Overview of real estate market in GCC these days
Posted: Mar 08, 2016
The discovery of oil wells and the surge and hydrocarbon products’ prices stirred up the real estate market in GCC area same as many other economic sectors.
Oil revenues encouraged GCC states to press ahead with their urbanization schemes which included improving real estate reality and infrastructure quality. Drastic changes took place in many locations like Dubai, Abu Dhabi, Jeddah, Riyadh, and Bahrain, even some of these locations became prime international property markets.
Besides oil revenues, there were a number of additional factors that contributed in bolstering the market performance including tourism, events like Expo 2020 and World Cup 2022, and rising population.
The drop in oil prices had a remarkable impact on property markets in GCC region due to the total reliance of these governments on oil revenues in completing its development schemes.
Saudi Arabia announced a budget deficit for the first time in years which reached 98 billion dollars. Kuwait had 27.8 billion dollars deficiency too.
Experts and market analysts estimated the total budget deficiency of GCC states to hit 122 billion dollars this year which is an unprecedented rate in the region’s history.
Despite the pessimistic view exported by market analysts and consultants, the market situation, in reality, was in better status thanks to the economic diversification policy being adopted in the GCC and the recently passed laws that aim at reducing market speculation and reducing the bubble effect.
Bahrain’s budget, like other GCC states, depends on oil revenues. The discovery of oil fields in Bahrain represents a major turning point in the Kingdom’s economic history.
Bahrain started a decade age in focusing more on developing the real estate sector to stand as another major source of income to the country beside oil sector.
The Kingdom’s government allowed foreign investors from purchasing properties in some certain areas scattered around the Kingdom. This decision boomed both demand and supply rates in the market.
More foreign investors entered Bahrain property market, meanwhile, foreign developers joined also with major real estate projects.
This recent flourish in the state’s property market enabled it to survive the economic overturns hitting the region as the total value of properties deals last year remained stable at 1 billion dinars.
Prices too remained solid. The stable rents and sales prices encouraged more investors to enter Bahrain’s market to take advantage of its high rental and investment yields.
The Saudi real estate market is believed by market analysts and observers to endure the economic hit.
Many analysts believe that there is no correlation between oil prices and properties market as the market witnesses skyrocketing demand rate due to the increasing population.
The procedures taken by the government are believed also to limit the crisis impact on real estate like for example the white land tax which is expected to boost the real estate development activity all around the kingdom.
UAE was the least affected by the oil plunge between other GCC states as the Emirates government didn’t announce any budget deficit this year unlike its neighbors.
Dubai and Abu Dhabi witnessed slight turbulence in sales and rents prices, residential apartments’ prices in Dubai for instance declined by 10%. However, demand rate remained stable in most areas as more projects are being delivered and investors still have high hopes for the market’s prospects.
Source: Weetas Blog
I'm Ahmed writes about real estate market especially in Gulf countries, and some other businesses like Automotive and Technology.