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Al Mazaya Holding’s Weekly Report

The Region’s Real Estate Markets Continue to Attract Cash Flows Despite Economic Pressures–

High cash inflows and low prices drive demand of residential units in GCC states

 

Diversification of real state products locally and globally is one supporting factor that rejuvenates property markets and ensures continued buoyancy. In its weekly real estate report, Al Mazaya Holding said that despite economic pressures, there are still free cash flows sailing into the region’s markets. However, these cash flows differ in their ability to attract investments, depending on the availability of cash among individuals or organizations. In addition, price levels in the current period are a major driver of momentum.

According to the report, the region’s real estate markets are currently divided into three types. The first is dominated by local demand only where end-users are the only active players. The second comprises end-users and investors on equal footing; investment in this type of market is of lower risk and high returns with a growing asset value. In the third type of market, investment demand prevails and is the main catalyst for real estate activity.

Investment returns play a significant role in activating rentals and sales of readily available units, thanks to the high returns for investors. Furthermore, property markets enjoy a higher competitive edge worldwide, despite all business challenges besetting them in comparison with other inflexible types of investments where prices continually take an upward turn.

Streamlined measures, multiple credit facility options and geographical diversification are all factors that maintain competitiveness and provide property markets with the momentum needed to increase profits and get official authorities to provide incentives that help the real estate sector grow.

The report highlighted the significance of diversifying real estate products in terms of value, rates, categories and locations, singling out the Turkish property markets, which are among the most favourites for Gulf investors, thanks to significant incentives provided by the government that help generate multiple investment opportunities.

In this respect, the report noted that the Qatari investments in Turkey have exceeded $20 billion worth of commercial and construction contracts, with Saudi real estate investments amounting to around $6 billion, with the Turkish government planning to increase them to $25 billion by the year 2023. UAE investments in Turkey are likewise on the rise, increasing by 160% over the past two years.

Regarding Gulf investments on the UAE property market, the report said they are on the rise, with the Emirate of Dubai maintaining its leading position thanks to its ability to stand up to volatility and internal and external pressures.

The UAE is classified among the world’s leading real estate markets that enjoy continual external and local demand on various types of products, with residential units still with the highest demand. Saudis lead the list of gulf investors in Dubai with AED8 billion worth of real estate investments; they are second on the list of non-Emirati property investors. Kuwaiti investors increased in number in Dubai over the past years, launching AD2 billion worth of real estate enterprises.

According to the report, the British real estate market abounds in limitless investment prospects and has displayed steadfastness and resilience despite the Brexit-related challenges and pressures. The high demand over real estate products, especially residential units, high cash levels, low investment risks and robustness of the banking sector are all factors that enhance the British market’s competitiveness and its ability to provide luxurious residential projects.

In conclusion, the report said that real estate transactions in and outside the region are mainly investment-oriented, with end-users likely to account for a decreasing share as prices increase and flexibility diminishes. Accordingly, active real estate markets in the region are likely to provide investment-oriented projects to maintain their resilience and attractiveness under all circumstances.