Get real, Part II
With the grinding halt of the real estate rollercoaster, exhilaration at the prospect of a ‘fast buck’ is over. What’s next for the industry? Part II
October 31, 2009 6:55 by Ehtesham Shahid
However, local players’ lack of enthusiasm for an event like Cityscape is made up by foreign players eager to make a mark. Arlida Ariff, the managing director of Malaysia’s Iskandar Investment Berhad (IIB) believes Cityscape Dubai will provide a great opportunity for her to strengthen her company’s relationship with the GCC market.
The saving grace is that this interest is not confined just to Dubai. Companies such as IIB are eying the wider regional market that includes Kuwait, Qatar and Saudi Arabia, another indication of shifting paradigms. Moody’s calls the Saudi real estate market “a notable exception” that is “benefiting from a large and growing indigenous population base and structural under-capacity for residential property, especially for low and middle-income families.” A Proleads study says out of total projects worth more than $387 billion in Saudi Arabia, 442 are in construction or bidding, with 106 canceled or on hold. The country accounts for nearly half of the GCC’s $1 trillion of GDP and two-thirds of its population of 37 million.
A Global Investment House study projects Saudi Arabia’s real estate sector to sustain a growth rate of between 5 percent and 7 percent until 2012, powered by a consistently strong domestic housing demand, expanding business development projects and a burgeoning hospitality sector. According to the report, the real estate sector’s GDP contribution will reach 7.2 percent in 2009, up from 6.8 percent in 2004, as Saudi Arabia’s real estate investments reach 1.125 trillion Saudi riyals ($300 billion) this year and are estimated to reach 1.5 trillion riyals ($400 billion) by 2010.