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The Region’s Property Markets are Poised for More Promotional Campaigns to Increase Local and Foreign Investments

The campaigns will help to secure cash needed for ongoing projects and revitalise demand

In response to the fluctuating market conditions across the region, the Gulf property sector has adopted a set of flexible promotional tools and campaigns that meet the requirements of the multi-faceted developments taking place. These include fast-paced business ups and downs observed throughout the GCC states.

With each of the region’s markets having its own distinctive peculiarities, a multi-pronged approach is needed for each accounting period in order to come up with an ideal mechanism that can generate reasonable investment returns. Al Mazaya Weekly Real Estate Report confirmed that the positive yields generated over the past period will help render current real estate marketing plans a success, both at the regional and global levels.

The report noted that foreign companies now tend to pump more liquidity to property investments in active markets, making use of the high annual returns of real estate investments and the current economic and political stability enjoyed by the GCC states. This enhances their competitive edge and propels promotional and market plans at the global level.

The region’s real estate companies seek to get more cash inflows, revitalise demand over all types of property and utilise external demand to generate capital profits. Industry indicators expect the region’s markets to continue to launch more promotional and marketing offers that will reflect positively on other economic platforms in the future.

The report highlighted the positive activities recorded by the forces of demand and supply in Saudi Arabia, where prices of land, flats and villas decreased by 15-30%, particularly in Mecca, Jeddah and Riyadh. As a result, property companies now go for all possible kinds of promotional plans, including waiving first installments of for-sale flats and offering real estate products at reduced installments in order to increase demand and get the cash needed for ongoing projects.

The report described the current status on the Saudi market as positive for all parties concerned, with property companies getting the needed liquidity and end-users ultimately having property at affordable prices. The report noted that low prices of land located outside urban areas might not have a positive impact on prices and end-users.

The forces of demand and supply in the UAE market go otherwise, according to the report, if compared with neighbouring markets. Varying prices could slightly affect demand over different types of real estate products, with declining rates of flats and luxury villas likely to encourage several segments, including middle-income categories, to invest and buy. In cases where price hikes have been reported, more confidence in the sector performance would be ensured, which would ultimately lead to more demand over all types of products.

The UAE is forging ahead with its promotional and marketing plans at the local and foreign levels, with the property companies operating in the country vying to lure the largest possible segments of international investments by participating in global platforms and forums through which they promote different categories of real estate products. Dubai Land Department, for example, has over the past period been organising overseas promotional campaigns to increase foreign investors’ awareness of investment prospects in the real estate sector in the emirate. Such efforts have resulted in a 34% increase in foreign investments to AED23 billion during Q1 2017, with indicators expecting continual growth for the UAE real estate market during the Holy Month of Ramadan.

The report highlighted the high-yield returns of real estate investments in the region’s markets, which help draw investors under all circumstances, despite besetting economic pressures. In this regard, the report mentioned that real estate investments in the UAE recorded an average annual interest rate of 9%, with Bahraini market registering an annual interest rate of 9-13%. Property annual expenses do not exceed a maximum of 1.5% of the total annual returns while re-sale profit of under-construction residential units after completion ranges between 17 to 22%.

Due to the prevailing state of deceleration, property development companies in the region are expected to offer more discounts during the Holy Month of Ramadan to overcome current slowdown and draw more customers with the objective of achieving sale targets for the elapsed period of the year.

It is noteworthy that observing Ramadan during the early months of the summer season, where the property sector usually suffers some deceleration in terms of sales and demand, provides a good chance for property companies to develop attractive promotional campaigns during the Holy Month in the run-up to the post-Eid El-Fitr period. The real estate exhibitions held by the end of last year and early this year provided property companies with a good chance to promote their products, with a lot of them having made good business at the local and international levels. Such campaigns are expected to continue during and after Ramadan by making use of the current low prices as a catalyst to revitalise demand.

In conclusion, the report said that the rental market remains tight in most of the region’s countries, with rising rental costs usually driving demand over sales operations.