7 Oct, 2008, 1939 hrs IST, IANS
DUBAI: The real estate markets in the Middle East will outperform all other regions in the world while India and China will be the key drivers of the sector in the Asia-Pacific region, according to a new survey.
The 'Investor Survey Sentiment', conducted by global real estate consultancy Jones Lang LaSalle in association Cityscape 2008, the real estate exhibition currently under way here, found that while the UAE will offer the best performing real estate market in the next couple of years, Saudi Arabia will be the next best performer.
The results of the survey were arrived at after taking the views of 350 developers, sovereign wealth funds and high net worth investors, Jones Lang LaSalle said in a statement.
Over 50 percent of the respondents believe the real estate markets in the Middle East will see the strongest performance of any region worldwide over the next two years.
India and China, too, have a strong outlook with 20 percent of the respondents believing these two markets will make the Asia Pacific the best performing market.
"Sentiment is a critical component when considering the health of any market," Blair Hagkull, Jones Lang LaSalle's managing director for the Middle East and North Africa (MENA), said in the statement.
"It is an important barometer, a key assessment criteria for any investor and the ideal gauge for considering future prosperity," he added.
The survey, according to the consultancy, is the most up-to-date as it was conducted after in the aftermath of US investment bank Lehman Brothers' collapse.
Also Read
→ High-end residential areas see 20-25% rise in price
→ Realty investors take equity route to offset tax burden
→ NCR sees fall in real estate projects
According to the survey, investors in the region are least positive towards west European real estate markets, with only 3 percent expecting this to be the strongest performing region.
Most Middle Eastern investors do not believe the US and European markets will witness a major improvement in performance in the short term.
The Middle East is expected to be one of the regions least affected by current global economic turmoil.
The survey found that though North America would be most affected by the crisis, it could also provide the most opportunities for value purchases over the next two years.
"There is a clear inverse relationship between strongest performing real estate markets and those economies expected to be most impacted by current global economic environment," the Jones Lang LaSalle statement said.
Investors also believe that, apart from MENA, emerging markets like Asia-Pacific and Eastern Europe will also be least affected by economic crisis.
With UAE expected to be the best performing market, investors remain particularly confident of growth in Abu Dhabi.
Almost a quarter of the respondents said Saudi Arabia would offer the strongest performing real estate markets, driven by a large and rapidly urbanising population and new legislation, which is opening up of real estate market.
Apart from the UAE and Saudi Arabia, Qatar emerges as the best performing market in the Gulf Cooperation Council (GCC) with less investors expecting Bahrain, Kuwait or Oman markets to perform the most strongly.
"The Gulf region offers strong relative international value with active buyers in the region generally looking to transact at 8-8.5 percent yields for prime commercial operating assets and slightly higher for hospitality products," Ian Ohan, head of investment transactions in MENA at Jones Lang LaSalle said in the statement.
"Investors are looking for strong capital growth in Abu Dhabi, the kingdom of Saudi Arabia and Qatar, reflecting their robust economic potential and more nascent stages in the real estate cycle."
He, however, added that though this was consistent with recent market evidence, it was likely to bow to upward pressure as the cost of debt rose.
According to Ohan, asset pricing in the region is increasingly being underpinned by cash flow valuation, reflecting a shift from development-led to capital-based real estate markets.
"We are anticipating greater transaction activity as sellers' value expectations begin to more closely resemble income valuations as debt markets tighten and speculative exit opportunities decline," he said.
About Us | Advertise with Us | Careers @ TIL | Terms of Use | Privacy Policy | Feedback | Sitemap
Copyright © 2008 Bennett Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service
This site is best viewed with Internet Explorer 6.0 or higher; Firefox 2.0 or higher at a minimum screen resolution of 1024x768
Wednesday, October 8, 2008
Archive for the 'Saudi Arabia Property' Category
Archive for the 'Saudi Arabia Property' Category
Investments in Saudi property market soar to SR1 trillion :: MENAFN
Saturday, February 4th, 2006 Posted by Overseas Property Mall in Saudi Arabia Property
JEDDAH — Real estate is the fastest growing sector in Saudi Arabia with more than SR1 trillion in investments. The growth is said to be the second highest in the world after Shanghai, according to Solaiman Al-Majed, Chairman, Tanmiyat Group.
But the burgeoning market needs to be regulated and organised in order to avoid scams, of which there have been quite a few, as well as achieve continuous progress and maintain investor confidence.
Apart from businessmen, thousands of ordinary Saudis have invested their money in real estate, in the expectation of large profits. But according to financial analyst Abdelmenem Jamil Addas this was not a healthy trend. “People think that they are seeing the dawn of a new era in the real estate market, that it will bring unimaginable riches and prosperity to all. This overconfidence will have dangerous consequences on our economy,” he added.
He said that the recent rise in real estate prices was being fuelled by artificially low short-term interest rates and a huge increase in bank loans. “We should not forget that as soon as interest rates rise, the rally in real estate prices will come to an abrupt end,” he explained. “Any market that is rising because of an increase in bank’s loans ought to be viewed with great caution,” he said.
According to Dr. Abdul Aziz Turkistani, a real estate expert, the real estate boom has led to the creation of many professional companies. “These firms,” he says, “are working to improve their organisational structure and marketing strategy in order to transform the sector into a successful industry.” He felt that real estate companies in the Kingdom should form an association to promote the industry with a view to facing competition from foreign firms.
