Manika Dhama continues her focus on the northern emirates and discusses Ajman’s residential real estate market
“With a population of 267,684 in 2016, which is expected to reach 300,000 by 2020, the Ajman real estate sector needs to be supported by additional job creation within the emirate, through the manufacturing and construction sectors in particular, along with an increase in business activity in the free zone.”
The Ajman residential property market has in the past primarily catered to residents looking for a cheaper alternative to the neighbouring emirates of Sharjah and Dubai. During the market peak of 2011 and beyond, residential projects closer to the Sharjah border fulfilled the demand for affordable housing for expatriates.
This group of residents made up 83% of the total population in 2015, and chose to live in Ajman apartment blocks within a 20-30-minute drive of key business centres in Sharjah and Dubai. However, price and rent declines among properties in Dubai since 2016 have had a knock-on effect in the northern emirates, including Ajman, where some projects have been scaled down or cancelled and price and rent performance have been negatively impacted.
The residential market in Ajman was initially dominated by villas/townhouses built by locals, but there has been an increasing number of apartment projects developed in recent years to cater to demand from expatriates. According to Cavendish Maxwell’s research, approximately 9,100 apartment units are scheduled to complete between 2018-19, with expected completion dates ranging from March 2018 to June 2019.
In contrast, the total upcoming supply for villas/townhouses is 2,500 units, with expected completion dates ranging from March 2018 to December 2019. The majority of large apartment projects are on the Corniche and in Ajman City, with more than 800 units each coming up in at least three projects in these areas. These are primarily mid-rise towers of 15-20 floors, with only two projects with 40-floor towers. The upcoming villas/townhouses are primarily in the Al Raqaib residential district, which is being developed under the Sheikh Zayed Housing Programme.
According to the Real Estate Regulatory Agency, Ajman (ARRA), in 2016 the emirate registered more than 18,000 freehold unit transactions, an increase of 39% from 2015 (as of December 15, 2016). Overall, $408m worth of transactions were finalised during the year.
Cavendish Maxwell research suggests that Arab and Indian nationals make up the majority of buyers in freehold locations in Ajman. These include developments such as Al Zorah, Ajman One, Emirates City and Ajman Uptown City. Most of the residential projects in Ajman have been built by private developers who do not have projects in other emirates. However, new projects have recently been announced by developers with a track record in neighbouring emirates. This includes Tiger Properties’ Hamadiyah City, featuring 100 towers between 10 and 45 storeys spread over 40m sqft. The project is on Mohammed bin Zayed Road, and infrastructure work is underway.
Price and Rent Performance
Prevailing apartment prices in the emirate range from $82 per sqft in Emirates City to $133 per sqft on average in the Musheiref area. The majority of stock is one- and two-bedroom apartments. Square foot area for a one-bedroom ranges from 550sqft to as large as 1,900sqft, while sizes for two-bedrooms range from 800sqft to 2,500sqft. Studios, the next popular unit type, are available in 300-900sqft sizes.
Rents in Ajman Corniche range from $9,300 per annum for a one-bedroom unit to $19,100 per annum for a three-bedroom unit, while Emirates City rents start at around $6,535 for a one-bedroom and can go up to $12,251 for a three-bedroom unit of 1,800sqft. In comparison, villa/townhouse rents in Ajman Uptown start at $10,900 per annum for two-bedroom units and larger units of around 2,300sqft command rates of $17,700 to $20,419 per annum. Four- or five-bedroom villas/townhouses of 4,000-5,000sqft in Al Mwaihat command rates as high as $38,116 per annum.
In addition to residential projects, Ajman has also attracted large-scale retail developments catering to the catchment population, as well as visitors from neighbouring emirates. Among the prominent retail offerings is Majid Al Futtaim’s Ajman City Centre, on Al Ettehad Street in Al Jurf.
The mall has recently grown from 29,000sqm to 55,672sqm in size as part of the ongoing redevelopment, in addition to increasing parking capacity from 750 to 1,800 as part of a $177m extension.
Further down the road is the China Mall in Al Jurf industrial area. This merchandise wholesale distribution centre is operated by Gulf Chinese Trading Corporation (GCTC) and occupies an area of 280,000sqm. Additionally, Ajman Holding recently announced the development of a 100-store mall, Mirkaaz, being built over one million sqft of land in the Al Tallah II area bordering Sharjah. The proposed development is expected to be completed by December 2019.
Economic Overview and Outlook
Ajman’s GDP was $4.68bn in 2014 (the most recent available government data), up 5% compared to 2013. Over the same period, the construction, real estate, business services and financial corporation sector grew at an annual rate of 8%. Additionally, Ajman’s industrial base has approximately 256 industrial firms – the emirate ranks third in the UAE in this sector, with manufactured goods exported to over 65 countries.
Additionally, Ajman’s Department of Economic Development reported an increase in demand for new commercial licences, to 4,233 licenses in 2016, a growth rate of 16%. Development in Ajman’s industrial areas, as well as steady growth in its manufacturing sector, is expected to improve job opportunities, thus improving demand for residential properties.
With a population of 267,684 in 2016, expected to reach 300,000 by 2020, the Ajman real estate sector needs to be supported by additional job creation within the emirate, through the manufacturing and construction sectors in particular, along with an increase in business activity in the free zone.
In 2017, the government of Ajman allocated 34% of its $321m budget to supporting economic and infrastructure development, translating the Ajman Vision 2021 and the emirate’s future plans. Infrastructure impetus from the government and improved transparency and ease of doing business, along with increasing activity from private sector real estate companies, could help improve the investment profile of the emirate in the coming years.