Property investors who are chasing value, solid returns and growth potential are looking beyond the real estate hotspots of Dubai and Abu Dhabi to the emerging emirates. Ajman and Sharjah are braced for similar property booms to those experienced by their neighbours, as investors see attractive opportunities among a host of new developments in these less mature markets. Many are due for completion within the next three years.
Since Ajman introduced freehold property in 2004, the state has had an influx of investment from major local developers. Almost 200 freehold residential towers are either under construction or have been completed in that time.
Nicholas Maclean, managing director (Middle East) of global real estate services firm CB Richard Ellis, says Ajman is a “bold” choice for developers given the current level of infrastructure but it does offer a unique opportunity to capture Gulf Co-operation Council (GCC) buyers who are keen on entering the secondary homes market.
It also appeals to workers in Dubai who are being priced out of the rental market, says Stephen Flanagan, a senior surveyor at global real estate adviser DTZ. He believes Ajman is a strong growth location based on the short commute to the world’s fastest-growing city.
“Long term, the emirate will not be as popular as Dubai but may be considered an affordable alternative, and there should be a relatively strong market for low- to lower-middle--income rental property,” says Mr Flanagan. “We would not be surprised to see rental growth for apartments, subject to rent directives, of some 15% a year, with capital values showing similar growth – at least in the short term.”
Recent improvements in infrastructure, roads and power as well as government support for developers has been accompanied by an increasing number of real estate players launching projects in the state. Buyers are also attracted to Ajman as the emirate promises the possibility of 100% ownership rights and guaranteed residency visas.
Emirates City is one of a range of developments designed to drive economic growth in the United Arab Emirates’ smallest emirate. The Dh15bn ($4bn) town-sized project consists of 72 residential and commercial towers, ranging in height from 20 to 50 floors.
Ajman One is a significant Dh2.7bn development due for completion in early 2010. Developed by Aqaar Properties, it features residential, commercial, hospitality and leisure projects on a 775,000-square-foot plot.
The mixed-use development residential section was 90% sold in just six months. Most buyers are GCC nationals and locally based expatriates who are keen to secure affordable housing in the UAE.
Boom in the offing
Neighbouring Sharjah is also on the verge of a property boom due to the increasing gap between supply and demand. Mr Maclean says that returns will be “substantially higher” than in Dubai or Abu Dhabi, subject to the government further developing infrastructure and supporting business to expand into the emirate.
“There is strong demand from businesses looking for office space outside of Dubai. Many financial sector clients are looking to split their front- and back-office functions and find their staff already living in the emirate,” he says.
Nujoom Islands is the largest commercial, residential and tourism project in Sharjah and its Dh18bn is a significant investment in the area, covering 60 million square feet and 13 sectors of land.