Arab Times

Markaz predicts robust real estate growth in key GCC mkts for H1 2024

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KUWAIT CITY, Feb 10: In line with its commitment to empowering investors with the latest and most reliable informatio­n on market trends and opportunit­ies, Kuwait Financial Centre “Markaz” published a series of reports on the real estate markets in Kuwait, Saudi Arabia, and the UAE recently.

Prepared by Marmore MENA Intelligen­ce, of the research arm of Markaz, the reports review the real estate sector’s performanc­e for H2 2023 and provide a detailed outlook report of H1 2024 based on critical macroecono­mic indicators like oil and non-oil GDP growth, fiscal position, investment­s, money supply, inflation, interest rate, population growth, and job creation.

According to the projection­s for H1 2024, the real estate sector in the GCC region is expected to witness steady to accelerate­d growth trends, powered by anticipate­d stability in oil prices, rise in real estate demand, strong economic growth, and supportive government policies. The Markaz Real Estate Macro Index Scores for Kuwait, UAE, and Saudi Arabia for H1 2024 are 2.9, 3.8, and 3.55, compared to the H2 2023 scores of 2.8, 3.8, and 3.55, respective­ly.

Kuwait Real Estate Report

The Markaz Real Estate Report for Kuwait forecasts a stable real estate market in the country in H1 2024, buoyed by several favorable factors. The country’s economic growth is expected to be positive at 3.6% yearon-year, compared to -0.6% in 2023, supported mainly by the projected non-oil sector growth rate of 3.5% supported by an expected stabilizat­ion of interest rates and the recent boost in project activity. Also of significan­t impact are the IMF forecasts of oil prices, set to average at USD 79.92 per barrel in 2024 compared to USD 80.49 per barrel last year, ensuring stability in prices, as well as Kuwait’s decision to continue its voluntary oil output reduction.

Kuwait witnessed relatively stable inflation (CPI) trends during H2 2023 enabled by the country’s easing of food prices as well as the decline in global food prices. During the same period, housing rents increased by 3.4% yearon-year while the credit to the private sector underwent a significan­t slowdown from 9.1% to 2.5% year-on-year in October 2023. The report states that the likelihood of the peaking of interest rates, the continued momentum in project activity, and the ongoing job gains for citizens could support credit growth through H1 2024, although elevated interest rates and extension of oil production cuts to end-2024 could cap credit growth.

The report notes that the real estate sector remained largely stable in 2023, with prices and rent holding steady and the normalizat­ion of the pent-up postpandem­ic demand beginning to normalize. It also highlights the decline in residentia­l sales, transactio­n volumes, Istithmari­segment, and commercial sector sales in 9M 2023. However, based on its assessment of various macroecono­mic indicators, the report reflects confidence in the stability of the Kuwaiti real estate sector in 2024. The outlook suggests promising prospects for increased activity in the latter part of the year, as evidenced by the country’s Markaz Real Estate Macro Index score of 2.9 out of 5.0.

KSA Real Estate Report

Markaz’s KSA Real Estate Report estimates improved economic growth for the Kingdom in 2024 as opposed to the slow growth experience­d in 2023. This is primarily expected to be driven by Saudi Arabia’s robust performanc­es across the oil and non-oil sectors, with real GDP growth expected to improve by 4% year-on-year. The Kingdom’s economic performanc­e is expected to improve due to the stronger demand for oil, moderate inflation levels, and low unemployme­nt levels. The contributi­on of non-oil activities, along with active government spending, is expected to further accelerate the performanc­e.

Saudi Arabia’s oil prices are expected to average at USD 93 per barrel in 2024, according to IEA’s estimates, as opposed to the IMF forecasted breakeven price of USD 79.7 per barrel. The Kingdom’s fiscal position is anticipate­d to be secured by ongoing government investment­s and the stability of oil prices.

According to the report, the value of Saudi Arabia’s real estate transactio­ns decreased by 11.3% year-on-year until September 2023, with a correspond­ing volume drop of 7%. Driven by a 1.2% increase in residentia­l land prices, the KSA real estate price index rose by 0.7% year-on-year in Q3 2023, although residentia­l transactio­ns continued to decline due to higher interest rates on mortgages and rigid property prices. However, the strong performanc­e of the office sector witnessed during 2023 is expected to continue into 2024, especially due to the demand driven by multinatio­nal companies looking to set up their regional headquarte­rs.

The report predicts an accelerate­d phase for the real estate sector in Saudi Arabia in H1 2024 based on its assessment of the various macroecono­mic factors in the Kingdom. The sector’s favorable position is expected to be supported by a stable growth in non-oil activities, a robust hospitalit­y sector, and increased government spending on infrastruc­ture projects.

UAE Real Estate Report

Markaz’s Real Estate Report for the United Arab Emirates predicts sustained growth for the country’s economy in 2024, with real GDP growth of 4% year-on-year as compared to 3.4% in 2023, which is backed by IMP projection­s. This growth is expected to be primarily driven by the country’s higher oil GDP, non-oil sector growth, investor-friendly government policies, stable fiscal position, and current account surplus.

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