The third-largest of the seven emirates that comprise the UAE, Sharjah has been pulling out all the stops to transform itself into a world-class investment hub, and its efforts have not gone unnoticed. In January of this year, Standard & Poor’s rated its long- and short-term foreign and local currency sovereign credit services A/A-1, with a stable outlook, and in the same month Moody’s assigned a first-time local and foreign-currency rating of A3 to the Government of Sharjah, also with a stable outlook. In statements released in support of their ratings decisions, both S&P and Moody’s pointed to the robust state of the government’s finances, with limited fiscal risks and low government debt, a comparatively wealthy and diverse economy, and the likelihood of support from the UAE should the need arise.
So what is it about Sharjah that is making international investors sit up and take notice? First of all the emirate has some very attractive fundamentals in place. There are no taxes, 100 percent repatriation of profits, a stable economy, and excellent infrastructure.
Sharjah’s economy is also well diversified, being the only one in the Middle East region with no single sector contributing more than 20 percent of GDP (see Fig. 1). It has the third-fastest-growing economy in the UAE, and has already attracted almost a quarter of the country’s business establishments. Sharjah is also the third-largest emirate by contribution to the UAE’s GDP and the third largest in size and population. When you add to this the relatively low cost of doing business in Sharjah – thanks to lower living costs and a well-stocked human resources pool – it becomes clear that Sharjah offers a stable investment environment that helps investors compete at a global level (see Fig. 2).
Attracting investment
What makes Sharjah truly noteworthy, however, is what the emirate is doing to leverage these fundamentals to attract foreign direct investment (FDI). With an eye on maximising FDI, Sharjah has identified four key growth sectors – travel and leisure, transport and logistics, health, and environmental services – and is aggressively working to attract investment in each.
Why are these specific sectors so important? When considering Sharjah’s travel and leisure sector, the first factor that must be mentioned is that it is, as always, all about location, location, location. The UAE’s geographical location makes it easily accessible to numerous markets, both from the East and West, and Sharjah is strategically placed right at the UAE’s heart. Sharjah’s major tourism areas are under 20 minutes’ travel from either Sharjah International Airport or Dubai International Airport. Sharjah is also the only GCC hub with direct access to both the Arabian Gulf and Indian Ocean. This means that thanks to its excellent air connectivity, along with Port Khalid on the Gulf and Port Khorfakkan on the Indian Ocean, Sharjah offers a gateway to 160 countries.
Last year, Sharjah welcomed more than 1.9 million tourists, a number which is expected to grow significantly this year in light of the large scale celebrations – which include over a thousand international cultural, tourism, and entertainment events – planned to mark Sharjah’s year as Islamic Culture Capital for 2014. The continuing demand for different experiences, the growing expatriate population, government investment and rising disposable income in Sharjah is also creating new opportunities in the travel and leisure sector, with market potential expected to reach AED 1.49bn by 2016.
Capitalising on this growth, the Government of Sharjah is proactively working to initiate tourism and leisure projects and to open pathways to attract foreign investors. It is a drive that is being spearheaded by the Sharjah Investment and Development Authority (Shurooq). According to HE Marwan bin Jassim Al Sarkal, CEO of Shurooq, which was established in 2009 to encourage investment in Sharjah by providing facilities and incentives to help overcome obstacles facing investment activities in the emirate, this targeted approach is at the core of the upsurge in foreign investment that Sharjah has seen recently. “We understood from the get-go that if we wished to succeed and truly develop Sharjah to its full potential, we needed a clear and systematic approach,” he said. “Which is why one of the first things we did as an entity was to engage in an in-depth study of where Sharjah’s strengths lie. We then used the findings of that study, which clearly identified the four key sectors, to plan and develop a number of projects that would accelerate each sector’s growth further.”
