Details

Al Mazaya Weekly Report

 

Real estate demand in Egypt expected to grow

up to 70% by year-end

Dubai retains its safe haven status for real estate investments

Property investments prove strong shield against economic headwinds

Property investments across the Gulf region have proved to be a strong shield protecting the regional economy and enabling GCC states to grapple with the ramifications of besetting financial crises. Most of the real estate investments typically retain their original market value, with each market boasting its own peculiar features that hold high demand in times of economic recovery, and fair in times of crisis — a fact that keeps the business running under all circumstances.

According to Al Mazaya Weekly Real Estate Report, property investments create attractive business opportunities and yield positive and sustainable returns driven by growing demand and sustained significant contributions to other economic platforms — a fact which is translated in the sector getting the largest share of liquidity in comparison with all other economic platforms. The report indicated that the economic and financial developments, the region has been going through all over the past period, have strengthened the real estate sector and helped diversify projects launched in this vital sector of the regional economy.

The report added that the risks associated with real estate investments are confined to their volatile returns caused by external economic pressures, with real estate assets having consistently proved to be resilient enough to keep their original values, which are always set to grow and secure high returns, be it residential, commercial, or industrial property. Likewise, land investments have proved their worth under all market circumstances, a fact verified by land rates never declining despite all economic challenges seen by the region.

The report highlighted the requirements needed to be met in order to ensure sustainable investment returns from the real estate sector and to safeguard this fundamental economic platform against economic headwinds blowing through the region. Atop these requirements, as per the report, is the stability of global oil prices, with GCC governments needed to adopt precautionary austere measures in preparation for the post-oil era.

The report pointed out that there are divergent speculations and forecasts associated with the real estate sector across the region based on the nature of spending measures adopted by each country and its financial status, with local economies needed now more than ever before to develop strong potential for growth and competitiveness so that they can stand up to global and regional economic fluctuations and vulnerabilities. GCC states are required, the report said, to shift to the knowledge-based, diversified economy model and work for best utilizing their enviable strategic locations as well as developing their infrastructure in a way that serves and meet the needs of all economic sectors besides creating economic catalysts and investment incentives conducive to consolidating their investment environments.

The report in this regard underscored the importance of ensuring consistent capital inflows and financing solutions on the back of a robust legislative and regulatory infrastructure that enables the realty markets to secure positive returns and further increase investors’ trust under all circumstances.

The report cited the Egyptian real estate sector as the best example embodying the importance of property investments over the long run. Despite the state of anticipation and hesitation looming every now and then, Egyptians still deal with real estate investments as a safe haven to protect their savings in anticipation of inflation-related crises that deplete the purchasing powers of all segments of society, regardless of their income levels and the social class they belong to.

Recent data indicate consistently growing real estate demand in Egypt, with property rates have increased by up to 30 per cent in less than three months, said the report, expecting prices to continue to grow by up to 70 per cent towards the end of the year. Citing factors, the report mentioned the rising cost of building materials, interior design & finishing works besides the recorded growth in demand and snowballing speculations.

The UAE property sector, meanwhile, has proved to be the main determinant for real estate development and investments across the GCC markets, with the Dubai realty market considered a safe haven for local and foreign investments alike, said the report, highlighting a considerable inflow of funds amounting to AED91 billion during 2016, with property transactions reaching a decent level of AED259 billion during the same period. New projects worth more than AED100 billion were launched last year, said the report, adding that a large number of existing projects have already been completed to meet demands of different segments of society.

The report in this regard highlighted the countless advantages boasted by Dubai, including its investment-conducive environment, a robust economy which has helped the emirate’s property market exceed expectations over five years in a row, since 2012, increasing investment returns of more than 9 per cent annually, growing investors’ confidence, and robust legislations and regulations that safeguard rights of all parties, ultimately helping the emirate retain its safe haven status for investment.

Concluding, the report said that long-term real estate investments will continue to be the best business option at property markets across the world, with profit levels to continue to be a strong investment determinant. Both anticipated and unanticipated fluctuations and volatilities recorded by real estate sectors from time to time will likewise continue to create new investment opportunities for all segments of society.