Sharjah is a shining gem in the United Arab Emirates right now, many expats want to know how to buy property in Sharjah responsibly.
Before anything else, it’s important to understand the different designations of expatriates in the UAE, which have a significant impact on who can purchase property and where.
Types of Expatriates in the UAE
Expats are generally grouped into two categories, GCC Arab nationals and non-GCC Arab nationals.
The latter represents anyone who is not a citizen of the six nations in the Gulf Cooperation Council: the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman. The former represents every other expatriate and overseas investor.
Opening Sharjah to Foreign Real Estate Investment
Since 2014, the city has been on a revolutionary mission to expand real estate markets to allow for foreign investment. In that year, they opened up the opportunity for expatriates to purchase property in Sharjah on leasehold with the condition that they must have a residence Visa.
This year, the regulation was dropped altogether. Now, expatriates and foreigners can purchase property in Sharjah without the need for a residence Visa. All property purchased can be done so on leasehold for a period of 100-years and GCC Arab nationals can still purchase on freehold.
The market has been opened up to a new generation of developers and investors, and the city has been building up its amenities as these legislations have developed. They’ve introduced tech-parks and some of the world’s most innovative projects like Arada’s Ajada development and Sharjah Waterfront City. Aljada is expected to be an immersive community with built-in amenities and mixed-use areas within. It will effectively be a city within a city.
So, how can you purchase property in Sharjah?
Deposits and Regulations
There is a large pool of investors that intend to purchase property for the purpose of renting it out. When doing this, you should keep in mind that there are Central Bank lending guidelines to follow.
Expatriates purchasing property that is valued under $1,360,000 (4,994,600 AED) are required to provide a minimum of 25 percent of the purchase price down as a deposit. Right now, properties valued at over $1,360,000 come with a deposit regulation of 35 percent of the total purchase price. These deposits are referenced only for the first property purchased.
For additional properties, the minimum deposit is 40 percent of the total purchase price. If you’re interested in one of the new, still under construction developments, the deposit for them is 50 percent of the purchase price. So, keep this in mind when conducting your property searches. Also, non-GCC Arab nationals are limited to only five property purchases.
While Sharjah real estate is open to Emirati and GCC Arab nationals to purchase property anywhere in the city, non-GCC nationals can only purchase property in certain locations.
For example, in Tilal City, non-GCC nationals could only purchase property on the edge of the city center where the city was in the process of building cluster communities around the city center. This was designed to reduce traffic and build the city up from the outside in.
Registrations and Contracts
After you’ve purchased your new Sharjah property, it is imperative that you register the property with the Sharjah Real Estate Registration Department. With your registration documents, provide any tenancy contracts you’ll be under if you’re planning on using your purchase as an investment property.
Since most buyers who rent out their properties work with real estate agents to manage their properties, the contracts submitted cannot be limited to the tenant/owner relationship.
Be sure to provide all contracts that properly explain the relationship of all parties with the property, that includes the tenant lease and the landlord lease made with any property management company or real estate agent.
Maybe you don’t want to buy just yet, you’re interested in renting first. That’s a great opportunity to get to know Sharjah before making a big investment. But, there are regulations for renting a property as well.
Tenants are required to pay to register their rental agreement, and that’s an added cost of two percent of the total annual rental contract value or $82 (301 AED), whichever is higher.
Rent is regulated in Sharjah in a limited capacity. According to the legislation, there is a three-year protection period that restricts landlords from increasing the rent of a property within the first three years of a lease.
After the first three years have passed, the property is subject to market conditions and the rent can be increased without a cap. But that doesn’t mean renters are completely unprotected. After the first rent increase, the rent cannot be increased again until two years have passed.
Renters can appeal to the Sharjah Rent Dispute Committee to manage all rental disputes.
Prior to purchasing property in Sharjah, be sure to speak with a knowledgeable real estate agent that can help you with anything you need from rental information to closing costs.