According to a report by the Kuwait Financial Centre (Markaz), the GCC real estate sector is predicted to see steady to accelerated growth trends during the first six months, driven by expected stability in oil prices, rise in property demand, robust economic growth, and supportive government policies.
The reports, which are produced by Markaz’s research division Marmore Mena Intelligence, analyze the real estate sector’s performance for the second half of 2023 and offer a thorough outlook report for the first half of 2024 based on important macroeconomic indicators like oil and non-oil GDP growth, financial situation, investments, money supply, interest rates, inflation, and the creation of jobs.
Several studies on the real estate markets in Kuwait, Saudi Arabia, and the United Arab Emirates were recently released by Markaz, in keeping with its mission to provide investors with the most up-to-date and trustworthy information on market trends and opportunities.
In comparison to the H2 2023 scores of 2.8, 3.8, and 3.55, respectively, the Markaz Real Estate Macro Index Scores for Kuwait, the United Arab Emirates, and Saudi Arabia for the first quarter of 2024 are 2.9, 3.8, and 3.55.
The Markaz report for Kuwait predicts a steady real estate market in H1, supported by several advantageous factors.
The non-oil sector is expected to grow at 3.5% annually, strengthened primarily by the recent uptick in project activity and an anticipated stabilization of interest rates. This is in contrast to the country’s 2023 GDP growth of -0.6%.
The IMF’s projections for oil prices, which are expected to average $79.92 per barrel in 2024 as opposed to $80.49 per barrel in the previous year, will also have a big influence. Kuwait’s decision to keep reducing its oil output voluntarily will also be crucial.
During the second half of 2023, Kuwait’s inflation (CPI) trends were comparatively stable, due to both the nation’s easing of food prices and the drop in food prices globally.
While the credit to the private sector experienced a notable slowdown from 9.1% to 2.5% year-over-year in October 2023, housing rents rose by 3.4% during the same period.
According to the report, credit growth could be supported through H1 2024 by the likelihood of an interest rate peak, the momentum that projects continue to have, and the continuous gains in citizen employment. However, credit growth could also be limited by high-interest rates and the extension of oil production cuts until the end of 2024.
In 2023, the real estate market held steady in terms of prices and rent, while the pent-up demand following the pandemic started to normalize, according to Markaz.
It also draws attention to the fact that during the nine months of 2023, sales in the commercial sector, Istithmari segment, residential sales, and transaction volumes all decreased. Nonetheless, the report expresses confidence in the stability of Kuwait’s real estate market in 2024 based on its evaluation of numerous macroeconomic indicators.
With the nation’s Markaz Real Estate Macro Index score of 2.9 out of 5.0, the outlook is positive, with potential for increased activity in the year’s second half.
Compared to 2023’s slowdown in growth, Markaz’s KSA Real Estate Report predicts stronger economic growth for the kingdom in 2024. With real GDP growth predicted to increase by 4% annually, Saudi Arabia’s strong performances in both the oil and non-oil sectors are largely expected to be the driving force behind this.
According to the report, the kingdom’s economy is predicted to perform better because of the increased demand for oil, low unemployment, and moderate inflation rates.
It further stated that active government spending and the contribution of non-oil activities are anticipated to further accelerate the performance.