The GCC real estate sector is expected to witness steady to accelerated growth trends during the first six months, powered by anticipated stability in oil prices, rise in property demand, strong economic growth and supportive government policies, according to a report by Kuwait Financial Centre (Markaz).

Prepared by Marmore Mena Intelligence, a research arm of Markaz, the reports review the real estate sector's performance for H2 2023 and provide a detailed outlook report of H1 2024 based on critical macroeconomic indicators like oil and non-oil GDP growth, fiscal position, investments, money supply, inflation, interest rate, population growth, and job creation.

In line with its commitment to empowering investors with the latest and most reliable information on market trends and opportunities, Markaz published a series of reports on the real estate markets in Kuwait, Saudi Arabia, and the UAE recently.

The Markaz Real Estate Macro Index Scores for Kuwait, UAE, and Saudi Arabia for H1 2024 are 2.9, 3.8, and 3.55, compared to the H2 2023 scores of 2.8, 3.8, and 3.55, respectively.

On Kuwait, the Markaz report forecasts a stable real estate market in H1 buoyed by several favorable factors.

The country’s economic growth is expected to be positive at 3.6% year-on-year, compared to -0.6% in 2023, supported mainly by the projected non-oil sector growth rate of 3.5% supported by an expected stabilization of interest rates and the recent boost in project activity.

Also of significant impact are the IMF forecasts of oil prices, set to average at $79.92 per barrel in 2024 compared to $80.49 per barrel last year, ensuring stability in prices, as well as Kuwait’s decision to continue its voluntary oil output reduction.

Kuwait witnessed relatively stable inflation (CPI) trends during H2 2023 enabled by the country’s easing of food prices as well as the decline in global food prices.

During the same period, housing rents increased by 3.4% year-on-year while the credit to the private sector underwent a significant slowdown from 9.1% to 2.5% year-on-year in October 2023.

The report states that the likelihood of the peaking of interest rates, the continued momentum in project activity, and the ongoing job gains for citizens could support credit growth through H1 2024, although elevated interest rates and extension of oil production cuts to end-2024 could cap credit growth.

According to Markaz, the real estate sector remained largely stable in 2023, with prices and rent holding steady and the normalization of the pent-up post-pandemic demand beginning to normalize.

It also highlights the decline in residential sales, transaction volumes, Istithmari segment, and commercial sector sales in the nine-month period for 2023. However, based on its assessment of various macroeconomic indicators, the report reflects confidence in the stability of the Kuwaiti real estate sector in 2024.

The outlook suggests promising prospects for increased activity in the latter part of the year, as evidenced by the country's Markaz Real Estate Macro Index score of 2.9 out of 5.0.

Markaz’s KSA Real Estate Report estimates improved economic growth for the kingdom in 2024 as opposed to the slow growth experienced in 2023. This is primarily expected to be driven by Saudi Arabia’s robust performances across the oil and non-oil sectors, with real GDP growth expected to improve by 4% year-on-year.

The kingdom’s economic performance is expected to improve due to the stronger demand for oil, moderate inflation levels, and low unemployment levels, stated the report.

The contribution of non-oil activities, along with active government spending, is expected to further accelerate the performance, it added.

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