<Jones Lang LaSalle, a leading global real estate advisory and management services firm and the largest of its kind in the Middle East, has predicted that the Kingdom's real estate sector will gain 10% over the next 12 months, far exceeding the expected growth rates for real estate in other Middle Eastern markets.
The firm's recent investor sentiment study shows that investors expect the Kingdom's real estate market to be the strongest performing market in the Middle East a year from now, with 40% of investors surveyed believing that the Saudi real estate market is beginning to recover and another 40% expecting a full recovery by the end of the year.
Commenting on the findings, John Harris, head of Jones Lang LaSalle's Saudi Arabia and MENA practice, said: “The report shows that the Saudi market enjoys greater maturity and stability compared to other markets in the region. He stressed the positive role played by the government of the Custodian of the Two Holy Mosques in achieving economic stability as one of the most important reasons for the return of investor confidence in the performance of the Saudi real estate market, and expects this trend to continue as the number of investors from within the Kingdom increases.“
The Kingdom's residents have always dominated the market, but in recent months they have shown a strong appetite for local assets, at a time of global instability.
Jones Lang LaSalle says in its report titled ”MENA Real Estate Investor Sentiment and Trends“ that investors recognize the strategic importance of the Kingdom, but are finding it difficult to find opportunities that deliver the returns they expect. While investors surveyed expect returns in excess of 12%, in the last year there has been a decline in the initial yield to below 10%, due to the limited supply of investable class assets.
The number of buyers in the Kingdom continues to dominate the market, but in recent months they have shown a strong appetite for local assets, at a time of global instability. Despite this, there are still more buyers than sellers of investable assets in the Kingdom, keeping demand high. The report also showed that investors are looking for opportunities in Saudi Arabia away from traditional cities such as Jeddah and Riyadh by heading to the Eastern Province (where there is interest in mixed-use real estate development along the coast) as well as in the holy cities of Mecca and Medina.
Andrew Charlesworth, Head of Capital Markets at Jones Lang LaSalle MENA, said: “Two key factors appear to be driving the outlook, with investors focusing on markets with indicators of strong demand (as determined by the local population) and markets with key economic growth drivers (such as oil and gas), with the Kingdom being the only country in the region that offers both."
The report shows an increase in investor appetite for the Kingdom of Saudi Arabia, which is the only country in the region that offers both. The report indicates a significant increase in the percentage of investors who believe that the Saudi real estate market will achieve the strongest performance among the markets. In October 2009, both Saudi Arabia and Abu Dhabi received the same 26%, but the percentage increased for Saudi Arabia to 30% and Abu Dhabi fell to second place with 25%, followed by Egypt in third place with 13%.
Jones Lang LaSalle's fourth investor sentiment study surveyed more than 100 investors, including investment firms, sovereign wealth funds, investment banks, private equity firms and large investors.
The firm's recent investor sentiment study shows that investors expect the Kingdom's real estate market to be the strongest performing market in the Middle East a year from now, with 40% of investors surveyed believing that the Saudi real estate market is beginning to recover and another 40% expecting a full recovery by the end of the year.
Commenting on the findings, John Harris, head of Jones Lang LaSalle's Saudi Arabia and MENA practice, said: “The report shows that the Saudi market enjoys greater maturity and stability compared to other markets in the region. He stressed the positive role played by the government of the Custodian of the Two Holy Mosques in achieving economic stability as one of the most important reasons for the return of investor confidence in the performance of the Saudi real estate market, and expects this trend to continue as the number of investors from within the Kingdom increases.“
The Kingdom's residents have always dominated the market, but in recent months they have shown a strong appetite for local assets, at a time of global instability.
Jones Lang LaSalle says in its report titled ”MENA Real Estate Investor Sentiment and Trends“ that investors recognize the strategic importance of the Kingdom, but are finding it difficult to find opportunities that deliver the returns they expect. While investors surveyed expect returns in excess of 12%, in the last year there has been a decline in the initial yield to below 10%, due to the limited supply of investable class assets.
The number of buyers in the Kingdom continues to dominate the market, but in recent months they have shown a strong appetite for local assets, at a time of global instability. Despite this, there are still more buyers than sellers of investable assets in the Kingdom, keeping demand high. The report also showed that investors are looking for opportunities in Saudi Arabia away from traditional cities such as Jeddah and Riyadh by heading to the Eastern Province (where there is interest in mixed-use real estate development along the coast) as well as in the holy cities of Mecca and Medina.
Andrew Charlesworth, Head of Capital Markets at Jones Lang LaSalle MENA, said: “Two key factors appear to be driving the outlook, with investors focusing on markets with indicators of strong demand (as determined by the local population) and markets with key economic growth drivers (such as oil and gas), with the Kingdom being the only country in the region that offers both."
The report shows an increase in investor appetite for the Kingdom of Saudi Arabia, which is the only country in the region that offers both. The report indicates a significant increase in the percentage of investors who believe that the Saudi real estate market will achieve the strongest performance among the markets. In October 2009, both Saudi Arabia and Abu Dhabi received the same 26%, but the percentage increased for Saudi Arabia to 30% and Abu Dhabi fell to second place with 25%, followed by Egypt in third place with 13%.
Jones Lang LaSalle's fourth investor sentiment study surveyed more than 100 investors, including investment firms, sovereign wealth funds, investment banks, private equity firms and large investors.
