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Sharjah has for a long time sat in the shadow of Dubai, feeding off the spillover tenant demand driven by rising rents in Dubai. During the last property cycle, Sharjah used the wave of tenant migration as an opportunity to begin a process of 'place-making' to shake off the emirate's image as a more affordable suburb of Dubai.
During the current cycle, the drivers for the residential market have been very different. While the lower rents no doubt enhanced the appeal of living in the Sharjah, it still lacked the necessary facilities and amenities of Dubai.
And so a concerted effort was made to build on the emirate's strength as a city of rich Islamic culture. This drove the creation of the Qasba Canal district, along with a range of museums, a new amphitheatre, Flag Island, the soon-to-open Jubail market and family-themed attractions such as the redevelopment of the Al Majaz Waterfront area, adjacent to Khalid Lagoon, all of which have enhanced the appeal of Sharjah.
The strong focus on the city's heritage has also helped in the attraction of Arab families that have been displaced from some of the more troubled parts of the region, which has further heightened demand for residential property across the city.
In fact, these factors together contributed to a 4.5 per cent uplift in rents during Q1-2014, which follows an increase of nearly 16 per cent last year.
These unique drivers are being complimented by the government's efforts to further diversify the emirate's economy. The 7 per cent rise announced in Sharjah's budget for 2014-15 is set to see almost 50 per cent of the Dh15.4 billion budget allocated to further development of the economy, which will aid in the generation of jobs.
The subsequent impact on the residential market will be sustained levels of demand for accommodation. Developers have been quick to react to the projected levels of future tenant demand with a growing wave of project starts reflecting mounting confidence of the emirate's ability to absorb new stock, which has remained relatively static since the 'great' recession.
Interestingly, not only are large residential towers continuing to be developed in popular central sub-markets such as Al Majaz and Al Nahda, but developers are increasingly looking at creating gated villa communities to cater to the growing number of families.
Surging demand helped to drive villa rents up by 13 per cent during the first quarter of 2014; this compares to a 25 per cent rise throughout last year.
The Airport Road corridor, in particular, is at the centre of this new wave of developments, with a number of gated villa schemes in the planning stages. We have certainly recorded a sharp upturn in the number of feasibility studies we are carrying out for such projects.
The proximity to Sharjah International Airport, coupled with the ease of access into Dubai via Shaikh Mohammed Bin Zayed Road and Emirates Road makes this relatively undeveloped part of Sharjah very attractive to developers who are looking for large greenfield sites.
For the first time, Sharjah will be able to offer residential communities that are on par with Dubai, with amenities such as malls, mosques and schools included in new self-contained developments. A prime example is Majid Al Futtaim's Al Zahia mixed-use project near Sharjah University City, which is set to include a range of villa and apartment schemes, along with a community retail centre and a business park.
This rapid development has also spurred authorities to closely examine the emirate's transportation infrastructure. The government has made headway in this respect with the ''upgauging'' of traffic capacity on several major roads already underway, along with the ongoing expansion of the city's fledgling public bus network as authorities strive to reduce the dependency on cars.
Furthermore, the recent announcement of the creation of the Sharjah Roads and Transport Authority promises to deliver yet more change to the public transport networks with a study underway to assess the feasibility of setting up a metro network across the city. If developed, a metro system would radically transform connectivity across the city and fundamentally alter the urban landscape.
While the emirate continues to develop, it is clear that there is a strong desire to develop a city that is proud of its past and has a vision to evolve into a modern Islamic metropolis.
Source: Steve Morgan, Special to gulfnews.com
The writer is the Middle East head of Cluttons