Kuwait – The real estate sector of the Arab Gulf states badly needs the intervention of investment institutions and funds to upgrade
its performance next year following a two-year deadlock, a specialized economic report said Thursday.
A report released today by Al-Mazaya Holding Company said that the growth achieved by various economic sectors in the Arab Gulf states, particularly following the hike in oil prices, should be reflected on investment funds and institutions with the aim of subsidizing the real estate market that has been experiencing a downward trend for two years.
It pointed out that the Arab Gulf countries which were most affected by the global financial crisis, like Kuwait, have initiated reforms during the crisis and gave momentum to the domestic economy in what should manifest itself in the real estate activity.
However, it added that expectations do not refer to a full openness to the real estate sector on the part of funders in 2011 as it is unlikely for the channels of funding to return to its bygone era though there are signals of recovery following the loan that Eva Hotels and Resorts Holding Company has recently got from Standard Chartered Bank, the first of its kind since the start of the global financial crisis.
It also referred to the necessity of lending support to the real estate firms by the Arab Gulf banking and finance institutions as the reliance of these firms on the governmental subsidies only will endanger them to price and market pressures that may delay the economic recovery in general.
The finance bodies did not take a positive stance, leaving the whole matter to governments in what pushed international finance institutions to warn against a rally in inflation rates as a result of wide-scale governmental intervention, the report said.
The expected economic growth in the Arab Gulf Cooperation Council (GCC) states will boost the performance of the real estate sector in the coming year, particularly following the increase in the governmental expenditure on infrastructure like what is happening in Kuwait following the approval of the development plan as well the development of educational and health installations, it explained.
Regarding the residential real estate market, it expected that the prices of houses and their rental values will soar in 2011, adding that hotels market will most likely remain relatively stable compared to its performance in 2010.
Finally, the report expected that rental values of commercial buildings, which are marked by good locations and roofed car parks, to soar in the coming year, besides a boom in the retail and recreation centers. (KUNA)
Global Arab Network