Business | Property
Gulf countries will need 5m new homes in the next 10 years
e Gulf countries will need five million new housing units in the next 10 years to cater to rising national populations and to accommodate expatriates coming to the region for jobs amid high economic growth.
- By Shakir Husain, Staff Reporter
- Published: 23:13 November 6, 2007
Dubai: The Gulf countries will need five million new housing units in the next 10 years to cater to rising national populations and to accommodate expatriates coming to the region for jobs amid high economic growth.
Supplies of new homes are projected to be 2.9 million units during the period, leaving a gap of 2.1 million units.
"The biggest gap will be in Saudi Arabia at 67 per cent," said Blair Hagkull, Middle East and North Africa managing director of real estate consultancy Jones Lang LaSalle (JLL).
Developers in places like Dubai are already under pressure to meet a shortfall in housing that is pushing property rents higher.
In a recent forecast, mortgage finance firm Tamweel said Dubai's housing market will see Dh62 billion worth of property supply next year but that would still fall short of demand.
The shortage of new homes is particularly severe for buyers and tenants whose monthly income is less than Dh12,000, while in the luxury and top-end category the supply-demand gap is the narrowest.
The real estate market is experiencing a distortion in most segments with oversupply in the luxury segment and undersupply in the low-income bracket.
JLL said in the last four years Dubai has focused on upmarket residential developments, attracting the interest of short-term investors and secondary home purchases.
Low-income segment
"As the market begins to saturate in the high-end and luxury sectors, opportunities are becoming apparent in the middle and low-income segments where the demand base is more secure," it said in a research distributed at the FT Gulf Property Investment Summit in Dubai yesterday.
Hagkull said the UAE is attracting more international investors who want to use the country as a base to enter other emerging regional markets.
On Saudi Arabia, it said the country holds the most opportunities in the GCC for real estate development and investment because of its high population base, representing more than twice the combined population of Bahrain, Kuwait, Oman, Qatar and the UAE.
It said Saudi Arabia needs moderately priced houses to attract mass interest. Also, there is a trend towards large single-family units. "Contrary to the decreasing household size that is becoming apparent in the UAE, similar trends are not yet reflected in the Saudi market," it said in a research.
Meanwhile, Gulf property firms have built both cash and expertise to invest in other countries, particularly in developing markets, analysts said.
Shift
There has also been a "geo-political shift" in the way Gulf-based funds invest their money in real estate these days. Earlier Arab investors predominantly sought properties in the US and Europe but now Asia and Africa figure prominently on their radar.
Hagkull said this is a sign that the region has developed a "360-degree thinking" for exporting capital.
"There is a fundamental shift from North and West to East and South. The biggest investments from this region are going to places such as China, India, Malaysia and Singapore," he said.
Gulf companies bring both money and knowhow when they enter a market, said Sanjay Puri, principal investment officer of the International Finance Corporation.
"It is a good way for GCC companies with cash and expertise to diversify," he said.
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