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House arrest, Part II
The UAE’s real estate industry is in shock, but the country’s mortgage providers will feel even greater pain from an expected wave of property defaulters, Part II
January 29, 2009 8:47 by Ehtesham Shahid
Saudi Arabia has the largest real estate market in the Gulf Cooperation Council (GCC), with more commercial floor space than all of the other countries in the region combined. The current stock of commercial space is planned to increase more than 60 percent by 2012. According to the JLL report, the residential housing shortage currently runs at more than 500,000 units and is expected to double by 2012. Despite that, in the short-term, real estate prices are worrying firms across the country. “In our survey,” reads SABB’s Saudi Arabia business confidence Q4 2008 report, “46 percent of respondents (68 percent in Q3) say they expect the cost of real estate to have a negative impact on their business in the next two quarters.”
Analysts have, however, been quick to assign Saudi the pole position to replace “overbuilt Dubai” as the Gulf’s new magnet for international property investors. “We see that there will be a movement away from Dubai now … and the market that fascinates us more than any is the Saudi market,” Andrew White, the head of Middle East operations at UK-based investor Kenmore Property Group told Reuters in early December. “While growth in Dubai’s economy relies on a nascent financial services sector and a burgeoning expatriate workforce, vast Saudi oil reserves have provided more than enough ballast to its economy in global credit market turmoil,” White said. Meanwhile in Doha, potential buyers are being advised to wait for a while before committing to the property market. According to DTZ Middle East, “a 10 percent ‘softening’ could occur in Doha by the middle of next year.” In Kuwait, real estate sales dropped sharply during October, reaching their second lowest level in more than two years.
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