The heart of Sharjah
Among the projects currently under development by Shurooq is the Heart of Sharjah, a five phase, 15-year historical restoration project that aims to restore and revamp the traditional heritage areas of Sharjah to create a tourist and trade destination with contemporary artistic touches that retains the feel of 1950s Sharjah. The Heart of Sharjah will also include the AED 100m Al Bait Hotel, the region’s first-ever traditional Emirati hotel, which is set for completion next year. These projects are in addition to the three leisure projects in the city of Sharjah that are already in play: Al Qasba, the Al Majaz Waterfront, and the recently opened and redeveloped Al Montazah Amusement and Water Park.
Shurooq has also taken care to ensure that its projects revitalise more than just the emirate’s urban areas. On Sharjah’s east coast, work is well underway on Al Jabal Resort, The Chedi Khorfakkan, which has been inspired by the region’s traditional architecture and way of life, and which promises to become the ultimate luxury destination in the Emirates. The emirate’s central region hasn’t been overlooked either. The development of Al Hisn Island in Dibba Al Hisn is now in the planning, design and layout phase and will, when completed, offer a large water canal, restaurants, cafes and cinemas with stunning views of the canal, as well as parks, children’s play areas and various other amenities.
Ecotourism plays a significant role. Kalba Ecotourism – the largest project of its kind in the UAE – is in its first phase. In this phase, the focus is on the redevelopment of the natural reserves at Kalba and the restoration of important archaeological sites. In its second phase, the project will develop Kalba Lake, and the final phase will see the construction of a number of new hotels and chalets, including a luxury five-star resort overlooking the Gulf of Oman, as well as a state-of-the-art activities centre – all of which will be built to eco-friendly standards.
As ambitious as that project might sound, it is soon to be overshadowed by the development of Sir Bu Nuair Island. At a cost of half a billion Emirati dirhams and set to be completed in 2017, the island will host a luxury five-star hotel and resort, hotel apartments and villas, a camping village, an amphitheatre, a museum, a mosque, an education centre, a harbour, an airport, and a number of other retail and leisure offerings. The island is of special ecological importance as it supports a high biodiversity of rare species and plants, resulting in it being registered on the list of Wetlands of International Importance under the Ramsar Convention in December of last year – one of five sites in the UAE on the list.
Access to growth
Sharjah’s transport and logistics sector is another where the UAE’s location, coupled with its excellent infrastructure and well-priced labour, makes for highly profitable investment opportunities. In the case of Sharjah specifically, its access to ports in both the Gulf and the Indian ocean, its highly successful and efficient free zones, namely the Hamriyah Free Zone and the Sharjah Airport International Free Zone, as well as its central location within the UAE – it is the only emirate to share borders with all six of the other emirates – have resulted in a fast-growing sector with a market potential expected to reach AED 6.24bn by 2016.
The UAE has also been making a name for itself as a healthcare hub in the region. Sharjah’s healthcare sector is expected to grow significantly in coming years, powered by the increased demand for specialised services that has prompted the creation of several state-of-the art medical facilities, most notably Sharjah Healthcare City. The industry is expected to grow by 9.3 percent, from AED 4.59bn this year to AED 6.55bn in 2016, which will provide numerous openings for foreign investors to enter this burgeoning market and invest in solid projects that offer excellent exit possibilities.
The ‘Green Emirate’
The UAE enjoys sunny weather all year long, making it an ideal platform for sustainable and renewable energy enterprises. Sharjah is already home to the largest waste management and treatment company in the region, Bee’ah, which is well on the way to reaching its target of a zero waste-to-landfill ratio by 2015.
This makes Sharjah an ideal market for environmental technology and equipment, in addition to innovation in green technology. Through continued collaborations with all concerned sectors, Sharjah is working to attract and establish sustainable projects that do not cause harm to the environment and ultimately establish Sharjah as the ‘Green Emirate’.
With these types of initiatives, projects, and organisations in place, it’s easy to see why Sharjah is seen as a highly tempting investment destination. Not only is there a great deal for prospective investors to choose from, but there is also ample support from the Government of Sharjah and other entities to facilitate investment.
