Sharjah, the third-largest emirate in the United Arab Emirates (UAE), has been gradually emerging as a promising hub for commercial real estate investment.
While Dubai often takes the spotlight, Sharjah’s commercial real estate space offers unique opportunities that savvy investors are increasingly exploring.
Understanding the nuances of this market is crucial for anyone looking to capitalize on Sharjah’s growth.
Economic Overview of Sharjah
Sharjah’s Growing Economy
Sharjah’s economy has shown remarkable resilience and growth over the past few years. With a diverse economic base that includes sectors such as manufacturing, trade, and tourism, Sharjah is not overly dependent on oil revenues. This diversification has provided stability and created a conducive environment for real estate development.
Key Industries Driving Growth
Industries like logistics, education, healthcare, and tourism play a significant role in Sharjah’s economy. The emirate is also home to numerous free zones, which attract foreign investments and businesses. These sectors drive the demand for commercial spaces, from office buildings to retail outlets.
Government Initiatives Supporting Real Estate
The government of Sharjah has implemented various initiatives to encourage real estate investment, including relaxed regulations for foreign investors, tax exemptions in certain zones, and infrastructure development projects. These initiatives have made Sharjah an attractive destination for commercial real estate investment.
Commercial Real Estate in Sharjah
Types of Commercial Properties Available
Sharjah offers a wide range of commercial properties, including office spaces, retail outlets, warehouses, and industrial units. Whether you are a small business owner or a large corporation, there is a suitable property type available to meet your needs.
Key Areas for Commercial Real Estate Investment
Al Qasimia
Al Qasimia is one of the most sought-after areas for commercial real estate in Sharjah. Its central location and easy accessibility make it a prime choice for businesses looking for office space or retail outlets.
Lively Al Qasimia is home to the Al Mahatta Museum, which details the region’s aviation history and displays airplanes in a former airport hangar. A few mid-range hotels, and busy shopping streets lined with curry houses and Arabic bakeries. Compact Al Nad Park has kids’ play areas, and the slender, landmark Pearl Monument dominates Al Ittihad Square Park. The ornate King Faisal Mosque is also nearby.
Al Nahda
Al Nahda is another popular area, especially for businesses that require proximity to Dubai. The area is well-connected and offers a range of commercial properties, from office spaces to warehouses.
Al Nahda is a locality in Dubai, United Arab Emirates. Located in eastern Dubai in Deira, Al Nahda forms part of Dubai’s eastern border with the emirate of Sharjah. Portions of Al Nahda that flow north into the emirate of Sharjah fall within that emirate’s jurisdiction.
Al Majaz
Al Majaz is known for its scenic waterfront and bustling commercial activity. It’s an ideal location for businesses in the hospitality and retail sectors, offering a vibrant atmosphere and high foot traffic.
Al Majaz is a bustling district situated along Buhaira Corniche. Spanning over an area of 231,000 sq. ft., the area features stunning scenery overlooking the Khaled Lagoon. It is home to numerous apartment buildings with studio to 4-bedroom apartments.
Al Majaz is the second most popular area for buying apartments in Sharjah. Tenants also showed keen interest in Al Majaz, the second most searched area for renting apartments in Sharjah. There are also a few offices, shops, and showrooms in Al Majaz Waterfront.
Demand Trends In The Commercial Sector
The demand for commercial real estate in Sharjah is on the rise, driven by the growth of small and medium enterprises (SMEs) and the expansion of multinational corporations.
The increasing population and growing number of tourists also contribute to this demand, particularly in the retail and hospitality sectors.
Inclusivity & Affordability:
Sharjah’s inclusive real estate laws contribute to its appeal as a lucrative market. While Dubai and Abu Dhabi are more internationally famous, Sharjah’s government allows expatriates to hold 100-year leaseholds, encouraging foreign investment in real estate.
Additionally, Sharjah properties are comparatively affordable, encouraging both small and large investors to take part in the real estate market, further creating opportunities for profitability.
Infrastructure & Economic Growth:
Sharjah’s infrastructure expansion and economic growth play an essential role in making its commercial real estate market profitable.
The government’s initiative to mirror the growth seen in Dubai and Abu Dhabi has attracted tremendous local and international investment, positively impacting the commercial real estate market. Furthermore, establishments in sectors like healthcare, education, or logistics have boosted the need for commercial spaces, thus escalating the market potential.
Diversity of the Market:
The diversity of the commercial real estate market in Sharjah also contributes to its profitability. From retail spaces, and office buildings, to warehouses, the potential for a broad spectrum of investments is vast.
Factors Influencing Commercial Real Estate Prices
Location and Accessibility
Location is a critical factor in determining the value of commercial real estate. Properties in central areas or near major highways and transportation hubs tend to command higher prices due to their accessibility and visibility.
Infrastructure and Amenities
The availability of modern infrastructure and amenities, such as parking facilities, security, and internet connectivity, also influences property prices. Areas with well-developed infrastructure are more attractive to businesses and therefore more expensive.
Economic Stability and Growth
Economic stability is another key factor. Sharjah’s diversified economy provides a stable environment for real estate investment, with steady demand and relatively low risks compared to markets that are more volatile.
Most Profitable Types Of Commercial Real Estate To Invest In
Office Buildings:
Office buildings are a cornerstone of commercial real estate investment, providing stable income streams through long-term leases with tenants. Investing in Class A office buildings in prime locations can yield high rental rates and attract reputable tenants, contributing to stable cash flow and property appreciation over time.
According to Mordor Intelligence, the Indian office real estate market is projected to grow from USD 26.00 billion in 2023 to USD 91.08 billion by 2028, at a CAGR of 28.50% during the forecast period (2023–2028). Grade A office spaces in prime locations like Mumbai and Delhi NCR can yield rental returns between 8–10%.
