Are the eastern emirates set to eclipse Dubai’s current boom?

Traditionally quieter and less developed than Dubai, the eastern emirates have started to enter the real estate development race with a number of multi-billion dollar projects. Zoe Naylor looks eastwards and finds that improved transport links and a lower cost of living are sparking an investment frenzy in Ajman, Umm Al Quwain, Sharjah and Ras Al Khaimah.

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By  Zoe Naylor Published  October 1, 2005

|~|Nujoom-Pic-3-%28high-res%29350.gif|~|Umm Al Quwain: Emaar’s US $3.3 billion residential development will include a 602 hectare waterfront community with 9000 homes and a marina.|~|A raft of real estate developments in the eastern emirates have been announced in the past few months signalling that the construction focus may gradually be shifting away from Dubai. Emaar, Tameer and RAK Properties have all unveiled mega projects that will transform these quieter emirates and expand the UAE’s property and leisure market. Is this an indication that Dubai’s bubble may be about to burst? According to Fady Mohammed, marketing manager at Tameer, one of the biggest pulls of the eastern emirates is the lower cost of living: “We see huge potential for development further afield, and I think the main attraction of the other emirates is the affordable living. “I don’t think the prices of living in the eastern emirates will ever reach the level we see in Dubai. The running costs and living costs in Dubai are way higher than the other emirates. For example in Ajman right now, you can buy a villa or an apartment for approximately US $270 to $315 per m2. In Dubai you’d never get it for less than $630,” he says. Tameer has started levelling the land for its $327 million Al Ameera Village in Ajman on the Emirates Road. And despite being in the early stages, the 500 000 m2 mixed-use development has already whet investors’ appetites. When previewed to key investors and real estate brokers, it generated such interest that Tameer decided to release the project’s entire residential inventory in one go — among the largest single releases of freehold residential real estate ever in the Middle East. Until now, Umm Al Quwain’s traditional occupation has been fishing and date cultivation. But this may be about to change as residents brace themselves for an influx of tourists: the emirate is the location for Tameer’s latest and largest project, the $8.1 billion Al Salam City on the Emirates Road. Designed as a 66 million m2 residential and commercial development it will include towers, residential districts and a shopping mall. When completed, Al Salam City will eventually house over half a million residents. While there is a risk involved in developing such mammoth projects away from the tried and tested hub of Dubai, Mohammed believes the very fact that developers are investing so heavily means there is a bullish confidence in the UAE’s untapped markets. “To build up an entire city here does need a brave heart. But we’re not the only players in Umm Al Quwain — Emaar has its waterfront development underway here, and we also have the Modern Emirates Industrial Area. These will all complement one another,” he says. Emaar Middle East made its $3.3 billion debut in Umm Al Quwain earlier this year with a waterfront community spanning 602 hectares and featuring over 9000 homes and a marina. Scheduled for completion within seven years, the development is planned on the shores of the Khor al-Beidah wildlife area. All these projects can expect a boost from the Emirates Highway that connects Dubai and Ras Al Khaimah with an interchange leading directly to Umm Al Quwain. “With the construction of the Emirates Road it means that the eye has definitely moved from Dubai to other emirates. Driving from Dubai you’re looking at a half an hour trip, so it’s very accessible,” says Mohammed. Sharjah’s slice of the action is in the form of Nujoom Islands, the emirate’s largest commercial, residential and tourism project to date. Developed by Saudi-based Al Hanoo Holding, the islands will eventually house over 40 000 residents. “We’ve started the excavation and enabling works and the infrastructure for the project,” says Abdul Hamid Moukayed, CEO of Al Hanoo Properties — a subsidiary of Al Hanoo Holding. The $4.9 billion development is planned over 18 million m2 of coastal land near the village of Hamriya. The site’s original coastal area covers 3 km of beachfront, but the extensive waterway systems planned for Nujoom Islands will create 33 km of beach front land. Nujoom Islands will consist of 13 sectors of land — the first three will represent the outer mainland of the project, with 10 additional islands created by water channels. The development includes 40 high-rise towers for residential and office use, 145 apartment buildings, four hotels, two resorts, 1400 water front and park side villas, five marine clubs and six centres for light industries. “Dubai has taken major steps in marketing itself as an emirate worldwide quite extensively over the last few years,” explains Moukayed. “The construction boom has also been seen clearly in Sharjah and the rest of the emirates — the difference is they’ve not really been marketing themselves as individual sectors.” Moukayed says Sharjah’s geographical location makes it a prime investment opportunity. “We believe the time is right for Sharjah to have such a large-scale development and to make use of its coastal zone. We’ve seen the business opportunity available to us in the emirate: the location is spectacular, plus there’s plenty of space and privacy.” He adds that the Nujoom Islands project has gained support from the local authorities: “The Sharjah government has already instructed Sewa [Sharjah Water and Electricity] to provide 1400 mega of power. We’re expecting the first 400 mega to be delivered in less than 6 months; after that, they’ll deliver 200 mega every 4 to 6 months until our project is ready to hand over.” As any regular commuter knows, the journey between Dubai and Sharjah can often be a laborious and time-consuming experience. Surely this would make people think twice about travelling to Sharjah? Not so, says Moukayed. “We are in discussions with Dubai Municipality about its plans to introduce a coastal taxi network, and we hope to be a part of that. “And by using the Emirates Road, it should not take more than 25 minutes to get to Dubai Airport from Nujoom Islands, and only 7 or 8 minutes to reach Sharjah Airport,” he adds. Unlike some of the emirates, Ras Al Khaimah’s economy has minimal dependence on oil — which has led to its government making bold plans to develop the tourism and leisure sector. It is the second emirate after Dubai to capitalise on the UAE’s freehold property market, and already features on the tourist radar thanks to leisure developments such as Tower Links golf course, as well as trekking opportunities around the emirate. RAK Properties used last week’s Cityscape exhibition as the launch pad for its new projects in the emirate. The $1.9 billion Mangrove Islands resort will be built close to the creek in Ras Al Khaimah. It will incorporate hotels, villas, a marina and a souk built on four islands covering 3.2 hectares. Julphar Towers will also be built close to the creek in RAK, featuring a shopping mall and a business centre. RAK Properties’ other announcements include the five-star Al Hamra hotel in Al Jazirah, and a community area incorporating 2000 villas close to the Emirates Road. The infrastructure is currently underway on RAK Properties’ $2.7 billion Porto Arabia, a 46.2 million m2 development of hotels, 4700 villas, a marina and a theme park. Saudi Oger is also using Ras Al Khaimah as the setting for its Saraya Islands project, a $500 million development spread over one million m2 and offering hotels, residences and shopping areas. Mohammed Sultan Al Qadi, managing director and CEO of RAK Properties, says: “I don’t think these new developments will take the construction focus away from Dubai, rather they will complement it. Dubai will still be the business hub for the next 10 to 20 years and then it may start to slow down. “There is also a hunger for quality building in Ras Al Khaimah that is currently not being met, but the new projects coming up will change that,” says Al Qadi. “The ruler of Ras Al Khaimah is putting a lot of support into developing and improving the infrastructre of the emirate,” he adds. While Dubai — and to a degree Abu Dhabi — are well developed, the five remaining emirates to the east and north of the UAE is largely unknown territory for many investors. But improved transport links and cheaper living costs look set to attract businesses and tourists alike who wish to participate in the growth of the country without paying top dollar for it.||**||

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