The Kuwait based investment and financial services company said developers will continue to offer a range of incentives such as fee waivers, discounts and rent-to-own agreements, combined with home finance options to attract new investors looking to take advantage of the lower prices.
The Ministers of Finance of the Kingdom of Saudi Arabia, the United Arab Emirates, the State of Kuwait…0 | the publication reaches you by | Bahrain News
“The signs of transactions bottoming out witnessed in 2019 will now be prolonged further into 2021, until normalised demand conditions arrive post-COVID-19.
“We do expect the supply-side to tighten cyclically in 2021, in terms of lower number of upcoming project announcements from developers, which should aid in arresting the ongoing steep declines of prices and rents,” the asset management company said in its December GCC real estate update.
Real estate transactions in the GCC area declined as of the end of October 2020, as total value transacted receded by 4 percent year-on-year to $72.1 billion, from $75.5 billion in the same period in 2019.
While, transaction volumes fell by 11 percent year-on-year over the same period, residential affordability has intensified with COVID-19.
The pandemic has caused additional headwinds for end-user demand in GCC’s residential real estate segment, driving rents and prices lower on a y-o-y basis in 2020, despite limited supply addition and several government initiatives for home ownership being rolled out.
Rents in all residential markets were under pressure in 2020, as tenants continued to downsize, migrate to more affordable residences, or looked for more incentives in their existing tenancy contracts.
In terms of residential prices, sales prices in Riyadh grew 2 percent y-o-y at the end Q3-2020, as per JLL, driven by the positive sentiment and momentum witnessed in the mortgage market from the Saudi government amending the 15 percent VAT on property transactions, the report said.
Separately, Qatar issued a new law which will add to the number of locations where non-Qataris can buy real estate. A two-tiered residency program that rewards large investors with government-provided services was also introduced to incentivize home ownership, it added.
The Refinitiv GCC Real Estate Total Return Index declined by 31.6 percent from January 2020 to 23rd March 2020 from the global sell-off, but more than recovered by the end of November 2020, ending marginally in the green on a year to date basis, said KAMCO.
“Developers in the region are reconsidering certain key projects in the light of the current weak demand environment and making supply-side adjustments, which should help in providing cyclical stability for the sector.
Reporting by Imogen Lillywhite
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