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 firstname.lastname@example.org Venkat Ramadoss ACA, CFA Assistant Manager +965 2224 8548 email@example.com Bassam N. Al-Othman Executive Vice President +965 2224 8011 firstname.lastname@example.org
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
Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz) and its subsidiaries. Markaz is regulated by the Capital Markets Authority and the Central Bank of Kuwait. The report is owned by Markaz and its subsidiaries and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz and its subsidiaries. Any user after obtaining Markaz and its subsidiaries permission to use this report must clearly mention the source as "Markaz and its subsidiaries ". The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and its subsidiaries and are subject to change without notice. Markaz and its subsidiaries has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily indicative of future performance. Kuwait Financial Centre S.A.K (Markaz) and its subsidiaries may seek to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz and its subsidiaries, Markaz and its subsidiaries has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz's and its subsidiaries own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz's and its subsidiaries website shall be at your own risk. For further information, please contact `Markaz' at P.O. Box 23444, Safat 13095, Kuwait; Email: email@example.com; Tel: 00965 1804800; Fax: 00965 22450647.
Kuwait Financial Centre "Markaz"
Markaz Research Offerings Economics
Got a CMA: What Next? (Feb-12) How is the GCC preparing for a AA+ World? (Sept-11) MENA Unrest (Apr-11) Kuwait Development Plan (Mar-11) Kuwait Capital Market Law (Mar-10) The "Vicious Square" Monetary Policy options for Kuwait (Feb-08) To Leap or To Lag: Choices before GCC Regulators (Apr-07) GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06) GCC GCC GCC GCC GCC GCC
Infrastructure Power (2012)* Airports (2012)* Ports (2012)* Water (2012)* Roads & Railways (2012)* ICT (2012)* MENA Real Estate MENA Market Outlook Kuwait Qatar Syria KSA Egypt Algeria Abu Dhabi Lebanon Dubai Jordan
Strategic Research GCC Defensive Bellwether Stocks (Jan-12) KSE 15 Index (Sept-11) The Golden Portfolio (Sept-10) Persistence in Performance (Jun-10) Missing the Rally (Jun-09) This Too Shall Pass (Jan-09) Fishing in Troubled Waters (Dec-08) Down and Out: Saudi Stock Outlook (Oct-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07) Periodic Research Annual GCC Asset Management & Investment Banking Survey 2012* Semi Annual GCC Market Outlook What to expect in 2012 (Jan-12) GCC Outlook 2H11 (Aug-11) What to expect in 2011 (Jan-11) What to expect in 2010 (Jan-10) What is left for 2009? (Sept-09) GCC Equity Research Statistics Quarterly GCC Equity Funds GCC Corporate Earnings Monthly Market Review Weekly MENA Market Intelligence KSE Market Review International Market Update Daily Markaz Daily Morning Brief Markaz Kuwait Watch Daily Fixed Income Update
Periodic Research Real Estate Strategic Research MENA Real Estate Perspectives Weekly Real Estate Market Commentary International Real Estate Market Outlook U.S.A. Contact Details Banking & Financial Services Kuwait Investment Sector (Mar-12)
Markaz Research is available on: Bloomberg Type
"MRKZ" , Thomson Financial, Reuters Knowledge, Zawya Investor & Noozz.
Stress Testing Kuwait Banks (May-11)
Kuwait Investment Sector (Sept-10) The New Regulations on Kuwait Investment Sector (Jun-10)
To obtain a print copy, kindly contact: Kuwait Financial Centre "Markaz" Media and Communications Department Tel: +965 2224 8000 Ext. 1814 Fax: +965 2249 8740 Postal Address: P.O. Box 23444, Safat, 13095, State of Kuwait Email: firstname.lastname@example.org markaz.com/research
GCC Banks - Done with Provisions? (Jan-10)
Shelter in a Storm (Mar-09) Banking Sweet spots (Apr-08) Oil & Gas
GCC Petrochemicals (2012)* Diworsification: The GCC Oil Stranglehold (Jan-09) Monthly Regional Petroleum Projects Commentary Daily Oil & Gas Bulletin
*Paid Category. Only executive summary & table of contents available for free download