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There's good news for property buyers in the UAE: Sharjah is opening up its real estate market to investors of all nationalities.
For the first time, non-Arab expatriates can purchase land or property in the emirate on a leasehold basis thanks to a resolution by the Sharjah Executive Council, which states that foreign investors have the right to own property in Sharjah for up to 100 years. Previously, only UAE and GCC nationals were allowed to own property in the emirate.
Experts say giving the right to buy property in Sharjah to the more than 200 nationalities in the UAE will improve the country's overall housing market.
''Sharjah's new property laws are having a positive effect on the UAE market by offering an opportunity to buy in an area that hasn't been catered for until now,'' says Victoria Garrett, Associate Partner — UAE Residential at Knight Frank.
''Dubai and Abu Dhabi do not really offer what one would term affordable housing, which is usually targeted at teachers, nurses or even civil servants.
''The opportunity to buy at that level of the market is great for people looking to be based in the UAE in the medium or long term, and those who would like to have roots here, but previously haven't been able to afford to get on the property ladder here.''
Adham Saleh, Managing Director of eZayed Real Estate, agrees. ''I think this will be beneficial to Sharjah as it will help retain many middle income earners,'' he says. ''It will be for those who are living in the emirate and want to continue living there.
''The factor fuelling the demand for real estate in Sharjah is, predominantly, high rents in Dubai. Moreover, many expats receive a house allowance, which they would rather use to invest in a property, instead of spending only on rent,'' adds Saleh.
A new start
Sharjah's first leasehold project is Tilal City, a mixed use development that will offer housing to 65,000 residents. The Dh2-billion master development belongs to Tilal Properties, a joint venture between Sharjah Asset Management and Eskan Real Estate Development.
At the time of the launch, Shaikh Sultan Bin Ahmad Al Qasimi, Chairman of Tilal Properties, said: ''Tilal City is one of a series of projects that will be implemented by Tilal Properties allowing UAE residents to buy property on a 100-year leasehold basis, according to the [various] laws regulating Sharjah's property market.
''We all realise the importance of the real estate sector, which greatly contributes to the GDP and economic growth in general. Through Tilal City, we aspire to serve the real estate requirements of the emirate and benefit all segments of society. We also aspire to add this integrated model city to Sharjah's tourist destinations.''
Haysam Jazairi, Executive Director of Business Development at Tilal Properties, says the development will attract different nationalities. ''Buyers will now include those with a UAE residency. It will be a mix of nationalities living here — UAE nationals along with Western, Arab and Asian expats. It will truly cater to everyone.''
Khalifa Al Shaibani, Director General of Tilal Properties, adds: ''We knew Tilal City would be a game changer for Sharjah's real estate market. That we sold almost 40 per cent of plots in the first fortnight, however, exceeded our expectations.''
Steven Morgan, CEO of Cluttons Middle East, the real estate consultancy working with Tilal, says prices for plots at the development are expected to attract first time buyers. Villa plots start at Dh110 per square foot and commercial and residential building plots at Dh180 per square foot.
''I have rarely seen a development so well planned and well timed as Tilal City,'' says Morgan.
The rental prices of the residential units are also expected to be affordable. Suzanne Eveleigh, Director of Property Management at Cluttons Middle East, says the move is extremely positive for those renting in Sharjah as well.
''If you look at our Sharjah report, rents on apartments have risen by 25 per cent in the past year. This is because of demand. Rents and sales are driven by demand and a huge lack of supply.
''The beauty of Tilal City is that it offers very attractive payment plans. To be able to purchase something as an expat in Sharjah is fantastic. A lot of people have businesses here or have been here from the 1970s, but haven't had the opportunity to buy.''
Despite the absence of a rent cap system in Sharjah, Eveleigh predicts this will change once more housing becomes available.
''There are some regulations,'' she says. ''For example, upon first leasing your property, you cannot change the rent for three years. You can change the price every two years thereafter.
''Although there is no rent capping at the moment, the market will soon regulate itself. I hear there are plans to bring in regulations to cap rents in the emirate.''
To buy or not to buy?
So is a property in Sharjah really for you? It is a straightforward yes if you have lived in the emirate for a while, and plan to live there for at least five more years. An excellent return on rent is definitely an attractive prospect.
But there is a downside — leasehold property is not usually as good as freehold for long-term value appreciation. Furthermore, some reports suggest that only those with a valid Sharjah residence visa will be able to purchase property. This will alienate those working in Dubai, even though they may be living in Sharjah. However, Tilal Properties denies this and says there are no such restrictions, as long as buyers present valid UAE residency visas.
All in all, the benefits far outweigh the cons, says Saleh. ''This will really help the diversification of Sharjah's economy. The emirate is already strong in the education and health sectors, so I believe this new initiative will attract more investment, allowing further growth and attracting more businesses and companies to set up shop in Sharjah.
''In terms of the overall impact, this is definitely a positive move for the UAE, as it will further stabilise the country's real estate market. Additional investment and business opportunities in the emirate are beneficial [for the country] too.''
Ask the Agent - When is the best time to purchase a property?
Source: Rachel MacArthur, Special to Property Weekly