Friday, July 20, 2018
With ground expected to be broken on multiple large-scale residential developments next year, the near term looks set to bring more of the same. As per the department’s figures, in Sharjah, the Sales transactions raised 46% y-o-y for the period January to June. These figures were released in mid-August. While sales of commercial properties totaled 846, marking an increase of 109%, the count of residential properties sold reached 1289, up 23%.
The reduction was attributed more to the rise in the number of medium-range and affordable residential units entering the market than any downward movement in prices while the cumulative value of property sales slipped by 3% to Dh11.7bn ($3.2bn) y-o-y.
Real estate reforms lead to strong sales. Purchases have been increased, in part, by changes made to Sharjah’s property regulations in 2014, letting foreigners to purchase real estate in designated areas under a 100-year leasehold. Only UAE nationals, citizens of other GCC states and Arab nationals with residence status in the country were allowed to purchase property in Sharjah, prior to the reforms.
As per a report issued in September by property consultancy Cluttons, once it came to the rental sector, the stock increased that pushed down broader rental costs in the first half of 2017, although the luxury segment performed strongly.
The report, referred to as United Arab Emirates Property Report 2017, displayed that returns on rental properties in the villa segment rose 11.7% y-o-y on the back of heightening appetite for high-end residences.
However, rents on apartments, decreased by 7% between January and end-June, having already slipped 8.1% in 2016.
More than 55,000 units are expected to come up in the residential property market in neighboring Dubai prior to the end of the decade. This influx, along with current oversupply, endangers putting rental pricing under pressure since owners look to attract tenants. Any fall in prices in Dubai could heighten its appeal as a rental destination and tighten competition with Sharjah, which has historically gained massively from lower rental costs.
As per Cluttons’ findings, rents in Dubai’s residential segment decreased by an average of 1.5% in the second quarter of 2017, marking a 12th consecutive quarter of falling rents, with the fall averaging 14% across the market.
In spite of lowering in both property prices and rentals in Dubai, Sharjah still has an upper hand over its neighbor in the context of cost factor. Sharjah’s more affordable cost of living could help the emirate maintain competitiveness in the residential market, especially among locals and expatriates in the middle-income sector.
As per a survey based on a mid-year affordability report compiled by Numbeo, Sharjah ranked 302nd out of 511 cities for their cost of living in, down from 273 in the researcher’s last survey that was conducted in January. Dubai also missed a number of spots from 190th spot to 206th, increasing the gap between the two emirates over the first half of the year.
As per George Khouzami, COO of Sharjah-based real estate company Al Thuriah Group, one more attraction is that buyers can secure more space for their money. He told OBG that the Real estate in Sharjah continues to be a predominantly price and size-driven market. Thus, although the development of new housing projects on the outskirts of Dubai may provide a supply of more affordable accommodation which could compete with Sharjah and provide sufficient space for price-conscious families, properties in Sharjah will remain attractive due to the space offered.
The sector’s consistent strong performance has resulted into developers announcing a new round of real estate projects.
In late September, Al Thuriah Properties announced plans to start work on a new high-rise building as part of its Sahara Tower 6 development after achieving 80% sales while the project was only half complete.
With both towers adding a total of 376 apartments to existing supply, it is expected that the Construction on the second building shall get underway next year and finish in late 2019.
In the same month, Arada brought up a $6.5bn project that will offer housing for 70,000 people, along with commercial, entertainment, retail and community facilities. The venture is Sharjah’s largest real estate development to date.
The Aljada initiative will cover an area of 2.2 sq. km located near Sharjah’s University City and the emirate’s international airport. It is scheduled to break ground in the first quarter of 2018, Completion is slated for 2025.
The latest series of planned projects shows the emergence in Sharjah’s real estate sector of large, mixed-use developments. It is set to bring more mid-to-high-end properties onto the market.
A number of factors like pricing and cost of living are expected to help the emirate retain its competitiveness through these and other developments will boost residential stocks. Combined with broader economic expansion, this should contribute towards the sector maintaining a balance between supply and demand, guaranteeing strong returns on investments.