Cluttons in Sharjah: Positive sustainable growth across real estate market

The Sharjah' economy is growing steadily, alongside government initiatives to improve business conditions, attract investment and diversify the local economy. This has proven successful, as it now boasts the highest level of diversification in the region and registered a growth rate of 6% between 2008 and 2010.

In the residential market, hopeful that the effects of the global financial crisis are over, landlords across Sharjah are once again moving to increase rents and restart stalled projects, indicating confidence in the marketplace. However, the handover of new residential stock across the Emirate has slowed in the past six months making for a sustainable supply and demand balance.

Rents for sub prime properties have dropped, partly as a result of the new housing regulations aimed at reducing overcrowding in specific areas. However, other residential properties, both villas and apartments, in family areas such as Al Falaj, Ramia and Shargan, have maintained their rental values this year. Villa prices are expected to rise over the next six months due to limited new stock coming onto the market.

Demand for office space in 2012 has remained strongest from small and start-ups with most looking for offices of approximately 2,000 square feet. The trend is for businesses to move out of residential properties and explore the increasing range of options provided by purpose-built office towers. In terms of prime office space, the Al Majaz area is topping the list with its high quality offices achieving rents of Dhs50-90 ($13.6-24.5) per square foot.

Trade, manufacturing and logistics are some of the best performing sectors in the Emirate, which has helped boost the industrial property market this year. This industrial sector is receiving rising demand for higher quality, more modern, purpose built premises both from new entrants to the market and companies looking to relocate.

Rental values range from Dhs16-25 ($4-7) per square foot per annum according to location and facilities. Most of the demand is for larger, built-to-suit units in the free zones and in general, the most popular areas are those closest to the Sharjah CBD. Warehouse rental rates have remained pretty steady at just under Dhs25 ($7) per square foot per annum since 2010 and are unlikely to change over the next 12 months.

Cluttons predicts that both rental values and sales prices in Sharjah's property market, will remain fairly stable throughout the coming months as there is little change in either demand or supply levels. The one caveat is the residential market which may experience some change in line with the population growth estimates for 2013, but is unlikely to be a significant change.