Real Estate - Agencies
The Gulf real estate market has achieved significant growth, with tangible increases in the value of real estate transactions and sales carried out in the GCC markets, which has had a positive impact on other economic sectors in the Gulf countries. This was highlighted in a recently released real estate report that tracked the Gulf real estate market throughout 2013.
Leaps in the Saudi Real Estate Market
The weekly Al-Mazaaya report confirmed that financial markets are the biggest beneficiaries of the increased pace of activity and projects in the real estate sector across GCC countries, which rose in line with supply and demand indicators and higher investment returns. It is noteworthy that the sector of real estate companies listed on Saudi stock exchanges has recorded significant gains this year, with the real estate development sector index rising by 42% since the start of the year, while the construction sector index rose by 23.51% since the beginning of the year. In contrast, the index for real estate companies listed on the Qatar Stock Exchange has risen by 22% since the beginning of the year, and the overall stock market index has risen by 24% during the same period, Real estate companies listed on the Dubai Market have posted record gains on the back of real estate developments that have exceeded all previous expectations, with Emaar shares rising by 88% since the beginning of this year, Drake & Scull shares rising by 82%, and Arabtec shares rising by 42%. Furthermore, the gains recorded in the share prices of real estate companies listed on the Abu Dhabi Stock Exchange have exceeded 100% since the start of the year to date, Holders of shares in publicly traded real estate companies have been the primary beneficiaries of real estate activity reflected in share price differentials since the start of the year, even before the real estate market has reached the stage of reaping actual profits from all completed projects and those currently under construction.
Real Estate Transactions
Reports from the Kuwait International Bank show that the value of real estate transactions during the first nine months of 2013 rose to 1,047.4 million Kuwaiti dinars, This comes as the Kuwaiti real estate market has seen significant activity in attracting investors and traders, and market indices have risen—particularly those related to trading liquidity and the value of completed real estate transactions, with the total value of traded real estate and land increasing by 77% compared to the same period in 2012, The residential sector accounted for 50% of the activity recorded during the third quarter of 2013, followed by the investment sector at 37%, while the commercial sector came in third at 13%. In contrast, real estate transactions in the Qatari real estate market saw a significant increase, and are expected to reach 50 billion Qatari riyals in 2013, driven by rising investor confidence in real estate, increased investment liquidity, and the continued development of various real estate projects, The total value of real estate transactions in the Emirate of Dubai during the first half of 2013 alone reached 108 billion dirhams, representing a growth rate of 30% compared to the level recorded during the same period in 2012, according to datadata released by the Land Department. These developments indicate an improvement in the attractiveness and resilience of the emirate’s real estate market.
Legislation and Laws
The report noted the progress made in 2013 regarding the legislative and regulatory framework governing all aspects of the real estate sector, These developments were intended to address the legal and legislative gaps affecting real estate transactions and deals, which had often led to increased investment risks in the market. Regulating the relationship between landlords and tenants accounted for the largest share of the legal developments recorded, in addition to legislation governing sales, real estate projects, liquidation processes, and committees responsible for dispute resolution and the liquidation of distressed projects.
It is worth noting that the updates to the legal and regulatory frameworks took into account past mistakes and experiences, as well as international standards and practices applied in global real estate markets, while this legislation focused on protecting investors on the one hand and attracting foreign investment on the other, in addition to enhancing the ability to regulate the real estate market in the region, sustaining current real estate activity, preserving gains, and improving competitiveness with foreign markets.
Mortgage and Financing Systems
In this context, 2013 saw remarkable progress in mortgage and real estate financing systems across GCC countries, and work is underway to adopt the final versions of mortgage system mechanisms, which will resolve many of the real estate market’s challenges and enable all segments of society to access the necessary financing. At the same time, these systems will provide high-quality investment opportunities for financing channels, withwell-calculated risk levels and high, stable rates of return and profits over the long term.
Rising Returns
The report on benefits notes that investment returns in the real estate sector across GCC countries are high and likely to rise further in the coming period,A report by Jones Lang LaSalle noted that the Emirate of Abu Dhabi achieved a real estate return on investment ranging from 7–9% in 2013, while the return on real estate investment in Dubai ranged from 7–8%, outperforming Europe and the United States, where returns ranged from 6% for the office sector to 7% for the residential sector, This falls within the average range of all indicators, while rates of return on individual investments across all sectors directly and indirectly related to real estate activity reach high levels, often exceeding 30%.
