Changes to residential property ownership laws in the Northern Emirate of Sharjah has prompted new interest in the development of affordable expatriate-focused accommodation, according to the latest Asteco market report.

In its UAE Property Review – Q1 2015 Report – the Middle East’s largest full service real estate company noted that with the February 2015 announcement of the Al Rayyan mixed-use project - the first development available on a 100-year leasehold basis for all nationalities – the emirate is moving into a new phase of market development.

“This project, which will offer 504 high quality apartments with two-bedroom units priced at around AED1 million, presents new opportunities for expatriate investors looking for an entry point into the market but for whom affordability is key, and location close to the Dubai border is important,” said John Stevens, Managing Director, Asteco.

Located in the busy Al Nahda area, close to the Dubai border, the development will also feature an office tower and mall, and is due for handover in Q2 2016.

“However, despite this groundbreaking move, we haven’t as yet seen comparable levels of transaction activity to match the number of enquiries as there is still some price point sensitivity,” added Stevens.

Elsewhere in the Northern Emirates, Fujairah is also witnessing something of a real estate renaissance in Q1 with strong leasing demand for apartments.

“The government of Fujairah has made significant investment into infrastructure improvements, such as at its Fujairah Port and Free Zone, to drive economic activity, and this has resulted in increased demand which has prompted considerable real estate development,” noted Stevens.

Ras Al Khaimah similarly witnessed good levels of residential leasing demand largely driven by local economic activity from its ports and free zones.

Development activity in Fujairah has been most evident in the northern district of Shariya, with sizeable development of studio, one and two-bedroom units. These units rent from AED 20,000 for a studio up to AED 38,000 for a two-bedroom unit and appeal to the affordable segments of the market.

A further 250 apartments are scheduled for completion by the end of this year with a similar volume of new units in the pipeline for 2016.

“At the higher end of the residential spectrum, only limited developments are available in Fujairah, including the upscale Al Jaber Tower and Al Rostamani Tower; both of which have positioned themselves as the best addresses in Fujairah over the last few years, with close to full occupancies,” added Stevens.

The two towers offer large apartments, some with sea views, and extensive facilities including swimming pool, gym, squash courts and underground parking, and are commanding average annual rents upwards of AED 60,000 and AED 85,000 respectively for a two and three-bedroom unit.

Despite legislative changes and development activity, overall, the number of sales transactions in Q1 remained low, especially in Ras Al Khaimah, despite improvement in sales prices over the last few years.

Popular developments include the US$2 billion, 25 million-square-foot master-planned Tilal City project, situated close to the Al Dhaid interchange and Sharjah’s outlying communities.

Launched in Q4 2014, the project offers plots of land for development and has attracted considerable interest from both developers and end users looking to construct their own villas. Asteco reports that villa plots have virtually sold out due to a low entry land price of AED 30 per square foot.

In Ras Al Khaimah, villas within the Mina Al Arab and Al Hamra communities continued to be popular with expatriate buyers due to their value for money positioning.

Mirroring the situation in Q4 2014, rental rates remained stable in Q1 2015 although marginal declines were recorded in Ajman and Sharjah as rental rates in neighboring Dubai continued to settle, effectively reducing any tenant migration.

Preferred areas in Sharjah remained unchanged with the Corniche, Al Nahda, Majaz and Abu Shagara districts continuing to see high occupancy levels in better quality buildings. These four districts recorded negligible respective quarter-on-quarter movement at between -1% to zero percent.

A one-bedroom apartment on the Corniche currently rents for up to AED 50,000 with a two-bedroom reaching up to AED 80,000. In Abu Shagara, one-beds command up to AED 38,000 with two-bed units available for up to AED 48,000.

Sharjah’s commercial sector remained stagnant with little or no transactions versus Q4 2014 performance despite small increase in demand from businesses looking to set up in the city, with office space on the Corniche, along Mina Road and in Al Wahda, being the most sought after locations.