Detailed research reports covering real estate sector in the GCC
Real Estate Market Commentary - 27 May to 2 June 2012
Jun 02, 2012
Kuwait Financial Centre "Markaz"
MENA REAL ESTATE RESEARCH
Research Highlights: A weekly market commentary
Real Estate Market Commentary
27-May-12 to 02-Jun-12
Kuwait: Central Statistical Office (CSO), in its latest monthly release, outlined a 0.6% M-o-M decline in overall prices in Apr-12, while the housing component remained unchanged. From a year ago, overall prices either increased or remained stable on M-o-M basis till Mar-12, but a deflation in CPI in Apr-12 denotes a change in trend, likely due to a strengthening USD. Housing component remained unchanged (M-o-M %) for most of the months since a year ago. On a Y-o-Y basis, overall prices increased 3.3%, and house rentals and utility prices grew 1.5%. Dubai: According to the Dubai Statistics Center (DSC)'s latest release, GDP grew 3.4% Y-o-Y in 2011 to AED306.2 Bn. This was led by a 5.8% Y-o-Y increase in trade (which contributes 30.7% to GDP). Exports expanded 44.3% Y-o-Y to AED98.1 Bn, while imports grew 21.4% Y-oY. The overall inflation was 0.5% Y-o-Y in 2011, while the housing component dropped 3.3%. UAE: The Dubai Chamber of Commerce and Industry (DCCI) expects inflation to increase during the second half of 2012, low base effects and rise in wages of UAE nationals in late 2011 and early 2012. This may be partially offset by lower international food prices and a stronger USD, both of which would make imports cheaper. The DCCI also expects housing costs to have bottomed out during the first H1-2012 and subscribed to IMF's overall inflation forecast of 2.5% Y-o-Y in 2012. On the other hand, as per the National Bureau of Statistics (NBS)'s latest monthly release, the average inflation until Apr-12 stood at 0.7% Y-o-Y, much lower than the IMF's 2012 full year forecast . Overall prices rose 0.1% M-o-M in Apr-12; while the housing component remained unchanged (this is in line with DCCI's observation of housing and rental costs bottoming out). On Y-o-Y basis, the overall inflation was 0.8% during Apr-12, whereas housing component dropped 3.4%. Bahrain: According to CBRE's Q1-12 market view, rentals for apartments and villas remained stable during the quarter on Q-o-Q basis, but declined Y-o-Y. The trend is in line with Cluttons' observation of a flat Q-o-Q trend, but differs on a Y-o-Y basis as Cluttons outlined rental increases at some locations. CBRE also noted stability in residential sales prices, in contrast with the downtrend in the residential sales market observed by Cluttons earlier. However, CBRE observed that some developers sold housing units at cost price or realizing losses, in line with the observation made by Cluttons. On the office front, CBRE reported a flat Q-o-Q rental trends, while Cluttons had outlined a downtrend earlier. CBRE expects rentals to decline, particularly at locations such as Diplomatic Area and Seef District, due to upcoming supply. Cluttons shared a similar outlook with downward pressure on office rentals likely to persist until end 2012. Lebanon: It was reported that builders are shifting focus to the construction of small apartments (120150 Sqm) due to high demand from the younger population. Demand for high-end residential space was reported to be retreating amid deterioration in the political environment in the Middle East that dented investor confidence. Figures provided by Bank Audi indicated a 3.4% Y-o-Y decline in real estate transactions to 16,784 in Q1-12 from 17,373; as the decline is largely ascribed to the impact of the regional turmoil on real estate.
Contents Market Commentary Charts to Note Activity Monitor: Dubai, Kuwait, Riyadh - KSA, Dammam KSA Qatar 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 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
140 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012
Source: Kuwait Central Statistical Office (C
SO), Monthly Consumer Price Indices (2011 & 2012)
Chart 2: UAE Consumer Price Index (CPI) and house rents 2011-12
114 112 110
106 104 102
100 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012
CPI Housing Component
Source: National Bureau of Statistics UAE, Monthly Consumer Price Indices (2011 & 2012), Markaz Analysis
Kuwait Financial Centre "Markaz"
MENA REAL ESTATE RESEARCH
Chart 3: UAE annual CPI 2008-12
Source: National Bureau of Statistics UAE, Markaz Analysis; *- actual figure till Apr-12
Exhibit 1: Rental trends discussed at a glance
Bahrain Rentals (Residential- BHD/pm, Office- BHD/Sqm/pm) Residential (Juffair -2BR) Office# CBRE 600 4.5-8.0 Cluttons 700 4.5-8.5
Source: CBRE, Cluttons Q1-12 reports #- CBRE data for Class A & B offices, Cluttons data for fitted office space
Kuwait Financial Centre "Markaz"
No. of Transactions No. of Transactions
10 20 30 40 50 60 70 80
No. No. No. No. Value Value Value Value
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