Wafa Al-Ghamdi, an expert in the field, said there was a professional approach and a chaotic way of developing and marketing real estate. The professional approach relied on market studies, market analyses and meeting customer demands. “The Saudi real estate market still depends on old methods and does not meet customer demands, especially middle and lower class families,” she said. Among the problems the Saudi real estate market faced was the domination of a few investors, lack of studies, lack of laws protecting the investors and customers, lack of transparency in dealings and the reliance on rumours to promote properties. “There is also lack of market awareness among customers, particularly women, and agents take advantage of the women’s lack of knowledge,” Al-Ghamdi said.
A Jeddah Chamber of Commerce and Industry (JCCI) working team recently made a number of proposals to make the business transparent and foolproof protect the rights of investors and ensure steady growth.
The boom has been attributed to the continuous repatriation of Saudi funds from overseas and increasing liquidity supported by soaring oil revenues.
Government projects and initiatives provide major opportunities for the private sector. They also continue to ensure that the construction industry remains the largest non-oil economic sector in the Kingdom. It was estimated to have contributed more than $15 billion to the national economy in 2005.
Recognising the need to diversify and reform its economy, the government has provided incentives and relaxed laws. This has boosted the private sector’s enthusiasm for heavy investments in residential and commercial buildings. It is estimated that 555,000 individuals will need new housing annually. This gives ample scope for developers. It equates to 100,000 new residential units a year. Additionally, the Kingdom is also developing its tourism industry (largely local and religious tourism) and it is expected to contribute $22 billion to the economy by 2023.
The Kingdom’s new Real Estate Law allows non-Saudi residents to own real estate for their private residence with the permission of the Interior Ministry. It also allows ownership of real estate by foreign investors to conduct their business activities and to own properties needed for their accommodation and that of their employees. The law also entitles investors to rent out property.
According to Abdul Monem Murad, chairman of the real estate development committee at JCCI total investments in 53 real estate share businesses across the country have reached more than SR14 billion.
Abdul Rahman Al-Jeraisy, chairman of the Riyadh Chamber of Commerce and Industry (RCCI), is spearheading a joint venture with other businessmen to set up a large real estate company in Riyadh with a capital of SR30 billion. He said the new company would have a strong presence all over Saudi Arabia. His estimate is that five million housing units would be required by 2010.
Source: MENAFN
Investments in Saudi property market soar to SR1 trillion :: MENAFN
Saturday, February 4th, 2006 Posted by Overseas Property Mall in Saudi Arabia Property
JEDDAH — Real estate is the fastest growing sector in Saudi Arabia with more than SR1 trillion in investments. The growth is said to be the second highest in the world after Shanghai, according to Solaiman Al-Majed, Chairman, Tanmiyat Group.
But the burgeoning market needs to be regulated and organised in order to avoid scams, of which there have been quite a few, as well as achieve continuous progress and maintain investor confidence.
Apart from businessmen, thousands of ordinary Saudis have invested their money in real estate, in the expectation of large profits. But according to financial analyst Abdelmenem Jamil Addas this was not a healthy trend. “People think that they are seeing the dawn of a new era in the real estate market, that it will bring unimaginable riches and prosperity to all. This overconfidence will have dangerous consequences on our economy,” he added.
He said that the recent rise in real estate prices was being fuelled by artificially low short-term interest rates and a huge increase in bank loans. “We should not forget that as soon as interest rates rise, the rally in real estate prices will come to an abrupt end,” he explained. “Any market that is rising because of an increase in bank’s loans ought to be viewed with great caution,” he said.
According to Dr. Abdul Aziz Turkistani, a real estate expert, the real estate boom has led to the creation of many professional companies. “These firms,” he says, “are working to improve their organisational structure and marketing strategy in order to transform the sector into a successful industry.” He felt that real estate companies in the Kingdom should form an association to promote the industry with a view to facing competition from foreign firms.
Wafa Al-Ghamdi, an expert in the field, said there was a professional approach and a chaotic way of developing and marketing real estate. The professional approach relied on market studies, market analyses and meeting customer demands. “The Saudi real estate market still depends on old methods and does not meet customer demands, especially middle and lower class families,” she said. Among the problems the Saudi real estate market faced was the domination of a few investors, lack of studies, lack of laws protecting the investors and customers, lack of transparency in dealings and the reliance on rumours to promote properties. “There is also lack of market awareness among customers, particularly women, and agents take advantage of the women’s lack of knowledge,” Al-Ghamdi said.
A Jeddah Chamber of Commerce and Industry (JCCI) working team recently made a number of proposals to make the business transparent and foolproof protect the rights of investors and ensure steady growth.
The boom has been attributed to the continuous repatriation of Saudi funds from overseas and increasing liquidity supported by soaring oil revenues.
Government projects and initiatives provide major opportunities for the private sector. They also continue to ensure that the construction industry remains the largest non-oil economic sector in the Kingdom. It was estimated to have contributed more than $15 billion to the national economy in 2005.
Recognising the need to diversify and reform its economy, the government has provided incentives and relaxed laws. This has boosted the private sector’s enthusiasm for heavy investments in residential and commercial buildings. It is estimated that 555,000 individuals will need new housing annually. This gives ample scope for developers. It equates to 100,000 new residential units a year. Additionally, the Kingdom is also developing its tourism industry (largely local and religious tourism) and it is expected to contribute $22 billion to the economy by 2023.
