With a host of real estate, major transport and infrastructure projects either being developed or in the pipeline, Sharjah’s construction sector is going through a busy time. Much of the new work is addressing previous shortages in areas such as gated and lifestyle communities, higher-end offices and retail premises, and more modern industrial estates. This presents contractors, architects and developers with a much wider range of opportunities than in previous years, when Sharjah was largely perceived as a low-cost alternative to its neighbour Dubai. The ongoing construction work will likely lead to a change in this view, with the emirate also focusing on high-quality civil infrastructure and incentivised economic zones for local and international businesses.

Challenges do remain, however. The introduction of a 5% value-added tax (VAT) in January 2018 may impact costs, while the overall economic slowdown that has hit the region in recent years, following the oil-price downturn that started in mid-2014, will also have an effect on pricing and demand. Master-planning and coordinating construction with utility and administrative frameworks can also still be a concern. Nonetheless, the sector remains upbeat about prospects following significant investment, with the year ahead likely to see stronger growth and fuller order books to add to its already busy schedule.

Sector Drivers

A look at the construction sector headlines for Sharjah between late 2017 and early 2018 quickly reveals the breadth of activity currently under way there. This ranges from the $6.5bn Aljada development by ARADA to a new hotel for Expo Centre Sharjah, as well as a $31m police general administration block in Al Dhaid to the east of Sharjah City with an October 2018 completion date, a 60,000-sq-feet fire station located at Al Saja’a industrial park on the outskirts of the city, and the Sharjah Multi-fuel Waste-to-Energy plant also located in Al Saja’a. Much of the activity is driven by government and semi-government entities, with public expenditure on the rise once more. In December 2017 Sharjah’s ruler, Sheikh Sultan bin Muhammad Al Qasimi, approved a 6% budget hike for 2018 to some Dh22.1bn ($6bn). Of this, some 24% has been allocated for infrastructure development – a 3% rise on the 2017 total.

Behind this increase in spending is a general uplift in the regional economy, as oil and gas prices have begun to rise again alongside an expected recovery in economic growth by the World Bank to 2.1% in 2018 compared to 0.5% in 2017. In March 2018 the Central Bank of the UAE estimated real GDP growth of approximately 1.5% in 2017, with this expected to rise to 2.5% for 2018. Sharjah, meanwhile, is expected to do slightly better, with ratings agency Moody’s predicting 2.7% real GDP growth in the emirate for 2018.

Improving Sentiment

Estimates of stronger growth are being underscored by rising business confidence across the GCC, with a survey conducted by international law firm Pinsent Mason in early 2018, showing sentiment in the construction sector improving by seven percentage points in the two years to 2018, from 32% to 29%. The UAE was most expected to deliver growth, with 38% of survey respondents seeing the country as providing the most opportunity in the GCC in 2018, compared to 35% in 2016.

In their January 2018 rating review for the region, financial services agency S&P expected a gradual recovery in Sharjah’s economy during the 2018-21 period, with the real estate and construction sectors set to flourish in 2018 due to spill-over from projects in Dubai connected to the upcoming Expo 2020, as well as tourism and manufacturing investment.

Spurring this optimism is the rollout of new free zones in Sharjah, including Sharjah Publishing City (SPC), Sharjah Media City, Sharjah Healthcare City (SHCC), and the Sharjah Research Technology and Innovation Park, all of which have major implications in the coming years for the construction sector.

Public Bodies

Key authorities for the construction industry include the Sharjah Investment and Development Authority (Shurooq), which not only promotes the emirate as a destination for foreign direct investment (FDI), but also runs major projects of its own, including hospitality and occasionally real estate . The Sharjah Directorate of Housing (SDH) develops strategic initiatives and housing policies, as well as providing assistance to nationals in meeting their housing needs. The Sharjah Directorate of Public Works is responsible for implementing civil construction and infrastructure projects in the emirate, while the Directorate of Town Planning and Survey develops the various masterplans for the emirate and its municipalities. It also issues certificates of granted lands and can re-zone residential, industrial and commercial usage – a mandate that will see it have a significant impact as Sharjah’s built land expands and neighbourhoods change their profile.

The responsibility of issuing permissions and registering projects lies with the Sharjah Real Estate Registration Directorate, the Environment and Protected Areas Authority and, outside Sharjah City, the Suburbs and Villages Affairs Department. In the capital, Sharjah Municipality is the local authority with regard to providing public utilities and services to citizens. In addition, members from many of these entities sit on the Sharjah Urban Planning Council, which aims to develop a comprehensive strategy for urban development.

Meanwhile, there are a number of professional bodies that serve to strengthen the construction industry, including the UAE Contractors’ Association, which has branches throughout the UAE and in Sharjah itself. The Sharjah Chamber of Commerce and Industry is also a key player in representing the interests of all manner of businesses operating in the emirate.

Construction Costs

On January 1, 2018 the UAE introduced VAT for the first time. The rate is 5%, although many goods and services remain VAT-exempt. In real estate, the sale and rent of residential units is one such 0% category, although sale or rent of commercial buildings, hotels, motels and serviced accommodation is subject to the 5% tax. For the construction sector, the main effect is therefore on the cost of building materials and utilities.

