As the pandemic restrains Gulf nationals from their usual summer vacations, the importance of having a local home alternative has been elevated significantly.
For decades GCC nationals have never been deprived of the luxury of travelling abroad during summer, thus creating an annual semi-migration to destinations such as London, Paris, New York, the southern coast of France, Spain and Italy. This has all changed given the circumstances, and those who can afford it are starting to invest in their local real estate projects as uncertainty continues regarding a permanent cure for COVID-19.
In Kuwait, specifically in the southern part of the country, locals have driven prices of real estate to rise more than 10 per cent since May 2020 in the manmade Sabah Al-Ahmad Sea City, or what is also known as Al Khiran project. Significant investments were launched by the private sector to serve the increasing numbers of beach houses being constructed at the project after a noticeable decrease in interest over the past two years.
Keeping them busy
Tamdeen Real Estate Co. launched an $820 million outlet mall project in Sabah Al-Ahmad Sea City to serve the residents of this project. And the number of real estate transactions in this area has soared to top the list of registered land transfers, as per the data from the Ministry of Justice, during May and June. Private contractors see it as a sign of relief after a nationwide lockdown that halted their business for more than three months.
In Bahrain, the first-half real estate trades saw a significant increase and ended a three-month decline from March to May - when transactions totalled 1,074, 961 and 732, respectively - before rebounding 54 per cent to 1,133 transactions in June.
The noticeable increase in transactions in Bahrain and Kuwait has also been partially driven by record low interest rates on mortgages, which in turn increased the appetite of GCC nationals towards investing in their local real estate market. Bahrain’s Amwaj, Durrat Al-Bahrain and Diyar Al-Muharraq recorded the highest interest, with the first half of 2020 seeing $779 million in real estate trading within the kingdom.
As for Dubai, it continues to be the region’s premier tourist and real estate investment destination by attracting more than 2,895 GCC investors in the first-half of the year, with total invested amount at more than Dh6 billion. Given the current market conditions, this is significant and a clear indication of its value to GCC nationals due to its cultural relativity.
The government has introduced many incentives to elevate overseas investments in real estate, and these have played their part. GCC investors are betting on Dubai’s track record in tackling and transforming difficult circumstancez to its favor. I expect Dubai to receive a higher share of GCC investments during the second-half as the market stabilizes even further.
- Feras Adel Al-Salem is Vice-President of the Kuwaiti Business Council in Dubai.