The Kingdom’s new Real Estate Law allows non-Saudi residents to own real estate for their private residence with the permission of the Interior Ministry. It also allows ownership of real estate by foreign investors to conduct their business activities and to own properties needed for their accommodation and that of their employees. The law also entitles investors to rent out property.
According to Abdul Monem Murad, chairman of the real estate development committee at JCCI total investments in 53 real estate share businesses across the country have reached more than SR14 billion.
Abdul Rahman Al-Jeraisy, chairman of the Riyadh Chamber of Commerce and Industry (RCCI), is spearheading a joint venture with other businessmen to set up a large real estate company in Riyadh with a capital of SR30 billion. He said the new company would have a strong presence all over Saudi Arabia. His estimate is that five million housing units would be required by 2010.
Source: MENAFN
Archive for the 'Saudi Arabia Property' Category
Archive for the 'Saudi Arabia Property' Category
Investments in Saudi property market soar to SR1 trillion :: MENAFN
Saturday, February 4th, 2006 Posted by Overseas Property Mall in Saudi Arabia Property
JEDDAH — Real estate is the fastest growing sector in Saudi Arabia with more than SR1 trillion in investments. The growth is said to be the second highest in the world after Shanghai, according to Solaiman Al-Majed, Chairman, Tanmiyat Group.
But the burgeoning market needs to be regulated and organised in order to avoid scams, of which there have been quite a few, as well as achieve continuous progress and maintain investor confidence.
Apart from businessmen, thousands of ordinary Saudis have invested their money in real estate, in the expectation of large profits. But according to financial analyst Abdelmenem Jamil Addas this was not a healthy trend. “People think that they are seeing the dawn of a new era in the real estate market, that it will bring unimaginable riches and prosperity to all. This overconfidence will have dangerous consequences on our economy,” he added.
He said that the recent rise in real estate prices was being fuelled by artificially low short-term interest rates and a huge increase in bank loans. “We should not forget that as soon as interest rates rise, the rally in real estate prices will come to an abrupt end,” he explained. “Any market that is rising because of an increase in bank’s loans ought to be viewed with great caution,” he said.
According to Dr. Abdul Aziz Turkistani, a real estate expert, the real estate boom has led to the creation of many professional companies. “These firms,” he says, “are working to improve their organisational structure and marketing strategy in order to transform the sector into a successful industry.” He felt that real estate companies in the Kingdom should form an association to promote the industry with a view to facing competition from foreign firms.
Wafa Al-Ghamdi, an expert in the field, said there was a professional approach and a chaotic way of developing and marketing real estate. The professional approach relied on market studies, market analyses and meeting customer demands. “The Saudi real estate market still depends on old methods and does not meet customer demands, especially middle and lower class families,” she said. Among the problems the Saudi real estate market faced was the domination of a few investors, lack of studies, lack of laws protecting the investors and customers, lack of transparency in dealings and the reliance on rumours to promote properties. “There is also lack of market awareness among customers, particularly women, and agents take advantage of the women’s lack of knowledge,” Al-Ghamdi said.
A Jeddah Chamber of Commerce and Industry (JCCI) working team recently made a number of proposals to make the business transparent and foolproof protect the rights of investors and ensure steady growth.
The boom has been attributed to the continuous repatriation of Saudi funds from overseas and increasing liquidity supported by soaring oil revenues.
Government projects and initiatives provide major opportunities for the private sector. They also continue to ensure that the construction industry remains the largest non-oil economic sector in the Kingdom. It was estimated to have contributed more than $15 billion to the national economy in 2005.
Recognising the need to diversify and reform its economy, the government has provided incentives and relaxed laws. This has boosted the private sector’s enthusiasm for heavy investments in residential and commercial buildings. It is estimated that 555,000 individuals will need new housing annually. This gives ample scope for developers. It equates to 100,000 new residential units a year. Additionally, the Kingdom is also developing its tourism industry (largely local and religious tourism) and it is expected to contribute $22 billion to the economy by 2023.
The Kingdom’s new Real Estate Law allows non-Saudi residents to own real estate for their private residence with the permission of the Interior Ministry. It also allows ownership of real estate by foreign investors to conduct their business activities and to own properties needed for their accommodation and that of their employees. The law also entitles investors to rent out property.
According to Abdul Monem Murad, chairman of the real estate development committee at JCCI total investments in 53 real estate share businesses across the country have reached more than SR14 billion.
Abdul Rahman Al-Jeraisy, chairman of the Riyadh Chamber of Commerce and Industry (RCCI), is spearheading a joint venture with other businessmen to set up a large real estate company in Riyadh with a capital of SR30 billion. He said the new company would have a strong presence all over Saudi Arabia. His estimate is that five million housing units would be required by 2010.
Source: MENAFN
Investments in Saudi property market soar to SR1 trillion :: MENAFN
Saturday, February 4th, 2006 Posted by Overseas Property Mall in Saudi Arabia Property
JEDDAH — Real estate is the fastest growing sector in Saudi Arabia with more than SR1 trillion in investments. The growth is said to be the second highest in the world after Shanghai, according to Solaiman Al-Majed, Chairman, Tanmiyat Group.
But the burgeoning market needs to be regulated and organised in order to avoid scams, of which there have been quite a few, as well as achieve continuous progress and maintain investor confidence.
