Real estate projects in Sharjah and Ajman on long wait-list for utilities

Population growth had made it difficult to resolve a lack of capacity despite efforts to expand infrastructure in Ajman. (CHANDRA BALAN)


Some 30 towers with hundreds of residential and commercial units are sitting empty following a wait of up to five years for services such as electricity, water and sewerage, said real estate sources in Sharjah and Ajman.

The problem is not the result of slow bureaucracy but a reflection of municipal systems that do not have the capacity to keep up with the demands of the rapidly growing emirates.

Ahmed Al Abdullah, CEO of New Dubai Property, which operates in Sharjah and Ajman, said population growth had made it difficult to resolve a current lack

of capacity despite efforts to expand infrastructure in both emirates.

The CEO of Sharjah's Noor Al Mamzar Property, Khalid Abdul Aziz Al Suwaidi, said the waiting list for public utilities was "years' long", in both emirates, but the problem was worse in Ajman.

However, Sharjah has seen the problem of empty buildings – with owners unable to rent out flats due to lack of electricity and water – particularly in high construction areas such as Muwilah.

Al Suwaidi said he knew of developers in Sharjah, who had to wait four years for services after obtaining their building licences.
And he said the problem was different in the two emirates because Sharjah produces its own power, while Ajman is dependent on federal sources. Ajman has already experienced power cuts as the demand on the electricity grid has outgrown supply. As a result, new buildings cannot be hooked up to the main network until more power is created.

Sources close to the negotiations, who did not wish to be named, told Emirates Business Ajman has already reached out to international companies to discuss building its own power plants. Ajman officials recently held meetings with representatives of a Canadian firm to discuss building a power plant – which could cost as much as Dh1bn – powered from gas from coal.

Meanwhile, the waitlist for utility services has grown so long some investors have begun to treat a notice of confirmation that supply will be provided from the municipality as a commodity that can be sold. These investors then sell projects that will be hooked up for much more than they paid for the land, without every building anything, said Obeid Al Tunaiji, CEO of Al Tunaiji Property. The promise of electricity and water, he said, has become enough to increase the value for developers.

While real estate officials, including Al Tunaiji, said growth in the two emirates is being hindered by the lack of utility capacity, they denied that property prices are high as a result.

Massive population growth, Al Tunaiji said, is behind the continuous rise in prices in Ajman and Sharjah, rather than a lack of supply. Even if the empty buildings came on the market, he said prices and rents would continue to rise. Al Suwaidi said returns on investment in property in the two emirates stands at 20 per cent annually.