Late last year, Sharjah’s government made the move to open up its property market to all expat residents, with the Sharjah Executive Council issuing Resolution No 26 of 2014 in a strategic move to stimulate investment into the emirate.

Previously it was only Emiratis and, more recently, Arab nationals who were entitled to own real estate in the emirate (on the condition they get approval from the Sharjah Real Estate Registration Department). GCC nationals do not have any limitations on buying property, while non-GCC Arab nationals are only allowed to purchase a maximum of five properties.

The latest move to extend ownership rights to residents does come with some limitations. Non-Arab expat investors will be able to lease properties for 100 years if they have a UAE residency visa. Also, expats cannot buy the land underneath the property – i.e. they must purchase leasehold of up to 100 years, rather than freehold. Meanwhile, GCC nationals are not required to have residency to purchase property in the emirate. Arab expats must be residents to invest in real estate; however they are, for the most part, able to buy various types of properties throughout the city. On the other hand, there will only be specific areas where non-Arab expats can buy.

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Tilal City

One of these is the new AED 2bn mixed-use project Tilal City. The 25m square feet development is open to all expat residents and contains 1,800 land plots, of which 13m square feet will be allocated for sale. It’s expected to offer affordable housing (apartments, villas and townhouses that can house up to 65,000 people). Until now, this is the only development that has been opened up to expat residents. However, authorities have stated that more projects are to be announced in the near future to meet demand.

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Residency visas, leasehold and foreign buyers

Despite this relaxation of rules, Sharjah’s property market is still not as open as Dubai, Abu Dhabi and Ras Al Khaimah, where foreign buyers living outside of the country are not only permitted to buy property, but also make up a very large share of investors. In Ajman, foreigners are entitled to own a right of freehold and lease for a period of 50 years. In Sharjah, a residency visa is required at the time of purchase.  In other emirates, investors can apply for a six-month, multiple-entry visa after they receive the title deed (this visa can be renewed after they leave the country). The stricter rules are considered to be an effort to target end users and prevent flipping and speculation.

Soaring property prices in Dubai over the last few years continue to have a knock-on effect in Sharjah. Tenant demand remains high from those working in and outside of the emirate, while supply has been very limited. Average rent rates jumped by 23 percent in 2014, according to Cluttons. Still, rent prices on average are about half the asking amount in Dubai, signaling the likelihood of more of Dubai’s residents heading north. In addition, current rental costs have also led more people to warm to the idea of buying in Sharjah. According to a recent survey, around 85 percent of the emirate’s residents said they were interested in buying there.

Buy-to-let and rent regulations

If you decide to purchase a buy-to-let property – and a quarter of those surveyed who wanted to buy in Sharjah intended to rent – be aware of the Central Bank lending guidelines. Under the rules, expats buying property valued at under AED 5m will need a minimum deposit of 25 percent, while a 35 percent down payment is required for properties over AED 5m.

After all of the paperwork is done, you will want rent it out as soon as possible to cover mortgage and maintenance costs. To do this, you will need to have the property registered with Sharjah Real Estate Registration Department, along with the tenancy contract. Most property owners in the UAE use real estate agents who will fully manage properties the market. They can give you a better idea of value the property holds as well as how much you can let it for.

Take note that rent is fixed for a three-year ‘protection period’ by Sharjah Municipality and only in the fourth year does it become subject to market conditions (with no fixed cap on rent increases, as in Dubai); landlords cannot raise the rent in the first three years of a rental. Thereafter, rent can only be increased every two years. Sharjah Municipality has a Rent Dispute Committee to manage all disputes between landlords and tenants.