Apart from businessmen, thousands of ordinary Saudis have invested their money in real estate, in the expectation of large profits. But according to financial analyst Abdelmenem Jamil Addas this was not a healthy trend. “People think that they are seeing the dawn of a new era in the real estate market, that it will bring unimaginable riches and prosperity to all. This overconfidence will have dangerous consequences on our economy,” he added.
He said that the recent rise in real estate prices was being fuelled by artificially low short-term interest rates and a huge increase in bank loans. “We should not forget that as soon as interest rates rise, the rally in real estate prices will come to an abrupt end,” he explained. “Any market that is rising because of an increase in bank’s loans ought to be viewed with great caution,” he said.
According to Dr. Abdul Aziz Turkistani, a real estate expert, the real estate boom has led to the creation of many professional companies. “These firms,” he says, “are working to improve their organisational structure and marketing strategy in order to transform the sector into a successful industry.” He felt that real estate companies in the Kingdom should form an association to promote the industry with a view to facing competition from foreign firms.
Wafa Al-Ghamdi, an expert in the field, said there was a professional approach and a chaotic way of developing and marketing real estate. The professional approach relied on market studies, market analyses and meeting customer demands. “The Saudi real estate market still depends on old methods and does not meet customer demands, especially middle and lower class families,” she said. Among the problems the Saudi real estate market faced was the domination of a few investors, lack of studies, lack of laws protecting the investors and customers, lack of transparency in dealings and the reliance on rumours to promote properties. “There is also lack of market awareness among customers, particularly women, and agents take advantage of the women’s lack of knowledge,” Al-Ghamdi said.
A Jeddah Chamber of Commerce and Industry (JCCI) working team recently made a number of proposals to make the business transparent and foolproof protect the rights of investors and ensure steady growth.
The boom has been attributed to the continuous repatriation of Saudi funds from overseas and increasing liquidity supported by soaring oil revenues.
Government projects and initiatives provide major opportunities for the private sector. They also continue to ensure that the construction industry remains the largest non-oil economic sector in the Kingdom. It was estimated to have contributed more than $15 billion to the national economy in 2005.
Recognising the need to diversify and reform its economy, the government has provided incentives and relaxed laws. This has boosted the private sector’s enthusiasm for heavy investments in residential and commercial buildings. It is estimated that 555,000 individuals will need new housing annually. This gives ample scope for developers. It equates to 100,000 new residential units a year. Additionally, the Kingdom is also developing its tourism industry (largely local and religious tourism) and it is expected to contribute $22 billion to the economy by 2023.
The Kingdom’s new Real Estate Law allows non-Saudi residents to own real estate for their private residence with the permission of the Interior Ministry. It also allows ownership of real estate by foreign investors to conduct their business activities and to own properties needed for their accommodation and that of their employees. The law also entitles investors to rent out property.
According to Abdul Monem Murad, chairman of the real estate development committee at JCCI total investments in 53 real estate share businesses across the country have reached more than SR14 billion.
Abdul Rahman Al-Jeraisy, chairman of the Riyadh Chamber of Commerce and Industry (RCCI), is spearheading a joint venture with other businessmen to set up a large real estate company in Riyadh with a capital of SR30 billion. He said the new company would have a strong presence all over Saudi Arabia. His estimate is that five million housing units would be required by 2010.
Source: MENAFN
Family-based real estate company in the process of constructing an entire city
here are at present no official statistics on the real estate market in Saudi Arabia; however, experts from the sector estimate that it is the biggest in the Middle East, with the highest prices per square foot in the world in some areas. But real estate activity in Riyadh – which accounts for about a third of all such activity in the kingdom – could represent around $80 billion.
Estimates vary slightly as to how much new housing is needed for Saudi’s ever-growing population. According to a study by a German company, the country will need 300,000 residential units over the next 15 years, calculating an annual growth in demand of 3 percent. It has also been suggested that there is a shortage of 225,000 residential units in Riyadh alone, and that the overall figure could be as high as one million.
Heading in the right direction: experts estimate that real estate activity in Riyadh alone could be worth around $80 billion.
In either case, real estate looks set to be a burgeoning sector as the economy continues to expand. As Salman Abdullah Bin Saedan, Managing Director of Olaya Real Estate Co., says, “The success of other sectors is reflected by real estate activity, which gets its strength from the government, which gets it from oil revenues.” Olaya Real Estate Co., a family-based company operating on Islamic principles, develops residential projects in Saudi Arabia and other GCC countries, with a strong commitment to innovation, quality, affordability and access.
One of the company’s most ambitious projects to date is the construction of an entire city south of Riyadh. The first project of its kind in the country, it will provide residential units, infrastructure, and essential services including schools, clinics, mosques and shopping facilities.
Mr. Bin Saedan is hopeful that some kind of mortgage system will emerge in Saudi Arabia, allowing more citizens access to property ownership
Estimates vary slightly as to how much new housing is needed for Saudi’s ever-growing population. According to a study by a German company, the country will need 300,000 residential units over the next 15 years, calculating an annual growth in demand of 3 percent. It has also been suggested that there is a shortage of 225,000 residential units in Riyadh alone, and that the overall figure could be as high as one million.
Heading in the right direction: experts estimate that real estate activity in Riyadh alone could be worth around $80 billion.
