Regional real estate and market impact

Mohammed Nawarah, country manager for DORMA KSA gives a run-down of the top GCC markets and the impact of their varying real estate investment plans

The real estate industry in the GCC and in particular UAE has seen some turbulent times in the recent past. 2012 has been marked as a tough year throughout the world for all the industries, and property sector is no exception. Some of the GCC states are facing an over-supply, while some are seeing Arab Spring and others political tension.

Growth in the real estate sector across the GCC is currently most evident in Saudi Arabia, due to government investment in the sector. The UAE at the moment is seeing some difficulty in the property market as the rentals have come down by 9% in 2011 and from 2008 until now, the rent has come down by about 50% overall.

In 2011, King Abdullah of Saudi Arabia has announced 500,000 residential villas, the National Guard has 17,000 villas and the Royal Commission has announced another 9000 residential villas to be constructed in the next three years. These projects in Saudi Arabia throw a positive light for the industry.

Qatar with the 2022 World Cup, has been witnessing significant investment in real estate, but as of now, the government has only announced some infrastructure projects.

But it’s just the start of 2012 and we have seen some projects being announced in Qatar and we do expect there will be more launches during the course of the year.

As Oman, Kuwait and Bahrain currently undergoing unrest, the real estate sector is going through rough patches due to lack of investor confidence. While UAE is struggling with demand issues and there are a lot of unfinished projects which will take approximately two to three years to complete.

This year, Q1 did not see a great performance from the industry due to lack of investment. But, the performance will be good as far as KSA is concerned, as the annual budget set is around  SAR690 billion, of which 17% is to be invested in real estate.

There is a huge potential in the residential segment as not all the citizens of GCC states have their own house. The mindset of people in the GCC region has always been towards property, being a safer investment option vis-à-vis equities.

The regulations play a big role in the property segment and depending on their attractiveness, the investor has the confidence in putting his/her money. The UAE and in particular Dubai has good regulations for the investor but the other GCC states need to improve.

Saudi Arabia, Qatar and Kuwait have to make their property regulations more attractive for the real estate sector to grow. Currently in Saudi Arabia and Qatar, expats can buy property for end use only, they are not allowed to sell it and this is a deterrent for investors.

To give a boost to the real estate industry in the GCC, an open and therefore attractive market for investors can be achieved through regulation and focus on mid-segment residential units, rather than luxury units.

DORMA, a world leader of door technology systems and allied products has been involved with the region’s leading innovative projects such as the Burj Khalifa, The Dubai Mall, Burj Al Arab, Qatar National Convention Center, Mall of Arabia and Dubai Metro to name a few. DORMA has a 25 percent market share in the GCC. 

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