GCC Real Estate To Witness Acceleration In First Half Of 2023
Buoyed by strong macroeconomic fundamentals, the real estate sector in GCC economies is on a solid trajectory to witness acceleration in the first half of the year, according to the ‘Real Estate H1 2023 Outlook’ reports for Kuwait, Saudi Arabia and the UAE, issued recently by the Kuwait Financial Centre (Markaz).
GDP growth rate was expected to be a measly 2% in 2023, lower than 12.4% last year owing to production cuts mandated by Opec+ and expected decline in demand for oil on fears of a global recession. Non-oil economic activity is expected to grow at 3.4% in 2023.
The report highlighted that with global supply chain disruptions easing, Kuwait’s inflation had begun to slow down. Consumer Price Index (CPI) rate was 3.27% as of October 2022 in comparison with 4.71% in April 2022.
The sales in the real estate sector were stable in Q3 2022 supported by the commercial and investment sectors compensating the decline in the private housing segment. Commercial sector sales were at KD124 million (+241.6% y/y) and investment sector was at KD253 million (+7.2% y/y). Residential sector registered sales of KD443 million (-46.4% y/y).
Saudi market economic growth momentum was expected to slow down this year compared to 2022, amid expected softening in oil prices and lower production in line with Opec+ cuts. In Q3 2022, Saudi Arabia had registered real GDP growth of 8.6% y/y, mainly supported by rise in oil production. Non-oil economic activity is showing growth and is expected to be positive in 2023.
The value of real estate transactions in Saudi Arabia from January-September 2022 had surged to SR172.5 billon, thus marking an increase of 12.2% y/y. Real estate prices, as indicated by the price index, have been relatively stable in the recent past, showing mild growth.
Saudi Arabian real estate market has been broadly positive, supported by favorable economic conditions and government initiatives. However; rising interest, sober global economic outlook poses some headwinds.
The report also indicated that the country's real estate sector had a positive year in 2022, witnessing a rise in rentals and property prices. For the January to September period, average property prices and rents increased by 8.9% and 26.6% respectively in Dubai.