Real estate deals are booming in Gulf markets

Dubai – Real estate markets in the Gulf region will welcome 2024 with a lot of optimism.

The performance of the United Arab Emirates market contributed to the increase in the total value of real estate transactions in the Arab Gulf countries during the January to October period, which reached $165.8 billion over the whole of last year.

The value of real estate transactions in the region's markets rose 21.1 percent to about $171.6 billion during the period, up from $141.7 billion on a year-on-year basis, according to recent reports by Kuwaiti firm Kamco Invest.

Investment data showed that Dubai alone accounted for 52.1 percent of the total value of real estate transactions across the entire region, making up for the decline in other key markets such as Saudi Arabia, Qatar and Kuwait.

According to data provided by DXB Interact, the value of real estate transactions in the emirate rose by around 57 per cent year-on-year in the ten months to 2023.

As for the Abu Dhabi market, real estate deals rose by around 56 per cent over the same period, meaning the sector was full of activity and gains in the UAE. Residential real estate prices in key markets continued to rise through the third quarter of 2023, supported by strong demand for investment real estate and a slowdown in project completions.

According to a Bloomberg Value Strat report, prices in Dubai rose 18.4 percent in the year to November. For Abu Dhabi, according to JLL, prices of residential units fell three percent year-on-year to the end of the third quarter of 2023.

JLL reported that in the Saudi capital Riyadh, real estate sales prices rose by around 7 percent year-on-year to the end of the third quarter of 2023, and the city of Jeddah saw similar growth in price growth year-on-year. basically.

Investment experts expect the next year to see moderate growth in prices and rents in key markets, barring unique residential projects offered by leading brands and developers with pricing power.

They said in the statement, “For the market in general, we expect to see the usual stability seen late in the cycle, with supply balancing demand with better momentum.” They justified their expectations that all investors and end-users would be wary of rising interest rates and affordability.

Rents for prime office space in Dubai and Riyadh have seen tremendous growth as demand for high-end office buildings continues and some sectors expand their presence in these areas.

Both cities want to become regional headquarters for companies in a few years, and they have been in intense competition for nearly two years when Saudi Arabia unveiled plans to attract foreign capital.

Meanwhile, office space developers in the region continue to maintain a limited supply due to time lags between design concept and completion, and the potential risk of delivering to poor economic conditions.

Kamco Invest expects this to reach 29.85 million square meters by the end of 2023, compared to 28.54 million square meters last year in key markets of the Gulf Cooperation Council countries.

There is a demand in the Gulf countries in light of the shortage of supply of specialized, high-quality industrial warehouse space. Rents for these locations have risen, leading to a widening rent gap compared to lower-quality locations.

Saudi Arabia launched a “Logistics” platform, one of the initiatives of the National Industrial Development and Logistics Services Program (NDLP), which aims to provide 59 logistics centers with an area of ​​more than 100 million square meters. country by 2030.

Despite global volatility, real estate stocks in the UAE and Saudi Arabia continued their good performance during the January to November period last year and saw strong gains.

According to the Total Revenue Index for Gulf Real Estate published by Refinitiv, the sector's performance increased by 19.2 percent in the first eleven months of the year, driven by strong performance by real estate development sector indicators in Dubai, Abu Dhabi and Saudi Arabia.

Investment experts believe that there is evidence that the shares of many renowned developers will continue to grow in 2024, with budgets enjoying sufficient liquidity.

They asserted that this environment would help them maintain their market share, achieve strong returns on investment, and pursue cross-border merger and acquisition opportunities.

The World Bank expects the Gulf states' economies to grow by one percent this year, down from the 7.3 percent recorded last year.

In a report released last October on the prospects for the economies of the Middle East and North Africa region, the bank said that “the combined Gulf economies will grow by 3.6 percent in 2024”.