Markaz Real Estate Macro Index Scores Reflect Positive Trends in Key GCC Markets for H2 2024

Markaz, in its latest real estate reports, forecasts a positive outlook for the real estate markets in Kuwait, Saudi Arabia, and the UAE in H2 2024. These comprehensive reports, developed by Markaz MENA Real Estate team and Marmore MENA Intelligence, the research arm of Markaz, offer a detailed analysis of the real estate sector's performance during H1 2024 and present an optimistic forecast for H2 2024. The positive projections are based on a thorough evaluation of critical macroeconomic indicators such as GDP growth rates, fiscal policies, and the oil market dynamics. 

According to forecasts for H2 2024, the real estate sector across the GCC region is expected to maintain its upward momentum, reinforced by strong macroeconomic fundamentals, supportive government policies, and increasing investor interest. The Markaz Real Estate Macro Index Scores for Kuwait, UAE, and Saudi Arabia for the second half of 2024 are projected at 3.5, 3.7, and 3.60, respectively. 

Notably, while Kuwait and Saudi Arabia show increases from H1 2024 scores of 2.9 and 3.55, the UAE maintains a stable score of 3.7, reflecting continued robustness and potential for sustained growth within these key GCC real estate markets.

Kuwait Real Estate Report
Kuwait's real estate sector is indicating resilience and potential for growth amidst challenging economic conditions, with a projected GDP contraction of 1.4% for 2024 following a 2.2% decrease in 2023. Despite these broader economic challenges, the non-oil sectors, especially real estate, are experiencing growth supported by an expected 2.0% increase in non-oil GDP. 
Enhanced project activities and anticipated business reforms drive this growth. The real estate market, as evident in the first quarter of 2024, is witnessing a revival with increasing rents and land prices, particularly notable in the Istithmari segment, where apartment land prices have shown significant year-over-year gains across most areas, except in Mahboula.

Commercial sector land prices have also seen increases across all governorates, and rental rates for 3-bedroom and 60 sq m apartments have remained stable with an uptick compared to the end of 2022, despite some exceptions in Khaitan and Mahboula. 
The real estate market's momentum is expected to accelerate in H2 2024, supported by strategic government reforms and a positive market sentiment. This optimism is quantitatively supported by the Markaz Real Estate Macro Index, projecting a 3.5 out of 5.0 score for H2 2024, indicating substantial growth potential.
Additionally, inflation is expected to ease, with the Consumer Price Index (CPI) moderating to 3.17% year-on-year by April 2024 from 3.37% at the end of 2023. Currently moderated by high interest rates, credit growth is anticipated to improve as the Central Bank of Kuwait may lower rates later in the year. This financial adjustment, alongside legislative reforms aimed at reducing land hoarding and promoting large-scale residential developments, is set to stimulate the market further.

The sector is poised for further growth despite the decline in overall volume and value of real estate transactions—a normalization from the pent-up demand seen post-pandemic. The Kuwaiti real estate market's future looks promising, supported by macroeconomic stability and strategic reforms likely to drive continued recovery and expansion. Investors and stakeholders are encouraged to stay informed of the evolving economic and regulatory environment as they plan their activities for the latter half of 2024.

KSA Real Estate Report
The Saudi Arabian real estate market is set to experience a significant upturn in 2024 following a sluggish period last year, buoyed by burgeoning activities in both the oil and non-oil sectors. According to the International Monetary Fund (IMF), Saudi's real GDP is anticipated to climb to 2.6% in 2024 from a previous contraction, with an optimistic projection of 8.1% growth in 2025. This economic recovery is mirrored in the real estate domain, where the General Authority for Statistics (GASTAT) reports a 0.6% rise in the real estate price index for the first quarter of 2024, led by a 1.2% rise in residential land prices. Further, housing rents have seen a notable increase of 10.4% in April 2024, largely due to a 9.4% hike in villa rents.
In Saudi cities Riyadh, Jeddah, and Dammam, the residential sector saw a substantial year-over-year increase in sales transactions by 77%, 93%, and 28%, respectively, during the first quarter of 2024. The office sector also strengthened with rising rents in high-end and mid-range properties across these cities. This increase in rents has been partly driven by the new regional headquarters initiative, a part of Saudi Arabia’s Vision 2030, which kicked off at the start of 2024.

The hospitality sector, too, displayed healthy growth, with Riyadh leading with a 26.8% increase in average daily rates during the first quarter. This was supported by a rise in business travel, religious tourism from Hajj and Umrah pilgrimages, and a vibrant slate of international and cultural events. However, not all areas saw growth; the Dammam Metropolitan Area experienced a slight decline.

Despite challenges posed by persistently high interest rates, the outlook for Saudi Arabia’s real estate market remains positive, with strong performance expected to continue into the latter half of 2024 due to solid non-oil sector activities and significant government spending on infrastructure. The market is believed to be in an accelerating phase, indicative of a dynamic period of growth ahead.

UAE Real Estate Report
The UAE real estate sector is poised for continued growth through 2024, driven by solid demand across residential, office, and hospitality segments, as detailed in the latest UAE Real Estate Report. The non-oil economy, including significant contributions from the real estate sector, is expected to sustain strong growth, buoyed by government support and favorable policies such as the revised Golden Visa requirements, which now enhance investor eligibility. Despite geopolitical uncertainties mildly clouding economic prospects, the real estate market remains vibrant, with record-breaking transactions and price increases.
In the first quarter of 2024 alone, residential property prices in Dubai and Abu Dhabi showed impressive annual gains of 18.3% and 8.6%, respectively, strengthening the UAE's position as a competitive luxury housing market globally. Moreover, easing the AED 1 million minimum down payment for golden visas is anticipated to further stimulate the real estate market by attracting more international investors.
Office spaces in Dubai and Abu Dhabi have also seen rent increases due to high demand, particularly in higher-grade properties, reflecting a market trend towards quality. Meanwhile, the hospitality sector continues to thrive, supported by a surge in tourism and business travel, contributing to a robust performance in hotel average daily rates across major cities.

Based on a comprehensive analysis of various macroeconomic factors, the UAE real estate sector is expected to maintain its growth trajectory in the latter half of 2024, albeit with a slight moderation in certain segments and areas like Abu Dhabi. The market's resilience indicates a well-supported economic environment and proactive policy measures ensuring sustained growth and investment appeal.
It is also worth noting that Markaz has exposure in the real estate sector across Kuwait and the GCC markets through the Markaz Real Estate Fund (MREF) and Markaz Gulf Real Estate Fund (MGREF), a private placement fund.

Kuwait - RE Report H1, H2 2024

KSA - RE Report H1, H2 2024

UAE -RE Report H1, H2 2024
 

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