Expert Eye: Investment climate in the northern parts

Expert EyeJohn Stevens

The combination of an apathetic investment climate and tentative investor sentiment has kept the UAE real estate sector in hibernation mode for the first six months of 2016, but that doesn’t mean that prospective home-owners should write off opportunities altogether.

While Abu Dhabi and Dubai have traditionally been the first ports of call for investors, there have been some interesting movements in the northern emirates where residential rental rates only registered a marginal decline in the first quarter of 2016 compared to neighbouring Dubai.

The growth in infrastructure development, both active and pipeline, is also creating a new future landscape and helping position the northern emirates as possible contenders in the investment competitiveness stakes.

For Sharjah, talks of forthcoming legislation supporting foreign ownership are sure to tickle the fancy of investors looking for an affordable entry point into the UAE market. In addition, overall low levels of new supply have enabled the emirate to maintain relative stability.

     Tips on investing in Sharjah real estate

Both Sharjah and Ajman have seen fairly rapid progression in the development of their adjoining hospitality and tourism economic component, with a number of retail, leisure and entertainment facilities coming up that are adding a new lifestyle element to the emirates.

These include the Q1 2016 opening of several commercial and retail outlets along King Faisal Street and other areas in Sharjah, which led to an increase in rental rates for certain apartment blocks facing the main road, and the launch of a new community mall, Zero 6, in Juraina 2, near the Sharjah University City campus, which will debut in 2017.

Growth in Sharjah’s industrial sector will also open up new opportunities in the labour market, which will have the domino effect of driving new demand for affordable housing. The Sharjah Asset Management, the government’s investment arm, has announced the launch of a new industrial park, Al Saja’a Industrial Oasis on Emirates Road, which will cover 14 million square feet of prime industrial usage land and is within proximity to the airport and Al Hamriya Port.

In Ajman, apartment rental rates remained stable in Q1 2016 with good quality two-bedroom apartments available for between Dh35,000 and 45,000 and three-bedroom units leasing for up to Dh70,000. These low rental rates and relative proximity to Dubai are the main drivers for families and individuals on a budget to settle in Ajman, and for investors looking to the long term to invest as these could produce slow and steady ROI.

According to the Ajman Real Estate Regulatory Authority, approximately 4,000 units were sold in 2015 across seven freehold developments. They were valued at Dh11 billion, up 27 per cent from the 2014 figures, with completed projects the most popular.

One of the quieter emirates in terms of development, Fujairah’s historically limited supply of studio and one-bedroom apartments has benefited owners with increasing rental rates over the last few years (although in the first three months of this year, they dropped by a nominal 1 per cent).

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At the top of the country, Ras Al Khaimah has been an option for investors looking for a second home or buy-to-let property for a number of years, with projects such as mixed-use community Al Hamra Village. Shaikh Mohammed Bin Zayed Road will see the delivery of 233 phase one units in Q1 2018.

A slow burner, the northern emirates are, nonetheless, the ones to watch by investors and end-users alike in the months to come.

Source: John Stevens, Special to Properties
Managing Director, Asteco


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