The Gulf Co-operation Council (GCC) is poised for a construction boom on account of massive infrastructure creation, according to a top official of Doha Bank.
“A combination of a shortage of affordable housing, stable interest rates, encouraging government policies which promote foreign direct investment in real estate sector, and an increasing expatriate population, is expected to result in high demand for housing in the short to medium term,” Doha Bank Group CEO R Seetharaman said at Project Qatar 2012.
Referring to Qatar, he said the residential construction market will rise in the long term on the back of healthy growth in population and increasing economic activity. “Commercial office construction market will be oversupplied in the near-term, with several new developments nearing completion in the near future,” he said, highlighting that major projects in Qatar include Lusail project, Barwa financial district and Barwa city.
The residential rental yields across Riyadh and Jeddah would increase mainly due to rising rental rates on the back of a shortage of new residential units, he said, adding the outlook for the commercial office real estate and construction markets of Saudi Arabia point towards a positive future on rising population, high liquidity, low interest rates and a booming economy. Major projects in Saudi Arabia include King Abdullah Financial district, Jeddah Housing project and Shams Al Arous.
On the UAE market, he said the residential properties market of Dubai was currently facing an oversupply situation due to lack of investor interest in acquiring new property. “Though the Dubai market is expected to remain oversupplied in the near term, the residential real estate and construction market of Dubai is likely to outperform the commercial office markets,” he added.
Abu Dhabi’s residential market is expected to be “oversupplied” over the next two years due to fresh supply in the market which would impact the rental rates, he said. In UAE major projects include Al Falah, Al Bateen Park and Rainbow towers.
In Oman, Seetharaman said, an optimistic outlook prevailed in the residential construction markets on the back of increasing population and rising employment levels.
However, the commercial office properties market will continue to be marked by oversupply in the near term, he said, adding demand for residential properties would remain strong in the well-developed localities of Qurum, Shatti Al Qurum and Madinat Qaboos.
In Kuwait, the demand for private housing would be particularly strong in the long-term due to undersupply and commercial office properties segment would “suffer” from the current state of oversupply in the short to medium-term, he said. Khairan Residential City and Kuwait Investment Authority headquarters are some of the major projects in Kuwait.
He said the residential market of Bahrain would continue to see “substantial undersupply” while the commercial office construction will be “under pressure” mainly due to oversupply and subdued economic environment.