Indian cricket star Virat Kohli has recently secured a lease agreement for a sprawling 18,430 square feet of office space in Gurugram. The lease, valued at an impressive Rs 1.27 crore annually, has been inked with corporate firm Mynd Integrated Solutions.
When investing, prioritize well-maintained office buildings located in established business districts or areas with promising infrastructure developments. Doing so can significantly enhance the potential of your investment.
Retail Outlets:
Retail outlets, comprising shopping centers, strip malls, and standalone retail stores, offer lucrative investment opportunities, especially in bustling areas with high consumer demand. Retail tenants typically engage in triple-net leases, assuming responsibility for maintenance, property taxes, and insurance, presenting investors with a hands-off investment avenue.
The expanding Indian middle and upper-middle class, buoyed by governmental initiatives and evolving aspirations, is reshaping consumption patterns. Shopping malls have become preferred destinations for dining and shopping.
Retail properties in prime locations such as major metro cities like Delhi, Mumbai, Bangalore, and Hyderabad can yield rental returns ranging between 6.5% and 8.5%.
When considering investments in retail properties in malls, factors such as location and amenities should be carefully weighed to make informed investment decisions.
Industrial Warehouses:
Industrial warehouses have become increasingly popular among investors, fueled by the surge in e-commerce and the growing need for logistics and distribution centers. Companies like Amazon, Flipkart, DHL, FMCG giants such as P&G and HUL, and other companies require warehouses to efficiently manage their operations, making them constantly seek locations that optimize product movement and storage. This high demand makes well-located industrial warehouses a valuable investment option, offering attractive rental yields and benefiting from the expansion of online retail and logistics sectors.
According to one estimate, the Indian e-commerce market is projected to reach USD 350 billion by 2030, indicating a significant increase in industrial warehouse demand. When investing, prioritize properties with automation potential and excellent connectivity to transportation networks to maximize income and profits.
Shop-Cum-Office (SCO):
This commercial property stands out as one of the finest options on the market, offering a unique blend of retail and office spaces within the same building or complex.
Strategically positioned by real estate developers in prime locations, these properties attract a diverse range of businesses to both the office and retail spaces. With its convenient location and excellent connectivity, potential customers and clients can easily access the property, enhancing its appeal.
Investing in such a property can be highly lucrative, providing a steady income stream from rental payments.
Moreover, investors can anticipate substantial appreciation in value over time, making it a sound investment for the future. Properties of this nature typically yield returns ranging from 6–10%, with the possibility of even greater profits upon sale if situated in a desirable location.
Investment Potential in Sharjah’s Commercial Real Estate
Return on Investment (ROI)
One of the most attractive aspects of investing in Sharjah’s commercial real estate is the potential for high ROI. Property prices in Sharjah are generally lower than in Dubai, but rental yields can be comparable or even higher, offering a lucrative opportunity for investors.
Comparative Analysis with Other Emirates
When compared to other emirates like Dubai and Abu Dhabi, Sharjah offers a more affordable entry point for investors while still providing access to the UAE’s dynamic economy. The relatively lower cost of living and doing business in Sharjah is a significant advantage.
Risks and Challenges
While the potential rewards are high, there are risks involved, such as market fluctuations, competition, and regulatory changes. Investors need to be aware of these challenges and conduct thorough due diligence before making a purchase.
Benefits Of Investing In Sharjah
Strategic Location
Sharjah’s strategic location between Dubai and the northern emirates provides businesses with access to a large customer base and a well-connected transportation network. This location advantage is one of the key reasons businesses choose to set up in Sharjah.
Favorable Government Policies
The government’s investor-friendly policies, including long-term visas for property owners and tax exemptions in certain free zones, further enhance the appeal of investing in Sharjah.
Growing Business Opportunities
With a growing economy and increasing demand for commercial spaces, there are ample opportunities for businesses to thrive in Sharjah. The emirate’s commitment to sustainable development and innovation also makes it an attractive destination for forward-thinking companies.
Challenges Of Commercial Real Estate In Sharjah
Market Competition
As Sharjah’s commercial real estate market grows, so does the competition. New developments are constantly being launched, which can make it challenging for existing properties to stand out.
Regulatory Considerations
Navigating the regulatory landscape in Sharjah can be complex, especially for foreign investors. It’s essential to be aware of the legal requirements and ensure compliance to avoid any potential issues.
Economic Fluctuations
While Sharjah’s economy is generally stable, it is not immune to global economic fluctuations. Investors need to be prepared for potential downturns and have strategies in place to mitigate risks.
Future Prospects of Sharjah’s Commercial Real Estate Market
Predicted Growth Areas
Experts predict continued growth in key areas like Al Qasimia, Al Nahda, and Al Majaz, driven by ongoing infrastructure development and increasing demand from businesses and residents.
Long-term Economic Indicators
Long-term economic indicators for Sharjah remain positive, with expected growth in key sectors such as tourism, education, and healthcare. These sectors will likely drive the demand for commercial real estate in the coming years.
Expert Predictions and Insights
Real estate experts suggest that Sharjah will continue to be a strong market for commercial real estate investment, particularly for those looking for high rental yields and long-term capital appreciation. However, they also caution that investors should stay informed about market trends and be prepared for potential challenges.
Sharjah’s commercial real estate market presents a lucrative opportunity for investors, offering high ROI, affordable entry points, and a stable economic environment. While there are challenges to navigate, the long-term prospects are promising, making Sharjah an attractive destination for those looking to invest in the UAE’s real estate market.
