Sharjah Market Update

2019

FIGURE 3

INFLATION, Y-O-Y % CHANGE FIGURE 4

OIL PRICES

Initial estimates show that Sharjah’s GDP fell by 0.1% in 2018, according

to data from Oxford Economics. GDP growth is expected to return to

Sharjah in 2019 as the general economic backdrop in the UAE turns more

positive on the back of economic stimulus packages, easing of business

regulations and as a result of the more favourable outlook for the

hydrocarbon sector.

FIGURE 1

GDP, Y-O-Y % CHANGE

FIGURE 2

EMPLOYMENT FORECASTS, Y-O-Y % CHANGE

Employment growth in 2018 registered at an estimated 0.5%. On the back

of a more positive economic backdrop, employment is forecast to rise by

1.9% in 2019.

FIGURE 5

UAE PURCHASING MANAGERS’ INDEX (PMI)

2018 2019 2020

Sharjah Employment, % Change 0.5 1.9 1.6

KEY MACRO ECO NOMI C HEADLI NES

The Emirate of Sharjah is the UAE’s third largest economy, accounting

for 5.8% of the UAE’s total GDP as at 2018. Over the 10 years to

2018, Sharjah’s economy has grown by 17.1% . Over the same time

period the wider UAE economy grew by 31.3%. Initial estimates show

that Sharjah’s GDP fell by 0.1% in 2018, according to data from

Oxford Economics. GDP growth is expected to return to Sharjah in

2019 as the general economic backdrop in the UAE turns more

positive on the back of economic stimulus packages, easing of

business regulations and as a result of the more favourable outlook for

the hydrocarbon sector.

Given the weaker economic conditions in the last few years, we have

also seen subdued market activity in Sharjah’s occupier market, with

commercial rentsfalling from 2016 to date.

In the residential market, sales prices and rents have fallen by 4.0%

and 9.6% respectively in the year to Q1 2019. These declines are

likely as a result of additional supply in Sharjah and prices fall ing and

the release of more affordable units in Dubai’s residential market. The

introduction of legislation permitting foreign ownership in Sharjah’s real

estate market may begin to attract greater levels of demand. However,

given increased supply, in both Sharjah and Dubai, and weaker

market conditions in neighbouring Dubai – which may attract interest

from Sharjah – we are likely to see prices and rents soften further in

Sharjah.

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The UAE’s has been witnessing deflation since the start of 2019 with the

index decreasing by 2.5% in the year to March 2019. This trend is being

driven by falling housing, clothing and footwear, food and drinks and

transportation costs.

End of month price Latest 3 months ago 12 months ago

Oil Prices – Brent Crude ($) 61.7 66.3 77.6

Oil prices have fallen to $61.7 as at May 2019, down from $76.6 a year

earlier. Trade wars and slower economic growth have contributed to the

lower price level. However, given recent geopolitical tensions we may see

oil pricesincrease on the backof greater uncertainty.

The Purchasing Manager’s Index (PMI), which tracks non-oil activity in the

UAE, registered a reading of 59.4 as at May 2019, the highest since

Ocober. 2014. However, the greater level of activity comes on the back of

lower selling prices, which have declined for the eighth straight month,

whilst input prices have remained relatively steadfast. As a result firms are

under considerable cost pressure and increased activity has not lead to

growth in employment, in May lessthan 1% of firmssurveyed were hiring.

2018 2019 2020

Sharjah GDP, % Change -0.1 2.6 3.7

1 Year ago 6 months ago Latest

UAE CPI, YOY % CHANGE 3.5 1.6 -2.5

Latest 3 months ago 12 months ago

Composite PMI 59.4 53.4 56.5

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Sharjah’s office market continues to see rents soften as a result of

subdued market activity. In the year to Q1 2019, Rents in Al Tawwun fell

by 14.2%, by 12.5% in Al Qasemeh and by 9.0% in Al Khan and al Majaz.

FIGURE 6

SHARJAH OFFICE RENTS, Q1 2019, Y-O-Y % CHANGE

FIGURE 7

SHARJAH OFFICE SUPPLY MAP – DESIGN AND EXECUTION

FIGURE 10

SHARJAH RESIDENTIAL SUPPLY MAP – DESIGN AND EXECUTION

Given the weaker economic conditions in the last few years, we have also

seen subdued market activity in Sharjah’s occupier market, with

commercial rentsfalling from 2016 to date.

FIGURE 6

SHARJAH OFFICE RENTS, Q1 2019, AED/SQ.FT.

Sales prices and rents in Sharjah are circa 50% and 65% lower respectively

compared to the neighbouring Emirate of Dubai. As a result, mid to low

income workerschoose to reside in Sharjah and commute to Dubai.

FIGURE 11

UAE MAINSTREAM RESIDENTIAL MARKET SALE PRICES AND RENTS, BY

CITY, AED/SQ.FT.

FIGURE 12

UAE MAINSTREAM RESIDENTIAL MARKET PRICES AND RENTS, Y-OY %

CHANGE

Sales prices and rents have fallen by 4.0% and 9.6% respectively in the

year to Q1 2019. This is likely as a result of additional supply in Sharjah

and pricesfall ing and the release of more affordable units in Dubai.

Taimur Khan. Research Manager –Development Consultancy & Research

+971 4 4267 660 | taimur.khan@knightfrank.com

Important Notice - © Knight Frank LLP 2019Document sources: Knight Frank Research: Macrobond/ Oxford Economics/ MEED Projects and REIDIN Note: * The Property Monitor Index methodology is based on a basket of properties where the property value is estimated using a range of sources compared to the price changes for apartments and townhouses/villas which is based on DLD transfers (or asking prices for Abu Dhabi) which may result in the average price changes not tallying with one another. This report is published for general information only and not to be relied upon in any way. Although high standards have been usedin the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or i n part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank Middle East Limited (Dubai Branch): Prime Star International Real Estate Brokers (PSIREB RERA ORN: 1196 4 trading as Knight Frank with registration number 653414. Our registered office is: 5th Floor, Building 2, Emaar Business Park, PO Box 487207, Dubai, UAE.

Currently there are estimated to be 77 active residential projects within

Sharjah, with delivery dates up to 2024, which are either being executed or

in the design phase. The budget value of these projects currently is

estimated at US$ 4.57bn.

Currently there are estimated to be 22 active commercial projects within

Sharjah, with delivery dates up to 2022, which are either being executed or

in the design phase. The budget value of these projects currently is

estimated at US$ 784m.