Dubai, Abu Dhabi and Doha emerge as top 3 real estate markets in the GCC
GCC Real Estate Sector is one of the fastest growing across the world according to a report by Al Masah Report.
The GCC real estate sector is one of the fastest growing sectors across the world, despite recent slowdown in economic growth due to oil price fluctuations. The region has emerged as an attractive destination for global investors and the real estate sector has become a key economic barometer for the growth in the region according to the Al Masah Capital’s real estate report.
Amongst all markets; Dubai, Abu Dhabi and Doha have emerged stronger owing to international projects, foreign investment flows and growing population. In addition to this, the upcoming Expo 2020 that will be hosted in Dubai and FIFA 2022 to be hosted in Doha, primarily buoyed the demand for exclusively designed amenities and world-class infrastructure spaces.
The report stated that the GCC markets are still gaining a lot of investor attention as prices are relatively stable, which reflects the real estate market’s maturity and the improved regulatory environment. Thus the sector remains resilient and is expected to register growth at a slow pace in 2016 and beyond.
Over the past decade, the GCC region has witnessed rapid economic development and demographic changes, including the influx of expatriates, which has increased the region's overall population. This, coupled with rise in per capita income, has fuelled the demand for residential units in the GCC region.
On the Real Estate Services front, this industry’s contribution to the economy has strengthened over the past decade due to an overall strong property market. The report stated that, during 2000-09, the real estate services market grew most rapidly in the UAE among the GCC six. In the UAE alone, the real estate services sector employed about 821,560 people (18.6 per cent of the total workforce) and in 2015 the sector contributed about 13.3 per cent to the GDP. This industry lateral encompasses of Facility Management (FM) and Property Management (PM); and both are still in its promising stage in the GCC when compared to developed markets such as Europe and North America. Both the FM and PM markets span a variety of functions, technologies and professions.
Furthermore, the tourism sector is likely to help accelerate growth of the real estate market in GCC, especially for UAE. While hospitality, residential and office lease markets remain buoyant in the GCC, the retail segment is expected to continue its aggressive expansion in the coming years. Within the residential sector, there is likely to be a continued shift of activity to the affordable sector. Given the relatively young real estate market across the GCC, a very high proportion of additional space has been in the form of new projects in recent years. This trend however seems to be changing, with increased interest observed in refurbishing and upgrading existing projects rather than developing new ones.
The report pointed out that the GCC real estate market has evolved from a predominantly cash-funded, off-plan driven investment boom to a consolidated market, servicing greater numbers of mortgage financed home owners. The market has become more aligned to global standards, thus giving rise to the services industry, including property management and consultancy. The UAE real estate market has turned out to be highly fragmented and competitive with many real estate assets managed by independent services providers.
Overall, the Real Estate Sector’s performance has been stable despite oil price fluctuations and is likely to be resilient and register growth, capitulating ample opportunities for the service providers. The report also made mentioned the regional governments proactive bid to invest interests and funds to move the region’s development beyond oil economy.