Sharjah seeks to regain investor confidence

26 January 2020
The UAE emirate is counting on a technology-dedicated free zone to reshape its position on Mena’s investment map

The UAE's diversification into sectors such as manufacturing and tourism has been well publicised in the wealthier emirates of Abu Dhabi and Dubai, but less so in their neighbour to the north, Sharjah, which has adopted a similar, if more measured, approach.

Behind the scenes, Sharjah has been making steady infrastructure investments in key sectors such as tourism, education and healthcare. It is also increasingly investing in the creation of a knowledge economy by funding education and research, as well as upskilling citizens and residents.

Knowledge economy

This effort is underscored by the Sharjah Research, Technology and Innovation Park (SRTI Park) project, a free zone that was established in 2016 following a royal decree by Ruler of Sharjah Sheikh Sultan bin Muhammad al-Qasimi.

The emirate intends to adopt the triple-helix collaboration approach – a three-way alliance between industry, government and academia – to attract innovation investors to the park.

SharjahSo far, SRTI Park's projects and initiatives have hooked established organisations such as Masdar, Beeah, Nokia and Du, as well as emerging companies such as energy firm Civil Twin Renewable Middle East, autonomous vehicle-maker Skyway, and 3D printing specialists Cybe and Immensa Technology Labs.

The park’s location within Sharjah’s University City is expected to help draw institutional investors. The district comprises 20 educational institutions and is in close proximity to the emirate's international airport.

Phase 1 of the SRTI Park, spanning about 5,574 square metres, is planned to serve 200 companies. Future phases include plans for a technology museum, a hotel, an exhibition centre and homes.

CEO Hussain Mohamed al-Mahmoudi tells MEED that the park's primary focus is the creation of a knowledge economy within Sharjah – something he says is hard to find elsewhere in the Middle East and North Africa (Mena) region.

While the Sharjah government’s focus on capital projects in its 2020 budget will boost the emirate’s investor attractiveness, the SRTI Park will elevate socioeconomic investment indicators, says Al-Mahmoudi.

He adds: “Projects like [SRTI Park] are unique in that they help create the infrastructure needed to support innovation. Sharjah is the dark horse – it is growing, and the investment climate here is becoming more lucrative.”

Wider projects market

Sharjah has 28 projects worth $3.4bn in the pre-execution phase, acccording to data from regional projects tracker MEED Projects.

Sharjah ProjectsAnother 118 developments worth $5.6bn are at the execution stage. This list includes Shurooq’s Sharjah Sustainable City, Alef Group’s Al-Mamsha and the $375m Al-Zahia City Centre project.

Last year, however, the contracting community did not witness a marked surge in private sector-led work in the emirate. While afforable residential and equipment rates mean lower overheads for businesses in Sharjah, there are barriers to winning work stemming from the reliance on state spending to fund construction.

With infrastructure making up 33 per cent of Sharjah’s 2020 budget, and capital projects, including roads and tunnels, accounting for 23 per cent of this year’s total planned spending of AED29.1bn, the government will continue to support construction activity.

There is somewhat less support for the sector coming from local real estate companies, which have tended to adopt a conservative approach to construction in the city to guard against idle or under-performing assets.

The demographics of residents have also played a role. Since many Sharjah residents commute to other cities, predominantly Dubai, for their jobs, property developers have favoured cost-effective, standardised apartment block and tower projects.

Sharjah’s first masterplanned gated homes in Al-Zahia were not revealed until 2015, when the government teamed up with Dubai-based Majid al-Futtaim.

Encouraging investment

Some believe these factors, combined with slow decision-making, have held Sharjah back from its full potential as a real estate investment hub.

From an infrastructure perspective, the emirate’s industrial area falls short of the amenities offered in Abu Dhabi and Dubai, while a lack of public transport means road congestion is a persistent problem in the emirate.

The government recognises that Sharjah's physical and social infrastructure must be developed further in order to attract private sector investors, and progress is now being made on transport and logistics projects such as the Al-Ittihad Road improvement scheme and airport expansion. Both of these schemes will greatly improve the emirate's connectivity.

Sharjah Research, Technology and Innovation ParkThe SRTI park is also piloting an overhead autonomous, monorail-type transport system called Skyway, which could form part of the emirate’s future transport system.

The pace of real estate tenders could pick up in Sharjah if its education investments start to pay off. Just as Dubai’s pool of global investors has been built around industry clustering in its free zones, Sharjah too could draw buyers with developments such as SRTI Park.

Contractors that maintain their presence in the market may well find themselves the front-runners in building the infrastructure needed for the successful implementation of knowledge-based industries.

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