Rising Dubai house prices have rekindled demand for property in Sharjah, providing a boost for mall operators such as Matajer. Sarah Dea / The National
Rising Dubai house prices have rekindled demand for property in Sharjah, providing a boost for mall operators such as Matajer. Sarah Dea / The National

Business

Sharjah poised to gain from Dubai housing boom

Sharjah retailers stand to benefit from an influx of new residents as soaring housing costs in Dubai make the northern emirate more attractive among commuters.

Gillian Duncan
Gillian Duncan

August 26, 2013

Sharjah retailers stand to benefit from an influx of new residents as soaring housing costs in Dubai make the northern emirate more attractive among commuters.

House prices in some residential submarkets in Dubai are closing in on their third-quarter 2008 pre-crisis peaks, according to a new report from Cluttons.

Sharjah's residential market, whose performance is closely linked to Dubai, is rising in areas - such as Al Nadha and Al Majaz - closest to its neighbour.

"The demand-spill-over phenomenon seen in the last property cycle is now being repeated and the recent introduction of a Salik toll gate on the Al Ittihad Road and the removal of the daily Dh24 Salik cap does not appear to have dented the appetite to live in Sharjah and commute to Dubai for work," according to Cluttons.

Retailers, such as Majid Al Futtaim, are now cashing in on the emirate's attractiveness by opening up community malls to serve residents. Majid Al Futtaim is renowned for its large shopping centres like the Mall of the Emirates.

Matajer, which are located in the Al Juraina, Al Khan, Al Mirgab and Al Quoz areas of Sharjah, have attracted more than 10 million visitors since opening a year ago.

"The one-year anniversary of [the malls] marks a significant milestone as we continue our mission to contribute to the economic development and sustainability of the emirate," said Ali Al Hashimi, the mall manager for community malls at Majid Al Futtaim Properties.

They are the only community malls of their kind in Sharjah, and the retail mix, which includes Carrefour, Baskin-Robbins, Caribou Coffee and Axiom, is specifically geared towards families living in the emirate.

Plans are in place to open two more community malls in Sharjah under the Matajer Mall brand at the end of next year. Majid Al Futtaim is also interested in opening community malls elsewhere in the UAE, but they would differ, said Mr Al Hashimi.

"Matajer is a brand name that is between Majid Al Futtaim and Sharjah Holding," he said.

"If there is another [partnership] between us and another stakeholder, probably it's going to be given another name."

However, where the centres would be had not yet been decided, added Mr Al Hashimi. "The concept is more targeting the mini communities of the urban areas of cities, so it could work anywhere."

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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