The emirate offers good price points and promising yields, says developer
UAE - The Sharjah real estate market did not get its due until the government relaxed rules and opened investment to expatriate buyers on 100-year leases in 2014. This decision resulted in a handful of developers launching large, master-planned communities to tap Arab as well as non-Arab investors and end-users. Arada was the new kid on the block in 2017, having launched two master communities - Nasma Residences and Aljada - in Sharjah.
"It wasn't our intention to launch two massive master developments in the same year. Arada has a charter to focus on creating prime and quality communities. We had our eyes on Dubai, Sharjah, Saudi Arabia and other international markets such as Italy, London and Sydney. But, the UAE is our focus point. Sharjah is a hidden gem. There is a 10 per cent transactional gap between Sharjah and Dubai. We wanted to be the first mover to capitalise on Sharjah's untapped potential. No one has given it the merit it deserves," said Ahmed AlKhoshaibi, Arada's CEO.
According to Craig Plumb, head of research, JLL Mena: "The main attraction of projects in Sharjah is their lower cost than Dubai. While it clearly varies from project to project, JLL estimates that residential prices in Sharjah are currently 30 per cent to 40 per cent lower in Sharjah for product of similar quality."
"Another attraction is the location of new projects such as Aljada. These projects are providing expatriate families with access to good quality family housing to purchase in Sharjah for the first time."
The $6.5 billion (Dh24 billion) Aljada is a massive master community spanning 24 million sq ft and split into 10 phases, each including 1,000 residential units each. Phase one has already been released to the market and only a few hundred units remain to be sold. The developer plans to release phase two by the end of January and the entire community will be ready by 2025.
Other components in Aljada include a business park spanning 500,000 sqm and projected to include 20,000 workers, four hotels (two 5-star and two 3-star), a hospital, four schools, a retail boulevard and linear parks running through the entire community.
"We are in talks with the government for a free zone. The business park will be launched in April 2018. We will retain a good chunk of assets in the community for recurring revenue," the CEO adds.
Arada is also planning an entertainment hub as a draw card to attract approximately 10,000 tourists to the community. "We aim to give you an entertainment experience of Dubai standards but at the cost of what you would pay in Sharjah," AlKhoshaibi added.
Although the developer planned to launch Aljada in 2018, the launch was preponed to 2017 after it witnessed robust sales for Nasma Residences. "There is a need for a well-designed, quality master-planned development that has amenities in Sharjah," he observed.
The untapped demand is reflected in how Arada managed to sell out 115 units in a single building in one day, a record for Sharjah.
Currently, end-users account for 30 per cent of sales in Aljada and investors make up the rest. "I expect that trend to change once we start construction. There will be a 50:50 split. End-users are waiting for us to hit the ground."
Arada is tendering for infrastructure and phase one construction. "We will award the job in February and likely start construction in March. We might do pre-mobilisation on site to save time," informed AlKhoshaibi.
A big chunk of investors is UAE locals, followed by those from the GCC (Kuwait, Saudi Arabia), Arabs (Tunisia, Algeria, Syria, Palestine, Lebanon) and Asians (Indian, Pakistan). "I believe the Arabs and Asians will eventually become the biggest buyers. UAE locals have a good eye for value; they know the price now is cheap and there is good potential for appreciation."
The average price per sqft at Aljada is Dh750, with studios priced from Dh299,000, one-beds from Dh545,000 and the cost going up to Dh3 million for a semi-detached four-bedroom villa.
Arada does not allow buyers to sell until they have paid 40 per cent of the property value. This limits speculation.
"We have had interest from potential bulk buyers. We do our due diligence before doing bulk deals. It's mostly from GCC investors who are eyeing capital appreciation and long-term revenue," said the CEO.
The developer has allocated Dh5 billion of equity to Aljada. It recently secured a syndicated loan of Dh1 billion from Abu Dhabi Commercial Bank and Dubai Islamic Bank to help finance the development of Aljada.
Unlike Dubai developers, Arada isn't offering overly aggressive payment plans. There are two payment plans in place for Aljada: 30:70 and 40:60. "We want to make sure that people who are buying are committed. We don't want to force people to buy something they can't afford."
On why property investors must choose Sharjah over Dubai, AlKhoshaibi said: "Investors must look at capital appreciation and yields. Sharjah's real estate market has a lot of growth potential. The government's initiative to allocate the biggest spend for infrastructure shows its commitment to the real estate market. Also, Sharjah retains its residents a lot more, with their average tenure being 20 to 30 years. The cost of living is also affordable in Sharjah. The emirate also offers net yields between eight to 10 per cent."
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