Renewed confidence in the long term potential of Sharjah’s residential sales market could gain momentum, with the imminent relaunch of land sales at the Shoumous Residential Complex, according to the latest Asteco Northern Emirates Q2 2015 real estate report, as the emirate begins to feel the effects of a reverse relocation trend to Dubai.  

Located on the Sharjah-Kalba Road, the project targets GCC and Arab nationals, and was initially launched following the success of plot sales within the Tilal City master planned development.

“Sharjah’s sales market has opened up in recent months, however, except for land plots at Tilal City that were priced in line with market demand, few properties have actually been sold due to the high asking prices, which failed to match buyer expectations. The lack of activity was further compounded by a wave of affordable project launches in neighbouring Dubai, which diverted prospective buyer interest,” said John Stevens, Managing Director, Asteco.

“Where Sharjah is also losing out is that Dubai’s more established real estate market has more transparent pro-buyer legislation in place,” he added.

In its UAE Property Review – Q2 2015 Report – the Middle East’s largest independent full service real estate company reported a slow second quarter for the Northern Emirates with the residential leasing sector generally witnessing marginal declines with the exception of Umm Al Quwain and Fujairah where rental rates remained stable.

Another project currently under development with potential to enhance interest in Sharjah, is the 45,470-square metre Al Noor Island. According to the Sharjah Investment & Development Authority (Shurooq), it is expected to be handed over at the end of 2015.

With a central butterfly design theme, the development will feature a natural butterfly habitat housing over 500 species, a 3,500 metre walkway and floating bridge serving as an entrance to the island, a literature pavilion, children’s playground, and an egg-shaped art sculpture.

The tourism and residential project is expected to increase awareness of the emirate and its market potential, which Asteco says will potentially drive higher rates and popularity to central Sharjah areas, especially along the Corniche.

“The Northern Emirates real estate market closely follows the Dubai market, with a few months delay between recovery and periods of stabilization, so new project announcements and the timetabled completion of developments such as Al Noor Island are vital elements in securing investor interest and confidence in the months to come,” noted Stevens.

For Sharjah and Ajman landlords, a 3% quarter-on-quarter drop in residential rental rates was prompted by a rise in vacancy levels as new supply was handed over and the reverse relocation trend to Dubai, which has started to gain momentum. The report noted that enquiry levels were also lower compared with the previous quarter.

Tenants can currently rent a two-bedroom apartment on the Sharjah Corniche from AED 48-80,000 per annum or AED 32-40,000 in Ajman. Asteco reports that although residential rental rates declined in Q2 2015, they were still higher in comparison with the previous year in Fujairah, Ras Al Khaimah and Umm Al Quwain.

“Another reason for the decline in Ajman has been the handover of new supply in recent months. We've seen a large amount of new stock entering the market, at a time when newcomers to the city were fewer. This resulted in an internal movement, away from older buildings to newer properties, particularly one and two-bed units, as tenants upgrade,” said Stevens.

Ras Al Khaimah has been the Q2 2015 success story with established communities such as Al Hamra Village and Mina Al Arab, continuing to witness good levels of demand and high occupancy rates, especially for quality competitively-priced villas and townhouses.

“This prompted the launch of the second phase of Flamingo Villas by RAK Properties, following strong sales performance for phase one, where villas achieved just over AED 600 per square foot; a similar price to that of a three-bedroom in Al Hamra with golf course view, which sell for AED500-700 per square foot,” remarked Stevens.

Phase one of Flamingo Villas is expected to be handed over in late 2015 with 57 two and three-bedroom units ready by the end of 2016.

Rental rates in high-end Fujairah buildings put a two-bedroom unit at an annual figure of AED55-62,000; in newer Ras Al Khaimah developments at AED50-65,000; with Umm Al Quwain the most affordable at AED28-30,000, albeit with lesser quality stock.

There is also a positive outlook on the horizon for the office sector despite a commercial rental rate drop this quarter of 3%, with the Business Confidence Index (BCI) showing a positive outlook for the remainder of 2015 according to the Sharjah Chamber of Commerce & Industry (SCCI).

The SCCI highlighted companies’ positive sentiment in Sharjah as firms plan to hire more employees, which, says the Asteco report, may translate into improved demand for office space in popular areas such as Corniche, Al Nahda and Al Tawuun.

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