Arada plans new Dh8bn project in Sharjah

Residential scheme will be built in phases and financed through a mix of debt, equity and off-plan sales, chief executive says

Ahmed Alkhoshaibi, chief executive of Sharjah real estate developer Arada. which is building the Dh24bn Aljada mega project. Victor Besa / The National

Sharjah-based real estate developer Arada plans to launch a Dh8 billion residential project that will be built in phases, its chief executive said.

The new scheme will be the company’s third in the emirate, following a Dh24bn Aljada mixed-use development and a Dh1.3bn Nasma residences scheme.

The third development is "a big project and it will be phased out", Arada chief executive Ahmed Alkhoshaibi told The National in an interview.

"We will be launching the first phase in November and the construction will begin in the first quarter of the following year,” he said. “It will be financed through a mix of debt, equity and sales.”

Construction of Arada's existing projects is continuing at pace, with the company recently awarding a Dh423 million contract to Best Building Contracting Company to build the second phase of Aljada project, comprising 2,000 units.

Last year, the company secured Dh1bn from two Sharia-compliant financiers to help fund the construction of Aljada and Nasma Residences. The deal follows a previous Dh1bn facility arranged in December 2017.

Arada is a joint venture between KBW Investments – a firm controlled by Saudi Arabia’s Prince Khaled bin Alwaleed – and Sharjah-based Basma Group.

Mr Alkhoshaibi is confident on the prospects for the Sharjah property market, describing it as a “safe haven” for investors.

“Sharjah does not fluctuate as much as other parts of the UAE. Property investors want to invest in markets which they feel are safer. Sharjah historically has been known for that,” he said.

The emirate recorded real estate transactions, worth Dh6.2bn in the first half of 2020, up 4.1 per cent over the same period last year, according to data released at the beginning of August by the Sharjah Real Estate Registration Department.

The recent government decision to offer long-term residence visas up to 10 years for investors, residents, retirees and those wishing to study in the academic institutions nationwide has had a significant impact on demand, Abdul Aziz Ahmed Al Shamsi, director general of the Sharjah Real Estate Registration Department said.

“Right now, there is a big gap between the performance of Sharjah property sector and the rest of the UAE," Mr Alkhoshaibi said. "Sharjah real estate department is putting a strong regulatory environment that allows developers like us to thrive,” he added.

Arada saw sales of Dh1.3bn from its two projects last year and is targeting Dh1.7bn this year. It is planning to increase annual sales to Dh3bn by 2025.

“This year alone, we sold 1,400 units so far and we are expecting to achieve 2,000 units by the end of the year. We are confident of achieving sales targets for this year,” Mr Alkhoshaibi said.

Arada is also looking to expand to Saudi Arabia with new residential projects in Jeddah and Riyadh. Mr Alkhoshaibi did not say how many units it was planning to build but said its first project would be a residential scheme "with some entertainment facilities". Construction is due to begin early next year.

He also stressed the company has no near-term plans to list on any of the region's stock markets but added "we wouldn’t take it off the table in the long term”.

An oversupply of residential units in Dubai's real estate market has had a knock-on impact on real estate values in Sharjah. Residential sale prices fell 9 per cent year-on-year in the emirate during the second quarter and rents declined by 13 per cent, according to Asteco's latest Northern Emirates report. Declines were steeper in newly developed master planned communities than in established areas.

Across the Northern Emirates, downward pressure on rental rates “is expected to continue with the steady delivery of new supply”, the consultancy said.