Sharjah to consider freehold for foreign investors - CBRE - UAE

Sunday, 8 August 2010 11:58 AM

SHARJAH: Residential lease rates in Sharjah are still the highest in the Northern Emirates. (Getty Images)

As lease rates in the Northern Emirates continue to decline, Sharjah is considering offering freehold rights to foreign investors, according to a report released on Sunday by global real estate consultancy CB Richard Ellis (CBRE).

While residential lease rates in Sharjah are still the highest in the Northern Emirates, they have tumbled by more than 50 percent since the first half of 2008, the CBRE report said.

“One potential driver for fuelling new market demand in Sharjah is the offer of freehold right to foreign nationals. The topic, amongst others, is understood to have been discussed during Q2, as various measures are considered to help rejuvenate the market,” it was stated in the latest CBRE report on the state of the real estate market in the Northern Emirates.

CBRE believes that “such a direct legislative change could positively impact upon sales activity and help to transform the fortunes of the market.”

Elsewhere, the report highlighted the fact that increased supply has seen average one-bedroom rental units in Ajman decline by 42 percent in the last two years. It also found that Umm Al Quwaim rents tumbled by 39 percent, Ras Al Khaimah by 28 percent and Fujairah by 23 percent, across the same period.

Oversupply in the Dubai office sector, which is expected to double over the next four years, is having an impact on demand in the Northern Emirates. Office lease rates in the Northern Emirates have dropped “considerably over the past eighteen months and now range between AED344 to AED970 per square metre per annum” the report concluded.

Overall, the main challenge facing the real estate market in the Northern Emirates is the lack of infrastructure, such as power shortages in Sharjah and Ajman.

Issues with power are expected to increase in the second half of the year, with the report forecasting that an additional 37,000 square metres of office space and around 7,000 new residential units are due to come on stream in Sharjah before the end of 2010.

While 17.5 percent - or AED4.6bn ($1.25bn) - of the UAE federal budget has been earmarked for the development of infrastructure projects in the UAE, the report believes that leasing and occupancy rates in the office and residential markets in the Northern Emirates are likely to continue to decline in the second half of 2010.

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Posted by: Trumped Saturday, 14 August 2010 5:00 AM[UAE]

Best of Luck with that one, That's going to be an uphill battle all the way, Dubai's treatment toward investors/homeowners was/is disgusting and the rest of UAE will be suffer for it. Empty promises, all Trust is gone

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Posted by: Simon Monday, 9 August 2010 10:26 PM[UAE] - Dubai

I heard that developers are selling units with FREE electricity generators :) Makes good sense these days!

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Posted by: Harry Winston Monday, 9 August 2010 8:31 PM[UAE]

The idea of Freehold visa was never popular in ABudhabi. With the onset of the crisis and takeover of Burj Dubai, came new rules from the Federal government on visas. Since ABudhabi has billions it was never dependent on business, tourism etc to sustain itself. Poor Dubai , its leaders and its investors have to suffer. having said that, even if visas are issued the property market will still sink as it is greatly oversupplied

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Posted by: Faisal Monday, 9 August 2010 2:02 PM[UAE]

When freehold properties were launched in Dubai in 2002, investors were promised a 99-year residence visa, renewable every three years. The promise of residence visa consistently appeared on every real estate advertising message in all forms of media, between 2002 and 2008. Thousands of foreigners, especially Lebanese, Iranians and Pakistanis (looking to resettle in Dubai and escape the uncertainty at home), were lured by this offer and chose to pour billions of dollars worth of property investment into Dubai and other emirates. Shortly after the property bubble burst in 2008, a new law was suddenly enacted in the UAE, withdrawing the 99-year visa and replacing it with a 6-month entry visa!!! Those who bought properties with an intention to settle down with their families in the UAE, were suddenly asked to report back to Immigration department and have their visas 'regularised'. I personally know of many property owners in Dubai who have had to pull their kids out of Dubai schools and send them back home, because they were now required to exit the country once every six months and return on a new 6-month, single-entry visa. What's more, no apology was ever offered, let alone any compensation for this breach of promise. Has anything like that happened anywhere else in the world? Not even in Burundi or Mozambique, I am sure. Against this background, will the UAE ever able to win back the trust of investors? Who would wish to park his investments in such an insecure environment, where there are simply no guarantees whatsoever. I would rather feel more secure investing in Somalia than the UAE!

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Posted by: Sanjay Batheja Monday, 9 August 2010 1:26 PM[UAE] - UAE

Haha! You guys missed the gravy boat - investors have learnt their lesson! Good luck!

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Sharjah to consider freehold for foreign investors - CBRE

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