· UAE real estate market grew modestly in 3Q14; Qatar remains upbeat
· Bahrain and Kuwait real estate perform relatively weaker compared to peers
· Broadly, oversupply in commercial space lowers demand for secondary properties
UAE
UAE’s real estate market remained mixed in 3Q14; while Abu Dhabi continued to witness an uptrend across segments, particularly residential, growth in Dubai was somewhat sluggish. Prices in Abu Dhabi’s residential sales market rose 5-6%QoQ villas and apartments, while that in Dubai the increase was modest at 1-3%QoQ. In the hospitality segment, occupancy rate in Abu Dhabi rose to 71%; however, it edged lower in Dubai. Growth in office rentals was 6.5%QoQ in Abu Dhabi (Grade A) while it fell by 4.7% in Dubai. Going forward, Global Investment House – Kuwait expect UAE real estate market to benefit in the long-run driven by improved economic fundamentals and increased demand leading up to the Dubai World Expo 2020.
Saudi Arabia
Saudi Arabia’s real estate market performance was mixed in 3Q14. The office rental market improved rapidly in Jeddah, but growth remained relatively sluggish in Riyadh during the quarter. An expected sharp rise in new supply in the near term would impact rents, with Grade B offices facing more pressure than Grade A. The hospitality segment remained mixed, with Jeddah outperforming Riyadh. Riyadh’s residential rental market would fare better, while residential sales prices in Riyadh and Jeddah are likely to rise.
Kuwait
The overall traded value of real estate properties declined 8.3%YoY and 32.8%QoQ to KWD890.2mn in 3Q14. Moreover, number of transactions declined (6.9 %QoQ) as high prices dented overall volumes. The value of real estate sales declined to a low of KWD250.3.mn in August 2014 compared with a record monthly high of KWD522mn in June 2014. The investment sector remained the biggest contributor, accounting for 52.3% of total sales volume in 3Q14 compared with 43.1% in 2Q14.
Oman
Oman’s real estate market remained flat in 3Q14 with the average rent for apartments and villas remaining stable. Moreover, the office market was also stable, with high-quality properties performing well than other lower categories. Going forward, strong demand and weak pipeline of villas are expected to drive prices. Moreover, influx of expat families would drive housing demand.
Qatar
Qatar’s office and residential rental markets remained strong during 3Q14. Offices recorded high rates across locations, with robust demand at Doha City Centre and Airport Road. Monthly rents for residential and offices increased 3%QoQ and 5%QoQ, respectively. The sales market also performed well, while mortgage inquiries rose considerably.
Bahrain
Bahrain’s real estate market, primarily the commercial segment, remained slightly weak during 3Q14 affected by oversupply; the trend is expected to continue in the near term. However, demand for quality and fitted offices would remain due to flexibility and lower costs. The residential market remained broadly stable; however, rents are expected to increase in the near term due to limited supply.
