Real estate deals in the Gulf countries grew by nearly 52 percent year-on-year in 2021 to $137.4 billion compared to $90.5 billion in 2020, according to an analysis by KAMCO Invest.
Kuwait-based KAMCO, said Saudi Arabia contributed to more than 41 percent of the total value of deals, while the UAE (Dubai and Abu Dhabi combined) added 33.4 percent to the deals in the region during 2021.
The number of deals in 2021 reached 663,323 compared to 570,080 in 2020.
KAMCO said the increase in real estate transactions activities on an annual basis in 2021 is primarily due to seizing unparalleled buying opportunities, mortgage investors seeking to obtain low rates for mortgage operations, and government initiatives to support housing and mortgages.
The average value of each real estate transaction increased in 2021 for markets such as Saudi Arabia by 29.7 percent and Dubai by 21.6 percent, indicating investors’ impulse for properties characterized by attractive prices.
In Dubai, the low supply and attractive prices have increased investors’ drive for the off-plan projects that developers are offering, following the slow pace witnessed in 2020, as the value of deals for the projects under construction exceeded 45 billion dirhams in 2021.
For 2022, KAMCO said that addressing the increase in the capitalization rate of Gulf real estate against the backdrop of the expected interest rate hike will be accurate across sub-sectors and according to the type of property.
The report noted that real estate capitalization rates are expected to grow with some partial lag. Net operating income must partially track inflation rates depending on demand fundamentals, especially in the stronger sub-sectors of residential real estate and industrial warehouses.
