The construction and real estate sectors have supported Sharjah’s economic development in recent years as the emirate’s government pursues further economic diversification and sustainable growth. Real estate demand is dominated by mixed-use developments, which incorporate hospitality, leisure and cultural offerings. High prices in neighbouring northern emirates, coupled with Sharjah’s competitive mortgage rates and low taxes, are encouraging more expatriates to invest in the real estate market, further supported by improved transport links with the rest of the UAE. In addition to real estate, the construction industry is supporting the government’s growth strategy through the development of several industrial sites and the expansion of free zones.
Structure & Oversight
Several government bodies are responsible for managing the construction and real estate sectors at the emirate level. Established in 1998, the Sharjah Department of Town Planning and Survey prepares comprehensive plans for all districts within its jurisdiction; implements housing policy; allocates residential, industrial, commercial and agricultural land; carries out urban renewal projects and re-plans older cities; and conducts transport and traffic studies.
The Sharjah Directorate of Public Works, created in 2000, is charged with the design, development, management and maintenance of government projects and facilities. It focuses on sustainable development in line with national aims to improve sustainability across all industries in the UAE. The Sharjah Directorate of Housing, meanwhile, provides housing support for citizens. The body provides loans and grants; works to construct permanent housing; and offers short-term accommodation in the case of fire, natural disaster or other emergencies. The department leverages e-services to process housing requests from citizens and handle contractor requirements. Lastly, the Sharjah Real Estate Registration Department (SRERD) is in charge of registering all developments in the emirate. The work of these entities is supported by the Sharjah Investment and Development Authority (Shurooq). As one of Sharjah’s primary investment-promotion bodies, Shurooq facilitates partnerships and operates as a strategic partner in real estate projects, focusing on mixed-use developments.
Regulation & Legislation
In November 2022 the government of Sharjah amended a law to allow non-UAE or GCC nationals to own property on a freehold basis to encourage greater foreign investment in the emirate’s real estate market. The law includes several exceptions whereby foreign nationals are entitled to freehold ownership of a property, including formal transfer by inheritance, assignment by the owner to first-degree relatives and ownership in projects of real estate development. This move is expected to encourage the greater uptake of properties in Sharjah by foreigners, including those who have been priced out of the Dubai market.
Local real estate developer Arada partly credited the change in law allowing foreign investors to purchase freehold properties in the emirate with boosting its annual performance. The company saw a total of Dh4.26bn ($1.16bn) in sales in the first half of 2023, which translates to a 186% rise in its annual sales as a result of increased demand.
Budget & Public Spending
Approved in January 2024, the emirate’s 2024 general budget provides $11.1bn in funding. To this end, 40% of the budget is allocated to infrastructure and capital projects, 30% to economic development, 21% to social development and 9% to government administration.
In April 2023 the Sharjah government announced that it would invest in the removal of cladding identified as a fire hazard from 40 buildings at a cost of Dh100m ($27.2m). This marked the first stage of a six-month project to remove such cladding from 203 public- and privately owned residential towers and commercial buildings across the emirate. The cladding will be replaced with fire-resistant alternatives.
Size & Performance
Construction and real estate contribute a significant amount to Sharjah’s GDP each year, as the federal and local governments focus on diversifying the economy away from oil and gas. Real estate activities were the third-largest contributor to GDP in 2022, accounting for 9.7% of the total, followed by the construction sector, at 9%, as urban development continued to gather pace.
Sharjah’s real estate industry generated over $6.6bn in revenue in 2022, an increase of 15.3% over 2021. In the first half of 2023 the sector achieved a trading value of $3.6bn, up 19.2% compared to the same period in 2022, according to a bi-annual report by the SRERD. A total of 40,843 transactions occurred in this period, with 4187 sales and a total mortgage value of Dh5.7bn ($1.6bn) for 42m sq feet of traded area. The sector saw a high level of diversity in investment sources, with 88 different nationalities registered. Emirati investors were the largest group at 7033, followed by other Arab investors, with 1824.
