According to industry expert Markaz Real Estate, the GCC real estate market is anticipated to continue growing due to solid macroeconomic foundations, encouraging government initiatives, and growing investor interest.
Markaz has projected a favorable picture for the UAE, Kuwait, and Saudi Arabian real estate markets in H2 2024 in its most recent real estate reports.
For Kuwait, Saudi Arabia, and the United Arab Emirates, the projected scores in the Markaz GCC Macro Index for the second half of 2024 are 3.5, 3.7, and 3.6, respectively.
These extensive reports provide a detailed analysis of the real estate sector’s performance during H1 2024 and present an optimistic forecast for H2 2024. They were created by the Markaz Mena Real Estate team and Marmore Mena Intelligence, the company’s research arm.
The optimistic forecasts stem from a careful analysis of key macroeconomic variables like GDP growth rates, fiscal policies, and the dynamics of the oil market.
Forecasts for H2 2024 indicate that, while the UAE maintains a stable score of 3.7, Kuwait and Saudi Arabia both show increases from H1 2024 scores of 2.9 and 3.55. These results demonstrate the continued robustness and potential for sustained growth within these important GCC real estate markets.
According to Markaz, Kuwait’s real estate market is showing resilience and room to grow even in the face of difficult economic conditions. The GDP is expected to contract by 1.4% in 2024 after falling by 2.2% in 2023.
As per Markaz’s report, the non-oil sectors, particularly real estate, are growing despite the wider economic obstacles. This growth is being bolstered by a projected 2% rise in non-oil GDP, along with increased project activities and planned business reforms.
The H1 2024 data indicates that the real estate market is experiencing a renaissance, with rising land and rent prices. This is especially evident in the Istithmari segment, where apartment land prices have increased significantly year over year in all but Mahboula.
According to the report, all governorates have seen increases in the price of commercial sector land, and rental rates for 60-square-meter and three-bedroom apartments have remained steady with an increase over the end of 2022, with a few outliers in Khaitan and Mahboula.
The momentum of the Kuwaiti real estate market is anticipated to pick up speed in H2, helped by well-timed government initiatives and upbeat market sentiment. The Markaz Real Estate Macro Index, which projects a 3.5 out of 5.0 score for H2 2024 and indicates significant growth potential, provides quantitative evidence for this optimism.
Furthermore, a decrease in inflation is anticipated, with the Consumer Price Index (CPI) moderating from 3.37% at the end of 2023 to 3.17% by April 2024.
Markaz stated that although high interest rates are currently impeding credit growth, it is expected to improve as the Central Bank of Kuwait may reduce rates in the latter part of the year. The market is expected to be further stimulated by this financial adjustment as well as legislative reforms intended to discourage land hoarding and encourage large-scale residential developments.
Despite the overall drop in the number and value of real estate transactions, the sector is expected to grow going forward as a result of the post-pandemic pent-up demand.
The future of the Kuwaiti real estate market appears bright, as strategic reforms and macroeconomic stability are expected to fuel further growth and recovery. It is recommended that stakeholders and investors keep themselves updated about the changing regulatory and economic landscape as they strategize for the second half of 2024.
Regarding the Saudi market, Markaz stated that the kingdom’s real estate industry is expected to undergo a major boom in 2024 after a slow year the previous year, propelled by expanding operations in the non-oil and oil sectors as well.
The International Monetary Fund (IMF) predicts that Saudi Arabia’s real GDP will grow by 8.1% in 2025, recovering from a previous contraction of 2.6% in 2024.
The General Authority for Statistics (GASTAT) reports a 0.6% increase in the real estate price index for the first quarter of 2024, driven primarily by a 1.2% increase in residential land prices. This economic recovery is reflected in the real estate sector.
Furthermore, in April 2024, there was a noticeable 10.4% increase in housing rents, mostly because villa rentals increased by 9.4%.
During the first quarter of 2024, sales transactions in the residential sector increased significantly year over year in Riyadh, Jeddah, and Dammam, Saudi Arabia, by 77%, 93%, and 28%, respectively.
With rising rents in these cities’ high-end and mid-range properties, the office sector also grew. The new regional headquarters initiative, which was launched at the beginning of 2024 as part of Saudi Arabia’s Vision 2030, has contributed to this increase in rent.
According to a report by Markaz, the hospitality industry also showed signs of robust growth, with Riyadh taking the lead with a 26.8% rise in average daily rates in the first quarter.
An increase in business travel, religious tourism from the Hajj and Umrah pilgrimages, and a packed schedule of international and cultural events all contributed to this. Not every region, though, saw expansion; the Dammam Metropolitan Area saw a minor downturn.
The outlook for Saudi Arabia’s real estate market is still favorable despite the difficulties presented by the country’s persistently high interest rates. Strong performance is anticipated to last into the second half of 2024 as a result of the country’s substantial infrastructure spending and steady non-oil sector activities.
It is thought that the market is entering an accelerating phase, which portends a dynamic period of growth to come.
Regarding the UAE scenario, Markaz stated that, according to the most recent UAE Real Estate Report, the country’s real estate market is expected to grow steadily through 2024, propelled by strong demand in the office, residential, and hospitality sectors.
It is anticipated that the non-oil economy, which makes substantial contributions from the real estate industry, will continue to grow rapidly due to government support and beneficial policies like the updated Golden Visa rules that now improve investor eligibility.
According to Markaz’s report, the real estate market is still thriving, with record-breaking transactions and price increases, even though geopolitical uncertainties are slightly clouding economic prospects.
The UAE’s standing as a competitive luxury housing market around the world has been reinforced by the remarkable annual gains of 18.3% and 8.6% in Q1 2024 alone for residential property prices in Dubai and Abu Dhabi.
Furthermore, it said that lowering the AED 1 million required down payment for golden visas is expected to boost the real estate market even more by drawing in more foreign investors.
Due to increased demand for office space, especially in higher-grade properties, rents for office spaces in Dubai and Abu Dhabi have also increased, reflecting a trend in the market towards quality.
In the meantime, the hospitality industry is still booming thanks to an increase in business and leisure travel, which has helped major cities’ average daily hotel rates to perform strongly.