In either case, real estate looks set to be a burgeoning sector as the economy continues to expand. As Salman Abdullah Bin Saedan, Managing Director of Olaya Real Estate Co., says, “The success of other sectors is reflected by real estate activity, which gets its strength from the government, which gets it from oil revenues.” Olaya Real Estate Co., a family-based company operating on Islamic principles, develops residential projects in Saudi Arabia and other GCC countries, with a strong commitment to innovation, quality, affordability and access.
One of the company’s most ambitious projects to date is the construction of an entire city south of Riyadh. The first project of its kind in the country, it will provide residential units, infrastructure, and essential services including schools, clinics, mosques and shopping facilities.
Mr. Bin Saedan is hopeful that some kind of mortgage system will emerge in Saudi Arabia, allowing more citizens access to property ownership
Saudi property boom takes off
Saudi construction work valued at more than $400 billion is due to be completed in the next decade. Increasingly, some of the largest investments are likely to lie in real estate development as well as industry and infrastructure.
Saudi Arabia: Saturday, June 09 - 2007
A proposed new mortgage law is expected to provide further stimulus to the expanding housing market later this year. As a result, some believe that the Saudi demand for homes could be shaping up to unleash the biggest building boom yet seen in Arabia.
Changing society
The fundamentals look promising as oil revenues continue to grow. With the growing needs of a young population the housing market is no longer focused on luxury villas and palaces but on the needs of a changing society.
The Kingdom's population of more than 20 million is the largest in the Gulf and current demand for housing far outstrips the supply with more than 70 per cent of the population aged under 30.
In the early 1980s almost all housing and real estate development was government sponsored. The situation is changing fast with the private sector leading and more than 50 companies alone licensed to sell and develop real estate in the Kingdom last year.
Another indicator of the Saudi construction boom is the expansion of the Saudi building materials industry with cement production expected to double to more than 90 million tonnes a year by 2010.
Economic cities
While existing cities and communities are already seeing major developments there is also an intense focus on the $150 billion worth of government sponsored investment that has been committed to new cities due to be built around a core of economic projects.
All of the economic cities will feature major residential and commercial real estate developments. Around 1.5 million people are expected to move to the new cities in the medium term and three times as many by 2020.
The region's big names are seizing the opportunity. Prince Alwaleed bin Talal al-Saud's Kingdom Holding Company, following on from its towering Al-Faisaliah development, is planning multi billion dollar real estate investments in both Riyadh as well as Jeddah.
The government's go ahead for construction of high-rise buildings in Jeddah is being seized upon by companies keen to develop sites overlooking the Red Sea.
Dubai's Emaar Properties, apart from its involvement in joint ventures to build the Kingdom's giant King Abdullah Economic City at Rabigh, is among a growing number of regional developers committed to residential developments in Saudi Arabia.
These include the Al-Khobar Lakes and Jeddah Gate projects. The latter involves a $700 million investment to build 5,000 homes on the 5 million square foot old Jeddah airport site.
Dubai's Damac properties has also decided to enter Saudi Arabia's fast expanding property sector with plans for a 40 storey tower block development on Jeddah's corniche. The intention is to establish a strong local presence in a number of Saudi cities Chief Executive Peter Riddoch says.
Major development of hotels and residential accommodation as well as new infrastructure development is also stimulating real estate markets in the pilgrimage cities of Mecca and Medina.
© 1996-2008 by AME Info FZ LLC / Emap Limited. All rights reserved.
This story was posted by staff reporter Saturday, June 09 - 2007 at 17:30 UAE local time (GMT+4)
Print Date: Wednesday, October 08 - 2008 - 20:47:38 GMT+4
Find this article at:
http://www.ameinfo.com/news/Detailed/122936.html
"AME Info", "AME Info/fn", "the ultimate Middle East business resource" and "the news you choose" are trademarks of AME Info FZ LLC / Emap Limited. All other products and brandnames mentioned are trademarks or registered trademarks of their respective companies. Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of AME Info FZ LLC / Emap Limited.
Source: www.ameinfo.com
» Company News/S/Sphere
http://www.ameinfo.com/122936.html
Saudi Arabia: Saturday, June 09 - 2007
A proposed new mortgage law is expected to provide further stimulus to the expanding housing market later this year. As a result, some believe that the Saudi demand for homes could be shaping up to unleash the biggest building boom yet seen in Arabia.
Changing society
The fundamentals look promising as oil revenues continue to grow. With the growing needs of a young population the housing market is no longer focused on luxury villas and palaces but on the needs of a changing society.
The Kingdom's population of more than 20 million is the largest in the Gulf and current demand for housing far outstrips the supply with more than 70 per cent of the population aged under 30.
In the early 1980s almost all housing and real estate development was government sponsored. The situation is changing fast with the private sector leading and more than 50 companies alone licensed to sell and develop real estate in the Kingdom last year.
Another indicator of the Saudi construction boom is the expansion of the Saudi building materials industry with cement production expected to double to more than 90 million tonnes a year by 2010.
Economic cities
While existing cities and communities are already seeing major developments there is also an intense focus on the $150 billion worth of government sponsored investment that has been committed to new cities due to be built around a core of economic projects.
All of the economic cities will feature major residential and commercial real estate developments. Around 1.5 million people are expected to move to the new cities in the medium term and three times as many by 2020.
The region's big names are seizing the opportunity. Prince Alwaleed bin Talal al-Saud's Kingdom Holding Company, following on from its towering Al-Faisaliah development, is planning multi billion dollar real estate investments in both Riyadh as well as Jeddah.