The largest number of transactions took place in Sharjah City, standing at 3794, with a value of Dh5.4bn ($1.5bn). The Muwaileh commercial area, Mezairah, Al Khan and Hoshi were the most popular areas in the city. The biggest number of sales took place in the residential real estate segment, at 3332, representing 79.6% of total sales, followed by industrial real estate, with 410, or 9.8%; and commercial real estate, with 373 transactions, or 8.9%.
At the national level, the UAE’s construction industry is expected to expand by 3.3% in real terms in 2023, following growth of 2% in 2022. The sector is projected to achieve an average annual growth rate of 3.9% between 2024 and 2027, driven by investment in infrastructure, renewable energy, oil and gas, housing, industry and tourism projects. This aligns with the national strategy, We the UAE 2031, as the federal government carries out a range of projects aimed at doubling GDP between 2022 and 2031.
A 2022 real estate market report by UAE property website Bayut.com found that the most expensive areas in Sharjah in terms of apartment sales were Al Khan, Al Majaz and Al Nahda. In Al Khan, the average price for a one-bedroom apartment in 2022 was Dh522,000 ($142,000), a two-bedroom property cost Dh754,000 ($205,000) and a three-bedroom property was Dh1.1m ($299,000), with the average price per sq foot in the area decreasing by 1.4% from 2021. Buyers were also interested in apartments in Muwaileh and Al Taawun. Al Nahda offered the best return on investment (ROI) for buy-to-let apartments, with a rental yield of 6.23%; followed by Al Taawun (6.16%); and Al Majaz (6.09%).
The most popular area for renting apartments was Muwaileh – situated close to industrial areas and one of the main highways to Dubai – where the average annual rental price was Dh16,000 ($4360) for a studio, Dh22,000 ($5990) for a one-bedroom flat and Dh30,000 ($8170) for a two-bedroom flat. Other popular areas included Al Nahda and Al Majaz.
For villa sales, Hoshi, close to the Dubai-Sharjah border, was the most popular area. The average purchase price of a three-bedroom villa in Hoshi was Dh2.3m ($626,000), marking an increase from Dh1.9m ($517,000) in 2021. The average price was Dh2.4m ($653,000) for a four-bedroom villa and Dh3.4m ($925,000) for five bedrooms. Other popular areas for villa sales included Muwaileh, Al Tai, Sharqan, Al Ghafiya, Al Gharayen, Al Qadisiyah, Al Goaz, Al Yash and Al Jazzat. The areas achieving the highest ROI for buy-to-let villas were Al Qadisya, at 6.8%; Al Jazzat, at 5.7%; and Al Ghafia, at 5.4%.
Expatriates contribute significantly to Sharjah’s property demand, representing a large proportion of the emirate’s population – around 1.6m of 1.8m, according to the 2022 census. The most popular areas for foreigners include Aljada, which is close to University City of Sharjah and the Sharjah Airport International Free Zone (SAIF Zone); the mixed-use neighbourhood of Al Mamsha; and Tilal City, which is popular among real estate investors. The growing number of expatriates in Sharjah has encouraged the construction of a range of mixed-use property developments across the emirate, with high levels of interest in both rental and for-sale properties.
Investment Opportunities
Shurooq, Invest in Sharjah – a body also known as the Sharjah FDI Office – and the Chamber of Commerce and Industry (SCCI) promote investment opportunities in Sharjah and foster partnerships with real estate organisations across the Middle East. In August 2023 the SCCI met with Invest in Sharjah to discuss ways to strengthen mutual ties, promote lucrative real estate investment projects and invigorate the local real estate sector. Shurooq and the SCCI also promote the emirate’s real estate market at the global level. In September 2023 the SCCI attended Cityscape Global 2023 in Saudi Arabia, which brought together representatives from over 85 countries and 350 exhibiting companies, attracting around 2000 investors.
