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
Authorities in Saudi Arabia have taken steps to seize these opportunities as well. It recently announced that “off plan” sales will only be conditionally permitted in select projects in the country. While it remains to be seen how the government will enact the announcement, a more regulated environment will be a positive move. A recent JLL MENA House report says to expect a move from the previous develop-and-sell business model to one based around securing tenancies and holding assets to gain sustainable long-term income flows. The emphasis is clearly gravitating away from high short-term profits to long-term predictable income streams.
Other countries in the region are at different levels on the learning curve, although the new paradigm is manifesting itself everywhere. In Qatar, the richest country in the Gulf by GDP per capita, the looming oversupply in the residential and office markets is set to challenge the market in the short term. Landmark Advisory says the supply and demand fundamentals of Qatar’s property market are changing rapidly. “After years of acute housing shortage, the supply-demand gap is narrowing, a fact already reflected by market-wide price declines. During 2009 and 2010, new residential developments will increase the supply of housing units and therefore narrow the supply-demand gap,” says the Landmark report.