Detailed research reports covering real estate sector in the GCC
Real Estate Market Commentary - 29 April to 5 May 2012
May 10, 2012
Kuwait Financial Centre "Markaz"
MENA REAL ESTATE RESEARCH
Research Highlights: A weekly market commentary
Real Estate Market Commentary
29-Apr-12 to 05-May-12
Kuwait: The Central Statistical Office (CSO), in its latest monthly release, indicated that average inflation edged up 0.8% M-o-M in Mar12, despite a 0.1% M-o-M drop in housing rentals. On a Y-o-Y basis, overall inflation was much higher at 4.1%, while the corresponding housing component increased 1.5%. Though both housing costs and overall inflation have increased from Mar-11, housing costs have remained mostly flat since Dec-11. Qatar: Property consultants DTZ in their Q1-12 report outlined a slight uptrend in residential rentals on a Q-o-Q basis, primarily due to an influx of expatriates for work. High-end accommodations at locations such as Diplomatic District and Pearl primarily led this rise, and apartment occupancy rates at these locations were above 95%, according to DTZ. Earlier, Asteco had reported stable residential rentals, while CBRE and NAI Qatar had observed marginal declines. Asteco had also outlined strong rental demand at Pearl. DTZ further noted that, the uptrend was more prominent for apartments, while the villa market remained flat. In contrast, Asteco had observed stability in both apartment and villa rentals, while CBRE and NAI Qatar had reported stable rental rates for apartments and marginal erosion of villa rentals. DTZ also highlighted strong residential sales demand at Pearl, in line with Asteco. On the office front, DTZ reported a diminishing oversupply situation due to strong demand, which helped stabilize rentals on a Q-o-Q basis. This was in tandem with Asteco's observation, but contrasted with NAI Qatar observation of a decline in office rentals. DTZ noted stable rentals for prime office space in areas such as Diplomatic District, Airport Road, Ring Road C & D, Al Sadd and Salwa Road. However, NAI Qatar outlined significant declines in prime office rentals at many of these locations (Airport Road: 6.3% Q-o-Q, Al Sadd: 2.9% and Salwa Road: 7.6%). DTZ estimates rentals to remain mostly stable in 2012, in line with Asteco. Lebanon: Citing figures from the Directorate of Real Estate, Bank Audi reported an 8% Y-o-Y growth in property sales to c.USD2 Bn in Q1-12. However, the number of sales transactions declined 3.4% Y-o-Y to 16,784. Transactions by foreigners grew 15.7% Y-o-Y to 325 in Q1-12. The sluggishness in volumes is ascribed to the cautious approach by investors in light of continued regional disturbances, evident from new construction permit trends, which was down 4.1% Y-o-Y. GCC: An analysis of transaction data for Apr-12 published so far indicates increasing activity levels in Dubai and declining trends in KSA on Y-o-Y basis. However, on M-o-M basis, mixed trends were observed in Dubai, with deal volumes edging down and a rise in total transaction value. Furthermore, the number of transactions/ transaction value declined (M-o-M) in Riyadh, while Dammam exhibited an uptrend. IMF, in their Regional Economic Outlook now expects GDP growth in GCC countries to decelerate to 5.3% in 2012 after growing 8% in 2011, and forecasts non-oil GDP to increase 4.5% Y-o-Y in 2012. IMF's lower growth forecasts for GCC are driven by resurgence in oil output from Libya and capacity expansion in Iraq, alleviating supply concerns. Economies of Kuwait, KSA & Qatar are expected to grow higher than the average rate while Bahrain and UAE are expected to be laggards in terms of GDP growth.
Contents Market Commentary Charts to Note Activity Monitor: Dubai, Kuwait, Riyadh - KSA, Dammam KSA Markaz Research is available on: Bloomberg - Type "MRKZ" Thomson Research, Reuters Knowledge ReutersRealEstate.com Nooz Zawya Investor ISI Emerging markets
Thomas K. Mathew Senior Research Analyst +965 2224 8000 Extn: 2712 email@example.com Venkat Ramadoss ACA, CFA Assistant Manager +965 2224 8548 firstname.lastname@example.org Bassam N. Al-Othman Executive Vice President +965 2224 8011 email@example.com
Developments sourced from various sources including news portals like Gulfbase, Zawya, Reuters, Bloomberg, Trade Arabia, Business 24/7, Arabian Business, The Peninsula, Gulf News, Property wire, Khaleej Times, Saudi Gazette, KUNA etc and also from published reports of real estate brokers and investment research houses.
MENA REAL ESTATE RESEARCH Charts to note
Chart 1: Kuwait Consumer Price Index (CPI) and house rents 2011-12
154 152 150 148 146
140 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012
CPI Housing Component
Source: Kuwait Central Statistical Office (CSO), Monthly Consumer Price Indices (2011 & 2012), Markaz Analysis
Chart 2: Real Estate Transactions Market Comparison Apr-12
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