The first three months of 2018 saw little impact on real estate prices from the imposition of the new levy; however, with contractors reported to be passing on the extra costs to developers, most of the latter were absorbing this, rather than end-consumers. At the same time, projects that are already ongoing and have fixed prices in the contract are not subject to VAT, except on outstanding balances, thereby delaying the likely impact. With the tariff’s introduction well signalled, contractors were also able to place bulk orders ahead of time, boosting stocks of materials to offset the increase and better manage costs.

At the same time, the approach of Expo 2020 in neighbouring Dubai has driven up demand for building materials throughout the UAE, in addition to the general economic uptick. Contractors in Sharjah tend to import from countries like China when the 5% importation charge can be offset by lower international prices. However, global trends in 2017, such as a reduction in Chinese steel output, affected prices, with the market witnessing a steady increase in the cost of materials over the course of the year.

While Sharjah does not produce a construction materials price index of its own, the most recent data from Statistics Centre Abu Dhabi for January 2018 showed the average price of steel had risen 18.9% year-on-year (y-o-y), while PVC pipes had gone up 9.2%, month-on-month. Some materials costs had fallen, however: concrete was 0.2% down y-o-y, natural stone had fallen 9.4% and glass dropped 2.5%. Equipment costs also underwent a significant price increase, with transport equipment up an average of 20% y-o-y. The Dubai Chamber of Commerce also publishes a construction materials price index, with this showing a 22.5% rise in steel prices, year-on-year, for the fourth quarter of 2017.

Industrial Production

In addition to importing various resources necessary for development, Sharjah maintains its own building materials industry to produce consumables for the construction sector. Sharjah Cement and Industrial Development Company (SCIDC) runs Sharjah Cement Factory, producing several varieties of Portland cement, along with ground-granulated blast-furnace slag and cement, and oil-well cement. The factory has a total grinding capacity of 1.1m tonnes per annum (mtpa).

The SCIDC is also responsible for the Paper Sacks Factory, producing multi-wall, glued/pasted valve-type empty paper sacks, and the Gulf Rope and Plastic Products Company, whose output comprises a wide variety of synthetic ropes, along with baler twine, under the trade name “Falcon”. Results for the company showed pre-tax profits fell from Dh69.3m ($18.9m) in 2016 to Dh57.1m ($15.5m) in 2017, despite a rise in revenue from Dh612m ($167m) to Dh649m ($177m). Recent times have been tough for cement manufacturers, in particular in the UAE and the wider region, with excess capacity forcing down prices. SCIDC’s performance remains a positive example in the context.

Other materials manufacturers in the emirate include the Sharjah Steel Pipe Manufacturing Company, which owns a spiral pipe mill with a 40,000 mtpa capacity, producing both line pipes and pile pipes. In steel fabrication, Ginco Steel is based in the emirate, with contracts throughout the Gulf region. Sharjah was the 2018 venue for the largest steel fabrication trade show in the Middle East, SteelFab.

With good highways connecting the emirate to the rest of the UAE, steel and aluminium are easily accessed from local sector giants, such as Emirates Global Aluminium (the world’s third largest producer of primary aluminium outside China) and RAK Ceramics, which is based in the Ras Al Khaimah emirate and was valued at nearly $1bn in early 2018 according to local media. The emirate also benefits from having ports on both the Indian Ocean and the Gulf, connected by fast highways, while its international airport has 32,000 sq metres of cargo facilities equipped to handle 16 types of aircraft and is being expanded to increase passenger capacity. Recent efforts to streamline customs and processing times at all these facilities have gone hand-in-hand with development of better access roads which have bottlenecks (see Transport chapter).

Major Projects

Real estate remains a key driver for the Sharjah construction sector, with analysts predicting continued growth in 2018 (see Real Estate overview). Some of the largest projects are the Aljada complex covering some 2.2 sq km, the 5.6-sq-km Sharjah Waterfront City, the 2.3-sq-km Tilal City, the 0. 5-sq-km Maryam Island and the 1.5m-sq-km Al Zahia mixed-use development, one of the emirate’s first and largest real estate projects. In addition, a range of medium and small-scale projects are also under way, including $400m of hotel projects announced in 2017 alone, plus around 4m sq feet of shopping malls currently in development. All of these also require infrastructure, with connecting roads, bridges, artificial islands and utility connections likely to provide big contracts for the sector. This major expansion of the emirate’s real estate portfolio is also driving a move into new geographical areas by developers.

The re-zoning of old industrial areas, and the relocation of firms based there to new industrial estates such as Al Saja’a Industrial Oasis (ASIO) and Emirates Industrial City (EIC), have created new spaces for residential and commercial development. At the same time, the emirate’s central region, around the town of Mleiha, is taking some of the overspill from Sharjah City, while developing its own tourism profile. Indeed, in December 2016 Shurooq announced a total investment of Dh5bn ($1.4bn) to develop the tourism sector in Sharjah City, its eastern coast and island resorts by the end of 2018. On the Indian Ocean side in particular, tourism is now providing a major investment, with Khorfakkan, Kalba and Dibba Al Hisn all seeing new developments, including the Khor Fakkan Corniche, the Kalba Eco-Tourism project and Al Hisn Island in Dibba.