Building Materials
A mix of local producers, manufacturers in neighbouring emirates, and importers through airports and seaports help provide Sharjah with construction materials. Two primary domestic producers are the Sharjah Steel Pipe Manufacturing Company (SSPMC) and Ginco Steel. Established in 1982, the SSPMC operates at a capacity of 40,000 tonnes per annum (tpa) of welded line and pile pipes for the construction and petroleum sectors. Ginco Steel was established in 1975 and is active in the design, fabrication and erection of steel structures, acting as a key supplier for the governments of Sharjah, Dubai and Abu Dhabi, as well as for the regional oil and gas industry.
Another large player is Sharjah Cement and Industrial Development, which owns Sharjah Cement Factory, the Paper Sacks Factory, and Gulf Rope and Plastic Products (GRPP). Sharjah Cement Factory has a grinding capacity of 1.1m tpa, while the Paper Sacks Factory can produce 120m sacks per year that can be used to package cement, fertiliser and chemicals. The GRPP plant has the capacity to produce 10,000 tpa of synthetic rope, which is both used locally and exported to more than 25 countries.
The emirate also hosts the SteelFab conference, aimed at encouraging trade in the metalworking, metal manufacturing and steel fabrication segments. The 19th edition of the event is set to be held at the Expo Centre Sharjah in January 2024, with the previous iteration in January 2023 attracting 6000 shareholders in these segments from 42 countries.
Cement decarbonisation remains a central objective of local stakeholders. In January 2023 BEEAH Recycling, the waste processing and material recovery business of BEEAH Group, was given the title of Green Partner to the Sharjah Cement Factory and Lafarge Emirates Cement for supporting green cement production by supplying lower-emission fuels. BEEAH Recycling produced 150,000 tonnes of alternative fuels in 2022 at a first-of-its-kind facility in the region. The company transforms municipal solid waste into high-quality, refuse-derived fuel (RDF) at its Solid Recovered Fuel facility. RDF has a lower moisture and chlorine content than traditional carbon fuels and can be injected into kilns for cement production. BEEAH provided 50,000 tonnes of its RDF to the Sharjah Cement Factory in 2022.
In line with national aims to foster sustainable development, in May 2023 the American University of Sharjah launched courses focused on green construction. The College of Engineering offers a Design of Sustainable Concrete course and promotes research in sustainable construction materials, such as lightweight and recycled aggregates.
Furthermore, Sharjah’s Research, Technology, and Innovation Park (SRTIP) is investing in 3D printing to drive innovation, particularly in the manufacturing and construction sectors. The technology has the potential to reduce costs, simplify logistics and offer design flexibility as parts can be printed immediately.
Sharjah Sustainable City
The UAE hosted the COP28 UN Conference on Climate Change in December 2023, with that year designated as the Year of Sustainability by the federal government. This is reflected in its national blueprint, We the UAE 2031, and has been supported by projects across various industries in Sharjah. The emirate’s flagship sustainable real estate and construction project is Sharjah Sustainable City. Shurooq and Dubai-based Diamond Developers launched the project in March 2019 with an investment of Dh2bn ($54.4m) to cover an area of 668,900 km. The mixed-use residential complex is set to include 1120 villas, a commercial space with retail and community facilities, green areas and educational institutions. Construction was split into four phases, with the final phase launched in May 2023 and completion scheduled for 2024.
Sharjah Sustainable City offers an example of how to construct eco-friendly commercial and residential buildings, while reducing carbon emissions and encouraging renewable energy usage. The project promotes circular-economy systems and waste management. The city’s wastewater is treated for landscape irrigation and there are extensive recycling systems in place. Further, there are plans to include a biogas plant to treat organic waste to generate electricity and be used as fertiliser.
The 604 villas constructed during the first two phases of the project were fully sold by the end of 2022, and the first set of properties had been handed over to homeowners. The handover of properties constructed in phases two and three were slated for 2023 and 2024, respectively.
