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Cluttons In Sharjah: The Resilient Real Estate Market Remains One Of The Emirate’s Top Performing Sectors
(28 April 2013)


Sharjah’s key to success lies within its diverse economy and real estate has proven resilient


 

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Cluttons, the real estate specialist which has enjoyed a dedicated Middle Eastern presence since 1976, today releases its Q1 2013 market report for Sharjah. The Emirate has maintained a strong economic recovery period demonstrated by the expansion of various markets and industry sectors and a focus on diversification. Sharjah’s real estate market has always proved resilient and highly popular with investors and Cluttons notes healthy performance across the residential, office, commercial, hospitality and industrial sectors over the past 12 months.

The residential sector is witnessing a steady rise in average rents as demand outstrips supply for the first time since the global crisis. Since October 2012, apartments in popular areas such as Al Majaz, Al Nahda and Qassimiya have witnessed an average rental increase of 10 to 15%. In desirable areas such as Sharghan, Al Fisht and Al Falaj, villas have seen a similar 15% increase due to strong growth in demand and a lack of quality stock. However, these increases are applicable only to new lettings as the three-year, no-increase protection law still exists in Sharjah.

In order to reduce congestion, the new Salik tollgate became operational on the Ittihad Road in mid-April, but the effect on nearby property prices is yet to be seen. It is not expected to have a significant impact, but commuters might move to take alternative roads like the 311, which is currently under expansion. As the economy of both Dubai and Sharjah continue to improve, Cluttons expects the residential market to strengthen further and rents for both apartments and villas to rise over the next six months.

The office market has remained unchanged since October 2012, with average rents in the main business districts holding between AED 50 to 80 per square foot. Landlords of a number of the more prominent office towers are now offering flexible lease agreements, which has helped attract tenants and increase occupancy rates. Cluttons has noted an increasing demand for on-site amenities such as gyms, restaurants and cafes, and extensive renovation work has been undertaken on some older properties, further enhancing the desirability of Sharjah’s office market. Cluttons expects the current market trend to continue over the next six months, driven also by Sharjah’s position as a good start-up location for smaller businesses.

The industrial market is the most stable real estate sector and accounts for approximately one fifth of the Emirate’s GDP. The government recently has begun re-zoning parts of the industrial area close to the city centre as commercial land. As a result, it is expected that industrial tenants will move further out of the city towards areas such as Sajaa. Since October 2012, industrial rents have remained steady, but certain areas further away from the city centre, like Industrial Area 18, are seeing a notable 15% rise in rents, with warehouse rents increasing from AED 17 to AED 20 per square foot.

Many businesses are now looking to relocate from the older congested industrial areas to reap the benefits of improved infrastructure as well as newer, higher quality properties which meet the growing fire safety requirements of the Civil Defense Department. Cluttons speculates there will be further rent increases in newer developments over the next six months, but expects the rents to remain unchanged in the older, less popular areas.

Finally, Sharjah’s hospitality sector has also shown signs of continued growth, with a 9% year-on-year rise in guest numbers at hospitality establishments within Sharjah. The Emirate is proving popular with budget conscious travelers as an alternative to Dubai, with the majority of visitors from the GCC. The majority of European visitors are Russian.



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