instances, residential towers in locations perceived to be prime, have been sold entirely off-plan, with capital values hovering around the Dh400 ($109) per sq ft mark.
Elsewhere in the emirate’s real estate landscape, the overarching improvement in the UAE’s economic performance is also manifesting itself in the commercial market in the form of rising levels of occupier activity, with Sharjah also clearly benefiting from the economic buoyancy, according to Cluttons report.
Demand for office space however remains centred on smaller units in the region of 1,000 to 1,500 sq ft. Despite the slight upturn in requirements, office rents have remained relatively flat. That said, prime areas of Al Majaz have seen a slip in rates and this has been predominately a result of greater supply and reduced demand from larger, international occupiers, it added.
Morgan said: “Some landlords with large shell and core space are moving quickly to capitalise on demand by carrying out partial fit-outs in a bid to take advantage of market conditions and lease space as smaller units. Furthermore, where space is urgently required, we have seen a few instances of residential-office conversions take place, with previously abandoned residential schemes being transformed into office space.”
“The supply pipeline is expected to deliver mostly Grade B space to market and this is driving some occupiers to consider build-to-suit options, which will, to an extent, allow them to mitigate issues such as sufficient parking, which remains a major challenge in the centre of the city. It is however very encouraging to see the government making head way in this area.”
According to Cluttons, the government is ploughing investment into the upgrading of transportation infrastructure across the city.
In addition, the announcement that the newly-formed Sharjah Roads and Transport Authority is undertaking feasibility studies for new road networks, a tramway system and a metro system which could be linked with Etihad Rail, further boosting the appeal of Sharjah as a more affordable alternative to Dubai and Abu Dhabi.
According to data released by Meed Projects, Sharjah is planning a $2.3 billion investment in transport infrastructure projects over the next five years.
The report also states that there has been a 300 per cent increase in the number of new projects awarded in Sharjah in 2012 and 2013, with more than 90 per cent of the contracts for the construction and real estate sectors.
"While a Metro network in Sharjah would bring about a radical transformation in accessibility across the city, the seven per cent rise announced in Sharjah’s budget for 2014/15 is set to see almost 50 per cent of the Dh15.4 billion budget allocated to further development of the economy," remarked Morgan.
"This will add further impetus to the rising levels of real estate activity in both the residential and commercial markets across Sharjah," he added.