Residential
Within a short driving distance of Dubai and sharing borders with all the other emirates, Sharjah offers lower-priced housing with the same luxury facilities and reputation for safety as its neighbours. Much of the residential market consists of mixed-use properties, with apartment buildings and housing complexes centred around a wide range of amenities, from sports grounds to supermarkets.
In March 2022 local real estate developer Alef announced plans to build an 8.7m-sq-foot residential estate at a cost of Dh3.5bn ($950m), with construction beginning in September 2023. Known as Hayyan, the project is expected to be delivered in the second half of 2025. Alef also launched zone three of its $436mn Al Mamsha Raseel project, a fully walkable mixed-use community, in June 2023, with the first building in the cluster completed in November 2023.
In December 2022 the Sharjah government approved a housing project in the Muhathab suburb. The Al Gitanah Residential Compound 1 will consist of 366 houses, with the project costing a projected Dh369m ($100m). Housing support will be provided in the form of loans and grants for those eligible. Al Tunaiji, a major real estate developer, expects to launch similar projects in Al Gitanah 3 and 5 soon.
Elsewhere, Arada was awarded a contract in February 2022 to expand its offerings in Aljada, Sharjah’s largest mixed-use destination. The company plans to build eight apartment buildings in the Naseej District of the development, at a total cost of Dh24bn ($6.5bn). Additionally, in January 2023 Arada awarded a $129m contract to Dubai-based developer Gulf Asia Contracting for the construction of its Vida Aljada hotel. Once completed, the hotel will consist of 175 rooms, 255 residences and 149 serviced apartments.
Arada had constructed three mixed-use developments in the UAE as of the end of 2023, including the Masaar residential project in Sharjah. The company continues to see robust growth in sales, selling 1616 homes in the first half of 2023, up 23% from the same period of 2022, with sales reaching Dh4.3bn ($1.2bn).
In March 2023 Shurooq unveiled plans for an upscale, six-building, 184-unit residential development called Ajwan in Khorfakkan. The project promises a space inspired by nature and is expected to help drive opportunities for tourism, culture and investment to the city, as well as the Eastern region.
Affordable Housing
The federal government’s Sheikh Zayed Housing Programme provides loans and grants, and allocates land to eligible citizens who want to buy property in the UAE. Emiratis can apply for housing or residential lands through the Housing Allocation Committee at the Presidential Court. Applicants must hold UAE citizenship, as well as have a family book and an Emirates identity card.
On the emirate level, the Sharjah Housing Programme was established in 2010 with an aim to provide housing assistance to all Emirati families in the emirate. In the 2012-22 period, the programme provided 11,503 people with subsidies of over Dh10bn ($2.7bn), which included 5914 grants and 5589 loans. Support ranges from financing to build or purchase a house to government-built housing for citizens. Meanwhile, in 2022 a law passed that allows expatriates of any nationality full property ownership.
Residential properties in Sharjah are exempt from value-added tax (VAT), while the VAT for commercial properties stands at the standard rate of 5%. Further, residential developments are charged 0% VAT for the first three years after their completion.
Leisure, Retail & Commerce
Rental rates for office properties in Sharjah remain stable thanks to moderate supply and demand. As household spending continues to increase and the emirate attracts more tourists, the demand for retail and leisure complexes is projected to grow. However, this rise could be somewhat dampened by the influence of e-commerce, which is expected to shift demand towards warehouses and logistics supply chains instead of traditional brick-and-mortar stores.
A $71m expansion of City Centre Sharjah was completed in July 2018, adding 13,700 sq feet of retail space to one of the emirate’s largest shopping malls. In addition to dedicated shopping malls, Sharjah has been adding retail offerings in multi-use developments. Alef aims to include a range of retail offerings in its Hayyan multi-use development. Meanwhile, the plan for Arada’s completed Aljada development includes a 4.4-km retail boulevard.