Private developers are behind many of these projects, either on their own, or in partnership with the emirate’s government or government-linked agencies, such as Shurooq and Sharjah Asset Management Holding. Competition for contracts is reportedly fierce, with companies from throughout the UAE and abroad taking part. The Sharjah Finance Department (SFD) is the key body for tendering in the emirate, with vendors and contractors required to register with the SFD to bid for projects that originate in Sharjah. Federal contracts go through the Ministry of Finance.

Civil Segment

When it comes to publicly supported housing, the SDH has also been active with civil projects. In late 2017 the emirate’s government approved a Dh286m ($77.9m) budget for housing support, aimed at 502 local families who might need assistance in completing, extending or beginning new construction. The start of 2018 also saw the government’s Permanent Committee on Land Allocation grant 548 plots of land to UAE citizens living in the emirate. Such grants are typical across the UAE, where the authorities take responsibility for ensuring all Emiratis have suitable places to build houses for personal use.

The transport sector is also becoming a major source of construction activity. One of the emirate’s three ports, Hamriyah, announced an associated free zone in March 2017, adding a 1-sq-km food park – the first such dedicated facility in the region – comprising offices, processing facilities and warehousing for food and beverage companies. Additionally, Sharjah International Airport is rolling out a four-year, Dh1.5bn ($408m) expansion project managed by international infrastructure firm Parsons. This multi-phase scheme will grow the existing terminal to a 20m passengers per year capacity by 2027. The first phase involves the development of the associated road network, with a new bridge providing a link from the airport to the nearby E88 highway, which was reported as 85% complete as of the end of 2017 (see Transport analysis).

Additional road works include improvements to the linkages between Sharjah and Dubai, where many Sharjah residents work. One development project undertaken to relieve the congestion between the emirates is the Mleiha intersection, a Dh200m ($54.4m) development that was around 60% finished at the start of the 2018, and expected to be complete in August the same year.

Once finished, the intersection will feature a nine-lane approach road leading to a seven-lane bridge and will increase capacity from 9000 cars per hour to 17,700. The project has also added three extra lanes from the intersection to service the central town of Mleiha which subsequently feeds to Kalba situated on the coast of the Gulf of Oman.

Additionally, the first stage of the Khalifa bin Zayed road extension from Kalba to the Omani border is scheduled for completion by the end of 2018.

Another sector seeing major construction work is public services. Health is an area of major interest to Sheikh Sultan, with the SHCC established as the lead project. This free zone is to be 4.8m sq metres in size, with room for hospitals, clinics and laboratories, rehabilitation and wellness centres, hotels and apartments, complementary and alternative medicine centres, offices, retail facilities, and logistics and light industrial units, all located close to the airport and a network of major roads. One hospital project has already signed up for SHCC: the Zulekha Healthcare Group is building a 150-bed hospital, adding to the emirate’s growing stock of private health facilities.

The SPC is one of the major free zones under construction. The 40,000-sq-metre site can house up to 550 companies, while also providing shopping and service facilities, a data centre, and a printing press with a print-on-demand capacity of up to 1m books per day. Additionally, Sharjah Media City is scheduled to begin construction this year, with the management building opening mid-2018. The facility will provide incentives to both local and international media companies and freelancers, such as 100% repatriation of profits and 0% tax on business conducted within the zone.

Green Building

Sharjah has been moving forward in adopting more sustainable building techniques and materials. Leading the way is the emirate’s environmental and waste management company, Bee’ah. Its new headquarters, currently under construction and employing 270 workers, is being built using recycled materials and is slated for Leadership in Energy and Efficient Design (LEED) platinum status, issued by the United States Green Building Council. The idea is that the building’s high energy efficiency, low carbon footprint and low water usage can be used as blueprints for many more buildings in the emirate.

There is additional scope to launch similar energy-efficient designs in residential developments in the local property market. “There is a market for more sustainable building design in new developments, including solar water heaters, solar-powered lights and new electric car charging points,” Ahmed Al Khoshaibi, CEO of development firm ARADA, told OBG.

Core Savills notes the UAE ranks among the top 10 countries in the world to hold LEED certificates, but states that despite the positive steps taken toward a green strategy there is a paradox, with the residential market lagging behind the commercial market. “Developers need to be more effective in communicating the benefits, cost savings and value of these measures to both investors and end-users,” Al Khoshaibi said.

Bee’ah is also working with Abu Dhabi’s state-owned renewables company, Masdar, on the Sharjah Multi-fuel Waste-to-Energy project. The first of its kind in the UAE, it is due for completion in 2020 and will process some 300,000 tonnes of waste in its first phase, generating up to 30 MW of power.


Diverse opportunities for Sharjah’s construction contractors, developers and suppliers lie in the near term. The pipeline should remain fairly secure for the next two to three years; however, cost pressures will likely continue due to increased demand and the newly implemented VAT, although firms have been largely able to absorb the effects of these so far.