Real Estate in the Gulf has had a volatile run for the past 24 months. Residential rents, in particular, have experienced a downward trend, valuations have come under pressure and wider business activity has been fairly slow. Despite challenges, we are positive on signs of recovery in 2020, providing favorable conditions for Real Estate investment in strategic sectors.
Interest rates have been shaved by central banks in the region following US Fed rates cuts which should stimulate non-oil economic growth. Economic reform across the GCC, and the upcoming Expo 2020 in the UAE, are boosting investor confidence, and this is a trend that should in turn provide impetus to the real estate market.
As borrowing conditions improve, REITs and real estate funds are likely to take opportunities to access capital that will fund asset portfolio expansion. The UAE recorded the highest inbound investment in the MENA region for the first half of 2019, amounting to USD 14.4 billion across oil and non-oil sectors. If the trend of strong inflows is maintained, the local market will benefit from this much-needed boost to stimulate further investment activity.
With loan facilities available at more competitive rates, and what can only be described as a “buyer’s market” in a number of key real estate asset classes, the GCC REIT sector is well-positioned to maintain its path to maturity. As the sector expands to provide a wider array of institutional real estate investment opportunities, new players may need to carve out their own niche by specializing their portfolios. Established players will look to grow and diversify their holdings to mitigate cyclical market risk, and this is the approach that ENBD REIT will continue to apply to its medium-term investment strategy.
