19-04-2025
Why Sharjah's commercial real estate market is no longer just an alternative
For more than 15 years, Sharjah's commercial real estate sector was built on optimistic market narratives and was eclipsed by the more dynamic office market in neighbouring Dubai. Rental rates in Sharjah remained largely unchanged following a steep correction after the global financial crisis and occupancy levels have often struggled to break 50 per cent. Recent trends, however, indicate a clear upward trajectory, suggesting a market that is gaining strength and momentum. With office rentals in Dubai continuing to rise amid soaring demand and tight supply, Sharjah is becoming an increasingly attractive alternative. Average occupancy levels are now above 70 per cent, with prime developments exceeding 90 per cent. Rents have also undergone notable growth – average rates have increased by 10 per cent to 15 per cent over the past 18 months. Prime rents have surged by more than 40 per cent, largely due to the introduction of new Grade A developments. Clear signs are emerging of a market not only stabilising, but also positioning itself as a viable option for UAE mainland businesses. Several factors underpin Sharjah's growing appeal. Affordability remains a key driver, with average rents about 60 per cent lower than those in Dubai, a gap that has widened in the past 18 months. With many Dubai workers living in Sharjah, the emirate presents a logical option for businesses aiming to improve operational efficiency and reduce costs. Broader economic growth across the Northern Emirates is also prompting businesses to establish a true local presence to service demand in these growing markets. While small and medium enterprises continue to occupy much of the city's office space, large corporates, particularly in the financial and oil and gas sectors, are increasingly including Sharjah in their expansion plans. These requirements are becoming more substantial, often forming part of phased relocations of back-office operations. In response, some landlords are investing in capital improvements to attract such major occupiers. Availability of space is a challenge, particularly in prime developments. While the quality and diversity of office stock has improved, thanks to a rise in purpose-built commercial properties, high occupancy levels are making it more competitive than ever to secure suitable office space. Savills is currently advising clients on more than 150,000 sq ft of requirements. To accommodate this demand, several major developments are in the pipeline. The most imminent is Phase 1 of Sharjah Asset Management's Al Thara project, set for completion by the end of the second quarter of this year. It will deliver 250,000 sq ft of office and retail space, along with a Voco hotel. Arada's business park project will add 4.3 million sq ft of prime leasable space through 40 smart office buildings, with phase one comprising eight Grade A office blocks totalling 812,000 sq ft, scheduled for completion in 2027. Meanwhile, Marwan Group's Dh3.5 billion ($953 million) District 11 will span 3 million sq ft of office space alongside retail and community-focused amenities. These large-scale developments reflect strong confidence in Sharjah's long-term potential, though the volume of supply raises questions about whether demand levels can sustain absorption in the short to medium term. Government policy could play a crucial role in maintaining this positive trajectory. Steps in the right direction have already been taken, with infrastructure-sector spending taking the biggest share (41 per cent) of the emirate's general budget for 2025, of $11.4 billion. The economic-development sector follows with a budgetary allocation of 27 per cent. Measures such as enabling longer-term leases without the burden of upfront tax payments would offer businesses greater financial flexibility. Additionally, enforcing a ban on commercial tenancies in residential buildings, which is still a common practice, would help formalise the office market and align it with international standards, providing businesses with dedicated commercial environments. Challenges remain, including ensuring long-term demand sustainability and managing supply constraints. However, the overall outlook for Sharjah's commercial real estate sector is increasingly positive. Businesses seeking strategic expansion opportunities would do well to act now, while investors and developers can take confidence in the emirate's continued infrastructure investment and commercial growth. Sharjah is no longer merely an alternative, it is fast becoming a destination in its own right. Shane Breen is head of Sharjah and Northern Emirates at Savills Middle East