The government's go ahead for construction of high-rise buildings in Jeddah is being seized upon by companies keen to develop sites overlooking the Red Sea.
Dubai's Emaar Properties, apart from its involvement in joint ventures to build the Kingdom's giant King Abdullah Economic City at Rabigh, is among a growing number of regional developers committed to residential developments in Saudi Arabia.
These include the Al-Khobar Lakes and Jeddah Gate projects. The latter involves a $700 million investment to build 5,000 homes on the 5 million square foot old Jeddah airport site.
Dubai's Damac properties has also decided to enter Saudi Arabia's fast expanding property sector with plans for a 40 storey tower block development on Jeddah's corniche. The intention is to establish a strong local presence in a number of Saudi cities Chief Executive Peter Riddoch says.
Major development of hotels and residential accommodation as well as new infrastructure development is also stimulating real estate markets in the pilgrimage cities of Mecca and Medina.
© 1996-2008 by AME Info FZ LLC / Emap Limited. All rights reserved.
This story was posted by staff reporter Saturday, June 09 - 2007 at 17:30 UAE local time (GMT+4)
Print Date: Wednesday, October 08 - 2008 - 20:47:38 GMT+4
Find this article at:
http://www.ameinfo.com/news/Detailed/122936.html
"AME Info", "AME Info/fn", "the ultimate Middle East business resource" and "the news you choose" are trademarks of AME Info FZ LLC / Emap Limited. All other products and brandnames mentioned are trademarks or registered trademarks of their respective companies. Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of AME Info FZ LLC / Emap Limited.
Source: www.ameinfo.com
» Company News/S/Sphere
http://www.ameinfo.com/122936.html
Saudi Arabia: Climate For Change
Dr. Saleh Al Habib, executive director, Jiwar
The luxurious Massarah Hotel, Taif
“The real estate business in the kingdom is just starting and the potential for development is great due to an alarming shortage of home ownership properties.”
--Ayedh Bin Farhan Al-Gahtani, president, Al OulaReal Estate Sector Set to Transform Kingdom
Saudi developers are seeking foreign partners and expertise to meet the king's demand for thousands of new homes for his people
Saudi Arabia may have plenty of oil and a great deal of space, but, remarkably, it has a shortage of housing.
The government estimates that more than 500,000 people require new homes annually, equivalent to about 100,000 units a year. To meet the need, scores of house building projects are rolling off the architectural drawing boards, and the property business is booming.
In the last three years, 50 new real estate developers have received licenses from the Saudi Arabian General Investment Authority and regional property firms are entering the market that, until now, has been mostly centered in Riyadh.
Many of the new developments are spectacular mega-projects. The $26.6 billion King Abdullah Economic City, which is being built on the Red Sea coast north of Jeddah, will have three luxury residential districts that will house 75,000 residents.
A second project, Jeddah Hills, which is to be built in Jeddah at a cost of $11.2 billion, will consist of 20,000 top range residential units.
Al Oula Development Company, operating under the umbrella of Emaar Middle East, is responsible for building the properties on almost half of the 5,432 acre site. Ayedh Bin Farhan Al-Gahtani, president of Al Oula, says it will be developed in phases and will be the single biggest residential building project in Jeddah.
Al Oula has projects in all the kingdom's major cities, says Al-Gahtani, who believes that the real estate business in the kingdom is just starting and the potential for development is great, due to an alarming shortage of home ownership properties in the kingdom. He expects to see many more such developments and says that Al Oula will take the biggest share in the market in developing residential units.
Saudi Arabia lagged behind its Gulf neighbors in liberalizing its real estate sector. As a consequence, the kingdom's property development companies, while posting impressive profits, have not so far experienced the hyper-growth that has been achieved in other Gulf states.
Many of the larger Saudi firms have actually made some of their largest investments outside of the kingdom. Al Oula is in Egypt developing a new diplomatic quarter in Cairo. The project has been embraced by the Egyptian government and a number of embassies and additionally Al Oula is focusing on Syria and Jordan.
Many of the larger Saudi firms have targeted the United Arab Emirates, lured by a more open market and higher returns.
Al Hanoo, one of the kingdom's leading real estate developers, formed a $136.2 million company called Ewan to build and sell the first phase of Star Islands, the largest commercial, residential and tourism development project in the emirate of Sharjah. Another major Saudi company, Tanmiyat, acquired the residential and commercial components of Legends, a $2 million theme park and resort development in Dubai.
Nevertheless the real estate business in the kingdom is gathering pace. High oil prices are leading to increasing personal prosperity for many Saudi citizens and a great deal of liquidity.
With a population of 27 million to cater for, the kingdom certainly has a much larger real estate sector than the other Gulf states, and so has potential for far greater returns on investment.
Economic expansion has also increased the need for accommodation as expatriates arrive in the established industrial centers of Yanbu and Jubail and the newer sites growing at Rabigh and Ha'il.
Dr Saleh Al Habib, executive director of Jiwar, a leading real estate company, points out that 60 percent of Saudi citizens do not own a house.
“They may not own a house, but the money is there to do so,” he says. Furthermore, with an estimated 60 percent of those citizens aged under 25 and the population growing at the rate of 7 percent a year, the demand for new homes is rising fast.
