Home prices may have bottomed in the Middle East, Kamco says

(Bloomberg) – Residential property prices in the six Gulf Cooperation Council members may have bottomed and total deal value for the year is on track to eclipse 2019 levels, said the Kuwaiti company Kamco Investment.

“Real estate in Dubai has been the scene of opportunistic buying by investors, especially in the high end of the apartment and villa market,” Kamco said. “Real estate prices in Saudi Arabia have recovered, thanks to government support in the form of mortgage financing and housing initiatives.”

The GCC includes Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Bahrain and Oman. Transactions in the first half of 2021 reached $ 64.9 billion, up from $ 90.5 billion in 2020 and $ 96.5 billion in 2019, the firm said.

A higher average value per transaction in the first six months of the year, compared to pre-pandemic levels of the first half of 2019, indicated “investment appetite for real estate at attractive prices” , Kamco said.

Housing is experiencing a prolonged boom in markets around the world, with valuations skyrocketing at the fastest rate since 2006, according to Knight Frank, and double-digit annual price increases. Earlier this year, HSBC Holdings Plc said growing demand for larger homes during the pandemic would further boost Dubai’s real estate market, echoing Morgan Stanley analysts who expect the rally to last “for several years. “.

Kamco warned that the potential for medium-term rate hikes could weaken sentiment. Meanwhile, rents continued to decline year over year in the first half of 2021 in most markets except Riyadh. Bahrain and Jeddah saw the biggest drops.

“Although our perspective on the residential real estate market in the GCC has become more constructive than in our previous update, we still demand that rents move towards a late recovery phase of the cycle, before establishing the segment as the undisputed leader. Said the firm.

For office and retail space, Kamco said competition could intensify and potentially put pressure on rents. Occupants were likely to prefer sustainable built environments and event-specific spikes in footfall and the sales conversion of events such as Expo 2020 should provide temporary respite for owners of mall space, the company said. .

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