Car retailers expect a new purpose-built area in Sharjah, which could become Asia’s largest vehicle market, will boost sales and visitor numbers.
The emirate’s Souq Al Haraj was officially opened on Thursday by Dr Sheikh Sultan bin Mohammed, the Ruler of Sharjah. The new facility – its first phase – is in excess of 5 million square feet, housing 415 different dealerships spanning new, used, commercial, classic and recreational vehicles. There is also a huge auction space.
Two more phases are planned, doubling the size of the market, which will make it the biggest car souq in Asia. No schedule was given for the delivery of the second and third phases. The new area is 85 per cent occupied after car dealers in the residential Abu Shagara neighbourhood were ordered to leave and offered free rent from August to the end of last year. That largesse has now ended, with a significant rise in rents.
“My accountant tells me that you could rent [space] in Abu Shagara for between Dh80,000 and Dh150,000 per year – we are now paying Dh300,000 per annum,” said Haidar Al Saadi, sales manager for Al Qassem Motors in Souq Al Haraj. “We will not be passing the new costs on to our customers, as we think more customers will come here and our business will benefit. The new facilities here are far better because there are places for us to park our cars outside the showrooms and there is customer parking also. Trade in Abu Shagara was hindered because there was no space for retailer or buyer.”
The souq’s operator, Sharjah Asset Management – which has stakes in Dana Gas and Air Arabia – has had to turn dealers away such is the demand for space. Some 300 to 350 car dealers and ancillary businesses, such as spare parts and tyres, were moved from Abu Shagara to the new facility. Such is the planning and regulation of the area, 15 per cent of the spaces have been left for the largest car dealers and businesses to enter the souq.
“We want the new cars to be in front of the customer as they drive in so the Grand Boulevard has the big names of [Mercedes dealer] Gargash and [Toyota dealer] Al Futtaim, among others, on it,” said Gregg Downer, chief real estate officer for Sharjah Asset Management. “This will be a one-stop-shop for anyone interested in buying a car with registration and other facilities on site. We are already very busy of an evening. The rents we charge are market- compatible for the facilities, the space, the security and the hub that we have created.”
The building of specific areas that cater to car dealers and the ancillary businesses has become a trend in the emirates, with Abu Dhabi opening Motor World in Al Shamkha and Dubai’s Al Aweer hosting more than 100 car dealers. The residential district of Sharjah’s Abu Shagara is likely to benefit.
“Its a great move for Sharjah which has been planned for a few years now,” said Bill Carter, head of valuations & product manager at Autodata Middle East. “It relieves the pressure on parking in Abu Shagara as the car dealers were taking up all the available space with their inventory. The ancillary businesses such as the spare parts and tyre shops made the area look very unkempt and it changes the focus from commercial to residential again. The downside is that the rents are higher but if you want a clean safe environment you have to pay for it.”
Overall car sales in the UAE last year are forecast to have risen 5.6 per cent to 1.88 million units from 1.78 million in 2014.
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