Al Gahtani of Al Oula maintains that it would be no exaggeration to say that the real estate sector in Saudi Arabia is second only to oil in terms of its economic contribution.
Saudi Arabia is underdeveloped in real estate terms, he says. This is due to political and financial elements. Banks have been traditionally cautious about engaging in real estate development projects because of regulations that did not allow them to mortgage the properties. This meant that developers had to raise their own financing, usually through private initiatives.
“Now things are changing on both the political and financial sides,” says Ibrahim Bin Fahad Al Assaf, Al Oula's executive vice-president. “Banks are starting to realize the importance of real estate development. In the past, they were running away from these projects, and today they are running to them. Mortgage regulations are in the process of being approved by the government. We expect these to be realized before the end of the year. This will set the groundwork for a mortgage system in the kingdom.”
Expatriates – from other Arab states, the West and the Indian subcontinent – who have lived in the country for ten years continuously can now apply for citizenship, and thus qualify to buy property.
The lack of mortgage facilities has acted as a bottle-neck limiting development, says Al Assaf, and when this problem has been resolved he believes the market will expand quickly with developers selling on a mass level. “We are moving slowly but surely. In Saudi Arabia drastic change does not happen easily but we are continuously changing.”
The company president, Al-Gahtani sees himself as a tool, carrying out King Abdullah's vision of the kingdom's future, and believes that Al Oula will expand to five times its present size in the years to come.
He says the changes since King Abdullah's accession have been dramatic. “He has challenged Saudis to repatriate their money and has made the kingdom a welcoming environment for investment.”
It was this attitude that persuaded the Dubai-based Emaar Properties to enter the Saudi market. In June, Emaar, the largest listed company in the United Arab Emirates, bought John Laing Homes, the second-largest privately held U.S. homebuilder, for $1.05 billion cash, making it one of the world's largest property companies in terms of capital.
When it entered the Saudi market, Emaar linked up with Al Oula.
This, says Al-Gahtani, is because the two companies share a common vision and a common structure. He explains that Al Oula was the first company in Saudi Arabia to be established by a group of companies, rather than by an individual or a family and therefore is an institution not a family business or any one individual's dream.
To emphasize the real estate potential in the kingdom, Al-Gahtani says: “Emaar has completed some incredible projects in Dubai, but Dubai is only the size of one Saudi city. Saudi Arabia will require probably 20 more projects equal to what is the biggest at present, the King Abdullah Economic City, to meet our society's needs. So there is room for more entrants in this market.”
Al Habib of Jiwar has a similar enthusiasm for an international partnership. Jiwar is a subsidiary of the Saudi Binladen Group, the kingdom's biggest construction company. Launching Jiwar after four years as a professor specializing in media and marketing, he saw that the kingdom's real estate sector lacked feasibility studies.
“An important aspect of real estate that was missing was identifying the needs of the people. You have to know what they want in their homes, what they want in their malls, what services they require. This information was not present. So we obtained it. We do our studies, take the numbers and implement them into the design of our projects.”
What the kingdom needs now, he says, is more foreign expertise.
“We need companies with the sort of experience that leading American companies have,” he says. “Our plan for Jiwar is to get our name out into the public arena and attract some partners.
To build the Jiwar brand name, the company invested $13.3 million in sponsoring The World Cup soccer competition and has hired a leading international advertising agency to market its name globally.
“This is the time when we need the American companies and businessmen to come and help us with their knowledge and expertise,” he says. “We have the cash, but we need help to cope with the change, the booming population, the heavy liquidity and the mega-projects.”
Investors in real estate can expect returns of not less than 30 percent, he says, with no taxes and an open environment.
The luxurious Massarah Hotel, Taif
“The real estate business in the kingdom is just starting and the potential for development is great due to an alarming shortage of home ownership properties.”
--Ayedh Bin Farhan Al-Gahtani, president, Al OulaReal Estate Sector Set to Transform Kingdom
Saudi developers are seeking foreign partners and expertise to meet the king's demand for thousands of new homes for his people
Saudi Arabia may have plenty of oil and a great deal of space, but, remarkably, it has a shortage of housing.
The government estimates that more than 500,000 people require new homes annually, equivalent to about 100,000 units a year. To meet the need, scores of house building projects are rolling off the architectural drawing boards, and the property business is booming.
In the last three years, 50 new real estate developers have received licenses from the Saudi Arabian General Investment Authority and regional property firms are entering the market that, until now, has been mostly centered in Riyadh.
Many of the new developments are spectacular mega-projects. The $26.6 billion King Abdullah Economic City, which is being built on the Red Sea coast north of Jeddah, will have three luxury residential districts that will house 75,000 residents.
A second project, Jeddah Hills, which is to be built in Jeddah at a cost of $11.2 billion, will consist of 20,000 top range residential units.
Al Oula Development Company, operating under the umbrella of Emaar Middle East, is responsible for building the properties on almost half of the 5,432 acre site. Ayedh Bin Farhan Al-Gahtani, president of Al Oula, says it will be developed in phases and will be the single biggest residential building project in Jeddah.
Al Oula has projects in all the kingdom's major cities, says Al-Gahtani, who believes that the real estate business in the kingdom is just starting and the potential for development is great, due to an alarming shortage of home ownership properties in the kingdom. He expects to see many more such developments and says that Al Oula will take the biggest share in the market in developing residential units.
