- The GCC real estate sector is set for growth in 2024, driven by strong macroeconomic conditions, government policies, and rising investor confidence.
- Kuwait’s market remains resilient despite economic challenges, with a projected 3.5 growth score, aided by non-oil GDP growth and favourable reforms.
- Saudi Arabia’s real estate market is witnessing significant recovery, with strong growth in residential transactions and rising rents, driven by Vision 2030 initiatives.
- The UAE’s sector shows robust demand across residential, office, and hospitality segments, supported by policy reforms and surging luxury property prices.
The real estate sector in the Gulf Cooperation Council (GCC) region is set to continue its upward trajectory in 2024, driven by robust macroeconomic fundamentals, supportive government policies, and growing investor confidence.
Markaz Real Estate, a leading industry expert, has provided an optimistic forecast for the real estate markets in Kuwait, Saudi Arabia, and the United Arab Emirates (UAE) for the second half of 2024.
Positive Projections for Key Markets
Markaz Real Estate’s latest reports reveal a promising outlook for the real estate sectors in Kuwait, Saudi Arabia, and the UAE. The Markaz GCC Macro Index, a key measure of market performance, projects scores of 3.5 for Kuwait, 3.7 for Saudi Arabia, and 3.6 for the UAE for the second half of 2024. These scores indicate a stable and positive growth trajectory across these key markets.
The reports, developed by the Markaz MENA Real Estate team in collaboration with Marmore MENA Intelligence, provide a comprehensive analysis of the real estate sector’s performance during the first half of 2024 and offer detailed forecasts for the remainder of the year.
These projections are based on an in-depth assessment of crucial macroeconomic indicators such as GDP growth rates, fiscal policies, and oil market dynamics.
Kuwait’s Real Estate Sector: Resilience Amidst Economic Challenges
Kuwait’s real estate market has shown resilience and potential for growth, even amid challenging economic conditions. Markaz predicts a 3.5 score out of 5.0 for Kuwait’s real estate sector in the second half of 2024, reflecting substantial growth potential.
This optimism is fueled by a projected 2% increase in the non-oil GDP, despite an overall GDP contraction of 1.4% anticipated for 2024, following a 2.2% decline in 2023.
Kuwait’s non-oil sectors, particularly real estate, are experiencing growth driven by enhanced project activities and anticipated business reforms. The real estate market has seen a revival in the first half of 2024, with rising rents and land prices, especially in the Istithmari segment, where apartment land prices have recorded significant year-over-year gains in most areas, except Mahboula.
Commercial sector land prices have also increased across all governorates, and rental rates for three-bedroom apartments and 60-square-meter apartments have remained stable, with some increases compared to the end of 2022, although there are exceptions in Khaitan and Mahboula.
Also Read: The Rise of Rent-Now-Pay-Later (RNPL) in the UAE
Strategic Reforms and Market Sentiment
The momentum in Kuwait’s real estate market is expected to accelerate in the second half of 2024, supported by strategic government reforms and a positive market sentiment. Inflation is expected to ease, with the Consumer Price Index (CPI) moderating to 3.17% year-on-year by April 2024 from 3.37% at the end of 2023.
Credit growth, currently moderated by high-interest rates, is anticipated to improve as the Central Bank of Kuwait may lower rates later in the year. This financial adjustment, coupled with legislative reforms aimed at reducing land hoarding and promoting large-scale residential developments, is set to further stimulate the market.
Despite the decline in the overall volume and value of real estate transactions, which can be seen as a normalization from the pent-up demand observed post-pandemic, Kuwait’s real estate market is poised for continued recovery and expansion.
The market’s future looks promising, with macroeconomic stability and strategic reforms likely to drive sustained growth. Investors and stakeholders should stay informed of the evolving economic and regulatory environment as they plan their activities for the latter half of 2024.
Saudi Arabia’s Real Estate Market: A Dynamic Period of Growth
Saudi Arabia’s real estate sector is expected to experience significant growth in 2024, following a sluggish period last year. This positive outlook is supported by burgeoning activities in both the oil and non-oil sectors.
According to the International Monetary Fund (IMF), Saudi Arabia’s real GDP is anticipated to rise to 2.6% in 2024, marking a recovery from previous contractions. The IMF also projects a robust 8.1% growth in 2025, indicating strong economic momentum in the coming years.
The recovery in Saudi Arabia’s economy is mirrored in its real estate sector. The General Authority for Statistics (GASTAT) reported a 0.6% increase in the real estate price index for the first quarter of 2024, driven primarily by a 1.2% rise in residential land prices. Housing rents have also seen a significant increase, with a notable 10.4% rise in April 2024, largely due to a 9.4% hike in villa rents.
Growth Across Key Cities
In major Saudi cities such as Riyadh, Jeddah, and Dammam, the residential sector witnessed substantial year-over-year increases in sales transactions by 77%, 93%, and 28%, respectively, during the first quarter of 2024.
The office sector has also strengthened, with rising rents in high-end and mid-range properties across these cities. This growth in rents has been partly driven by Saudi Arabia’s Vision 2030, which includes the new regional headquarters initiative that began at the start of 2024.
The hospitality sector has also displayed healthy growth, with Riyadh leading the way with a 26.8% increase in average daily rates during the first quarter of 2024. This growth has been supported by a rise in business travel, religious tourism from Hajj and Umrah pilgrimages, and a vibrant slate of international and cultural events. However, not all areas saw uniform growth, the Dammam Metropolitan Area experienced a slight decline in certain sectors.
Despite challenges posed by persistently high-interest rates, the outlook for Saudi Arabia’s real estate market remains positive. The market is believed to be in an accelerating phase, indicative of a dynamic period of growth ahead, driven by strong non-oil sector activities and significant government spending on infrastructure.
UAE’s Real Estate Sector: Sustained Growth and Strong Demand
The UAE’s real estate sector is poised for continued growth throughout 2024, driven by solid demand across residential, office, and hospitality segments.
The non-oil economy, with significant contributions from the real estate sector, is expected to sustain strong growth, supported by government policies such as the revised Golden Visa requirements, which now enhance investor eligibility.
The real estate market in the UAE remains vibrant despite geopolitical uncertainties that have mildly clouded economic prospects. The sector has seen record-breaking transactions and price increases, particularly in the luxury housing market.
In the first quarter of 2024 alone, residential property prices in Dubai and Abu Dhabi showed impressive annual gains of 18.3% and 8.6%, respectively. These gains have further strengthened the UAE’s position as a competitive player in the global luxury housing market.
Policy Reforms and Market Dynamics
The UAE government’s policy reforms, such as easing the AED 1 million minimum down payment requirement for Golden Visas, are expected to further stimulate the real estate market by attracting more international investors.
The office space market in Dubai and Abu Dhabi has also seen rent increases due to high demand, particularly for higher-grade properties, reflecting a market trend toward quality.
The hospitality sector in the UAE continues to thrive, supported by a surge in tourism and business travel. This growth has contributed to a robust performance in hotel average daily rates across major cities, further bolstering the real estate market.
The GCC real estate sector is poised for a promising future in 2024, with strong growth expected across key markets in Kuwait, Saudi Arabia, and the UAE. These markets are set to benefit from robust macroeconomic fundamentals, supportive government policies, and increasing investor interest.
As the year progresses, stakeholders in these markets should remain vigilant and responsive to the evolving economic and regulatory landscape to capitalize on the opportunities that lie ahead.
The continued momentum in the real estate sector reflects the resilience and adaptability of the GCC economies, positioning them for sustained growth and development in the years to come.
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