Author : editorial
RIYADH: National Commercial Bank (NCB), the largest bank in the Kingdom, predicted Sunday a long-term favorable outlook for the real estate market in GCC (Gulf Cooperation Council) countries.
NCB Capital, investment banking arm of NCB, said, on Sunday that although the real estate markets remain subdued in many countries because of weak economies and credit restraints, by contrast the countries in the region are likely to benefit from favorable fundamentals and see property prices begin to rise.
"Following oil-led stabilization in the region, the most recent data now suggests that a property market recovery might be upon us even in Dubai. However, the cries have underscored the need for systemic reforms so as to ensure that this is a sustainable recovery," Jarmo Kotilaine, chief economist at NCB Capital, said.
The bank believes that the structural drivers of the GCC real estate sector will be robust economic growth with solid macroeconomic fundamentals, a high degree of stability and a favorable business climate. Besides moving away from dependence on hydrocarbons, the other factors include favorable demographics such as demand for housing from a growing young population and foreign ownership which relaxes the ownership laws.
"In Saudi Arabia, the outlook is favorable with economic activities set to benefit from the combination of an oil price recovery, continued government stimulus and gradual relaxation of bank lending."
"We expect a gradual price appreciation of some 20 percent over the next three years in the Kingdom which the new mortgage law would likely to accelerate. The UAE market looks likely to be the lowest to recover with little prospect of sustained price appreciation before 2011," Kotilaine said.
The economist concluded that the gradual development of the debt capital markets would make it easier to raise funds for construction in the Kingdom , while continued progress of at least some of the economic city ventures would drive growth.
Source : Arab News 2010
Source : Arab News 2010