Saudi Arabia lagged behind its Gulf neighbors in liberalizing its real estate sector. As a consequence, the kingdom's property development companies, while posting impressive profits, have not so far experienced the hyper-growth that has been achieved in other Gulf states.
Many of the larger Saudi firms have actually made some of their largest investments outside of the kingdom. Al Oula is in Egypt developing a new diplomatic quarter in Cairo. The project has been embraced by the Egyptian government and a number of embassies and additionally Al Oula is focusing on Syria and Jordan.
Many of the larger Saudi firms have targeted the United Arab Emirates, lured by a more open market and higher returns.
Al Hanoo, one of the kingdom's leading real estate developers, formed a $136.2 million company called Ewan to build and sell the first phase of Star Islands, the largest commercial, residential and tourism development project in the emirate of Sharjah. Another major Saudi company, Tanmiyat, acquired the residential and commercial components of Legends, a $2 million theme park and resort development in Dubai.
Nevertheless the real estate business in the kingdom is gathering pace. High oil prices are leading to increasing personal prosperity for many Saudi citizens and a great deal of liquidity.
With a population of 27 million to cater for, the kingdom certainly has a much larger real estate sector than the other Gulf states, and so has potential for far greater returns on investment.
Economic expansion has also increased the need for accommodation as expatriates arrive in the established industrial centers of Yanbu and Jubail and the newer sites growing at Rabigh and Ha'il.
Dr Saleh Al Habib, executive director of Jiwar, a leading real estate company, points out that 60 percent of Saudi citizens do not own a house.
“They may not own a house, but the money is there to do so,” he says. Furthermore, with an estimated 60 percent of those citizens aged under 25 and the population growing at the rate of 7 percent a year, the demand for new homes is rising fast.
Al Gahtani of Al Oula maintains that it would be no exaggeration to say that the real estate sector in Saudi Arabia is second only to oil in terms of its economic contribution.
Saudi Arabia is underdeveloped in real estate terms, he says. This is due to political and financial elements. Banks have been traditionally cautious about engaging in real estate development projects because of regulations that did not allow them to mortgage the properties. This meant that developers had to raise their own financing, usually through private initiatives.
“Now things are changing on both the political and financial sides,” says Ibrahim Bin Fahad Al Assaf, Al Oula's executive vice-president. “Banks are starting to realize the importance of real estate development. In the past, they were running away from these projects, and today they are running to them. Mortgage regulations are in the process of being approved by the government. We expect these to be realized before the end of the year. This will set the groundwork for a mortgage system in the kingdom.”
Expatriates – from other Arab states, the West and the Indian subcontinent – who have lived in the country for ten years continuously can now apply for citizenship, and thus qualify to buy property.
The lack of mortgage facilities has acted as a bottle-neck limiting development, says Al Assaf, and when this problem has been resolved he believes the market will expand quickly with developers selling on a mass level. “We are moving slowly but surely. In Saudi Arabia drastic change does not happen easily but we are continuously changing.”
The company president, Al-Gahtani sees himself as a tool, carrying out King Abdullah's vision of the kingdom's future, and believes that Al Oula will expand to five times its present size in the years to come.
He says the changes since King Abdullah's accession have been dramatic. “He has challenged Saudis to repatriate their money and has made the kingdom a welcoming environment for investment.”
It was this attitude that persuaded the Dubai-based Emaar Properties to enter the Saudi market. In June, Emaar, the largest listed company in the United Arab Emirates, bought John Laing Homes, the second-largest privately held U.S. homebuilder, for $1.05 billion cash, making it one of the world's largest property companies in terms of capital.
When it entered the Saudi market, Emaar linked up with Al Oula.
This, says Al-Gahtani, is because the two companies share a common vision and a common structure. He explains that Al Oula was the first company in Saudi Arabia to be established by a group of companies, rather than by an individual or a family and therefore is an institution not a family business or any one individual's dream.
To emphasize the real estate potential in the kingdom, Al-Gahtani says: “Emaar has completed some incredible projects in Dubai, but Dubai is only the size of one Saudi city. Saudi Arabia will require probably 20 more projects equal to what is the biggest at present, the King Abdullah Economic City, to meet our society's needs. So there is room for more entrants in this market.”
Al Habib of Jiwar has a similar enthusiasm for an international partnership. Jiwar is a subsidiary of the Saudi Binladen Group, the kingdom's biggest construction company. Launching Jiwar after four years as a professor specializing in media and marketing, he saw that the kingdom's real estate sector lacked feasibility studies.
“An important aspect of real estate that was missing was identifying the needs of the people. You have to know what they want in their homes, what they want in their malls, what services they require. This information was not present. So we obtained it. We do our studies, take the numbers and implement them into the design of our projects.”
What the kingdom needs now, he says, is more foreign expertise.
“We need companies with the sort of experience that leading American companies have,” he says. “Our plan for Jiwar is to get our name out into the public arena and attract some partners.
To build the Jiwar brand name, the company invested $13.3 million in sponsoring The World Cup soccer competition and has hired a leading international advertising agency to market its name globally.
“This is the time when we need the American companies and businessmen to come and help us with their knowledge and expertise,” he says. “We have the cash, but we need help to cope with the change, the booming population, the heavy liquidity and the mega-projects.”
Investors in real estate can expect returns of not less than 30 percent, he says, with no taxes and an open environment.
Subscribe to:
Posts (Atom)