In September 2022 Arada announced plans to develop a Dh6.3bn ($1.7bn) business park as part of its Aljada development. The company is using 4.3m sq feet of leasable land to construct 40 office blocks with the goal of drawing more international technology companies to the emirate. The first eight blocks are expected to be completed by 2025. Dubbed the Arada Central Business District, this will be the first wholly centralised business centre in Sharjah.
Industrial
Sharjah hosts six free zones located in or near major transport centres. The Hamriyah Free Zone (HFZ) is the UAE’s second-largest industrial free zone, home to over 6500 businesses from 163 countries as of the end of 2023. International stakeholders have shown interest in Sharjah’s free zones, with many investing in expansion projects in 2023.
In September 2022 Trend Industries FZC, a Sharjah-based metal construction company, announced plans to invest Dh25m ($6.8m) in the construction of a new steel production facility in the HFZ. The expansion will increase the company’s production capacity from 3600 tonnes to 8400 tonnes per year and bolster Sharjah’s reputation for steel manufacturing. Similarly, in June 2023 the HFZ signed a deal with Indian company Infinite Energy to construct a multifunctional oil refinery at the free zone. The company plans to lease a 200,000-sq-foot plot of land for the project. A month later, Hong Kong-based Herald Holdings, a global logistics and shipping companies conglomerate, signed an investment agreement with the SAIF Zone, leasing 173,000 sq feet of land to develop a high-tech logistics facility. This brings the company’s total footprint in the SAIF Zone to 227,000 sq feet and its total investment to Dh30m ($8.2m).
The broadening of Sharjah’s industrial zones will be supported by a $653m expansion project at Sharjah International Airport. To respond to the rapid growth of the tourism and business sectors, the Sharjah Airport Authority is working on boosting the airport’s passenger capacity from 8m to 20m, annually as well as increasing its freight capacity by 2027.
Road Infrastructure
The construction of new and improved road and rail links across Sharjah is set to support the rapid growth of the emirate and provide enhanced connectivity with neighbouring emirates. The Sharjah Roads and Transport Authority is working with the Dubai Roads and Transport Authority to develop a major new link between the two emirates, aimed at cutting the commuting time from 20 minutes to 12 minutes. The Garn Al Sabkha Street Sheikh Mohammed Bin Zayed Road Intersection Improvement Project is expected to cost $102m, which covers the construction of four bridges spanning 3 km and capable of carrying 17,600 vehicles per hour. While the project’s expected completion date had not been announced as of the end of 2023, construction was 50% complete as of November of that year. This development will help promote Sharjah’s reputation as commuter friendly, allowing residents working in other emirates to enjoy lower housing costs and living expenses.
Mortgage & Housing Finance
On the national level, several banks are encouraging greater investment in the real estate market by offering housing finance schemes that support the federal government’s Golden Visa programme. Banks are vying with one another to provide competitive fixed-term mortgage rates – up to two percentage points lower than countries such as the UK and India – and to support the long-term residency visa process of applicants. Some banks are offering three-, four- or five-year fixed-term mortgage rates at 4.69%, which can fall to 4.44% for applicants who opt for a salary transfer.
Expatriates are required to pay a higher down payment to be eligible for a mortgage. UAE nationals must pay at least 20% of the property value for properties that cost Dh5m ($1.4m) or less, while foreign investors pay 25%. This figure increases to 30% for nationals and 35% for expatriates for properties valued at over Dh5m ($1.4m). Green mortgages are increasingly popular, with investors able to select this option when purchasing property in areas such as Sharjah Sustainable City to benefit from financial benefits, including loan processing discounts.
Outlook
Sharjah’s real estate and construction sectors have grown significantly in recent years as UAE residents look for affordable and attractive alternatives to neighbouring emirates. Several major mixed-use development projects are seeking to address this increase in demand and reduce the need for travel to other emirates for work or leisure activities. The construction of major industrial and office spaces has provided greater business opportunities, while improvements to the road network, the airport and free zones are set to enhance trade.
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