Interview: Raymond Khouzami
How will the demand for mid-market properties drive growth in Sharjah’s real estate sector?
RAYMOND KHOUZAMI: Traditionally, Sharjah’s real estate market has been driven by customers attracted to a strong sense of community and its family-friendly environment. A price-driven market, the majority of buyers prefer larger, affordable accommodation as the comparatively generous size of local properties continue to be a key selling point. Rates of return remain strong at 8% to 10% annually – an attractive rate within the regional market – despite growth in the property sector being influenced by changing demand patterns in neighbouring emirates.
Generally, demand has been affected by regional political instability and a robust project pipeline, but sales have been stable as units continue to be competitively priced. There are clear preferences in property purchases as the majority of pre-sold units are bought by investors looking for higher rates of return, while larger units are typically sold to end-users when the property is nearing completion. Home financing from banks is most easily obtained when the property is complete, with most banks offering financing once a deed is provided by developers.
What are the comparative advantages of Sharjah’s real estate market, and what factors are influencing consumer choice?
KHOUZAMI: Sharjah benefits from three key advantages for consumers: affordability, location and space. Sharjah’s rental market remains attractive to investors as it produces a high return on investment and is more affordable than other emirates due to lower service fees and utility costs.
Customers are interested in location and accessibility, and many new large-scale projects have been launched near highway infrastructure, which is opening new areas of the city for development. We have seen a trend in the market towards the addition of amenities in property developments as end-users now expect facilities such as shared gardens, multi-purpose halls and sports facilities. As the local market is competitive, developers are increasingly aware that providing a higher standard in terms of facilities and product quality is essential. The provision of these services is attractive to customers, particularly individual property investors who want streamlined, simplified services which include rent collection, cleaning and general property management. The overall market for property investment is becoming more challenging as both investors and end-users are generally cautious and unwilling to rush into purchases. Although Sharjah remains popular with regional buyers, many investors are local and purchase multiple apartments to lease.
How is the business and operational environment for developers changing?
KHOUZAMI: We continue to see strong demand from Arab residents – particularly after the regulatory changes in 2014 which allowed freehold purchases for Arab nationals with residency.
Developers are benefitting from a stronger regulatory environment with frequent coordination among government departments. For example, the introduction of e-services is improving collaboration and discussion between developers and the relevant government authorities, with new e-portals meaning that most documentation required for developments may be submitted online.
Developers are also positive about the long-term outlook for the sector as new infrastructure projects, demographic growth and economic stability create demand for property. Sharjah nevertheless has to adapt to the evolving real estate market, as new developments in Dubai are starting to offer similarly competitively priced properties, which may compete with Sharjah’s target segment in the future.
Read More from OBG
