Construction & Real Estate
GCC's real estate transaction values surge 42pc to hit $137bn
GCC's real estate transaction values surged to a new high in 2021, hitting $137.4 billion, up 42% over $96.7 billion for a normalized 2019, driven by the strong transactions growth in Dubai (+86%), Kuwait (+47%) and Saudi Arabia (+25%), said a report.
GCC real estate value transactions surged to a new high in 2021, hitting $137.4 billion, up 42 per cent higher than the full year figure of $96.7 billion for a normalized 2019, mainly driven by strong transactions growth in Dubai (+86%), Kuwait (+47%) and Saudi Arabia (+25%), according to a report by Kamco Invest, a regional non-banking financial powerhouse in the region.
The number of transactions in 2021 soared to 663,323 from the previous year's figures of 570,080, it stated.
Saudi led all markets in terms of transactions and contributed to over 41% of the aggregate value transacted, while adding 46% to the region’s 2021 transaction volumes.
Dubai's sales transactions hit AED150 billion, witnessing higher growth when compared to the previous two years as higher transaction activity was largely due to opportunistic buying in the residential segment.
This benefitted the villa and townhouse segment and was also aided by mortgage investors who were keen to capture lower mortgage rates, as discussions over the impact of potential rate hikes on loan rates continued to emerge.
The average value per transaction in GCC bottomed out in 2021 ($207,000) and was only 7.1% lower than the 2017 average.
Markets such as Saudi Arabia (+29.7%) and Dubai (+21.6%) witnessed significantly higher average transaction values, pointing towards investment appetite for attractively price real estate.
The real estate transactions market in Dubai was particularly active in 2021, as transactions levels reportedly surpassed levels last seen in 2014, while the third highest transaction volumes in history were recorded, as per Property Monitor.
Value transacted in Saudi Arabia and Dubai combined reached $97.6 billion in 2021, and surpassed full year figures of the entire GCC from 2019.
In Dubai, lower available inventory and more attractive prices pushed investors towards off-plan project launches from developers after a slow 2020 with AED22 billion, as off-plan transactions clocked over AED45 billion in 2021.
Recovery in Saudi Arabia’s real estate prices was driven by government support mainly, in the form
of mortgage financing and housing initiatives such as the Sakani program from the Real Estate
Development Fund (REDF) that support the Vision 2030 objective of increasing the home ownership
rate to 70% by 2030, said the report by Kamco Invest.
This was also evident from the value of new residential mortgages in 2021 (SR152.4 billion) which was higher than aggregate mortgage value of 2020 (SR150.8 billion).
For 2022, the discussion behind expansion of real estate cap rates in the GCC, amidst the backdrop
of interest rate hikes, is more nuanced in our view, across sub-segments and type of property, it stated.
Consensus economists estimate multiple rate hikes, ranging 5-6 hikes of atleast 25bps each by the
Fed, which would impact lending rates in the GCC.-TradeArabia News Service