DUBAI: With an increasing number of expats saying they’re being pushed out of Dubai due to soaring rents, a 7,000-year-old city is looking to offer a nearby haven.
Sharjah – Dubai’s neighbour to the north – is beginning to lure investors to its shores less than two years after passing a law that allowed foreigners to buy property in select areas of the conservative emirate.
Already, developers are in the process of constructing 10s of thousands of homes. Buyers aren’t far behind.
“You have lower rents and lower costs of living overall,” said Prathyusha Gurrapu, head of research and advisory at the property consultancy firm Cushman & Wakefield Core.
“We are seeing migration happening as many people move to Sharjah because rents in Dubai have became very expensive.”
It’s the latest sign that Dubai is struggling to keep up with the soaring demand for housing after bankers, lawyers and other white-collar workers flocked to the emirate in recent years, lured by a low-tax regime and favourable time zone. Home values in the emirate have now risen for 16 straight quarters and rents for single family homes – villas – have soared 86% since the start of the pandemic, according to real estate consultancy JLL.
Sharjah has long offered more affordable housing compared with Dubai, which is known as a glamorous metropolis dotted with luxury hotels and pristine housing developments built around manicured parks and infinity pools.
But much of Sharjah’s housing supply consists of old towers with few of the facilities typically offered by its neighbour.
That’s starting to change. Arada Developments, owned by the son of Saudi Arabian Prince Alwaleed bin Talal and a member of Sharjah’s ruling family, is building a US$9.5bil project.
Known as Aljada, that development will ultimately include 25,000 homes, an entertainment area with restaurants and shops as well as sporting facilities and one of the region’s biggest skate parks.
About one-third of the construction is complete and the rest should be wrapped up by the end of the decade, according to Arada chief executive officer Ahmed Alkhoshaibi.
The developer has begun talks with officials in the emirate about allowing companies to apply for licenses similar to those granted by Dubai for its economic free zones, which offer certain tax exemptions and other benefits.
First settled more than 7,000 years ago, Sharjah has been ruled by the Al Qasimi dynasty since the 1600s and the current ruler has been on the throne for more than half a century.
Historically, it was one of the wealthiest of the sheikhdoms that make up the United Arab Emirates thanks to its ports and the pearl fishing industry.
The city struck oil in the 1970s and went on a development drive. Up went brutalist towers that were popular at the time.
These days, local leaders are looking to preserve swaths of the emirate as part of “The Heart of Sharjah” project, which will restore narrow, old-style alleys, souks and other historic buildings.
“The Heart of Sharjah project is one of the most fascinating projects in the world right now,” said Sarah Moser, a professor at McGill University and director of the New Cities Lab.
“It’s this sort of attempt at reclaiming a past that was abandoned or neglected when oil was found and the modernissation process started.”
For decades, Sharjah’s economy relied on trade, motor vehicles repairs, manufacturing and construction for growth. After the government loosened rules to allow foreign nationals to more easily buy property, buyers began flocking to the city.
Indian buyers now make up about 29% of home sales in Arada’s developments in Sharjah, up from 8.7% just a few years ago, according to data provided by the firm.
Buyers from Germany, Canada and the United Kingdom now comprise 10% of property purchases – those nationalities barely registered in Arada’s data before the 2022 law was passed.
The demand is helping boost prices. When Arada first started selling homes ahead of construction beginning on Aljada, which is located just 20 minutes from Dubai’s airport, the price per square foot was hovering around 650 dirhams (US$177).
Since then, prices have shot up to 1,400 dirhams per square foot, though Alkhoshaibi said they still remain about 40% below comparable areas in Dubai.
“The prices in Sharjah have shot up, in part, as a result of residents moving from Dubai,” Shane Breen, head of the Sharjah office at the real estate brokerage Savills.
“But even with that, Sharjah remains more affordable as the price difference is still so big between the two markets.”
For instance, he said, a one bedroom apartment that leases for 60,000 dirhams a year would be considered the top of the market in Sharjah but that sum wouldn’t get a tenant a studio in many parts of Dubai.
Sharjah’s government has tried to maintain affordability by mandating a three-year freeze on rents for new tenants. Post that, landlords are allowed to raise rents only once every two years.
Other developers are also seeing an opportunity.
Abu Dhabi’s Eagle Hills is building a 4.5 billion dirham luxury homes and tourism destination on Sharjah’s Maryam Island.
SEE Holding, a developer of environmentally-sustainable infrastructure, is building over 1,200 homes in Sharjah in phases and the private firm sold one billion dirhams worth of properties in 2023, according to the company’s founder Faris Saeed.
Sharjah’s Alef Group is another developer that’s active in the city.
Muhammad Qasim, the Sharjah branch manager for property broker Betterhomes, said his business has seen strong demand from buyers complaining they’ve been priced out of Dubai.
The broker, which opened its offices in Sharjah just two years ago, has seen sales surge 60% so far this year compared with the same period in 2023, he said.
“We need to double our team to serve the demand,” Qasim said. “A lot of the buyers and tenants are coming from Dubai.” — Bloomberg
