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Fluctuations in the oil price are not always
driven solely by the supply versus demand
ratio–currently,thereareother,geopolitical,
forces at work that are affecting the price.
These forces are by nature temporary,
and in time we will see the price stabilize
and more accurately reflect market
realities post global economic crisis.
However, the effect of the oil price on the Gulf
real estate sector is certainly real, lowering
the cost of materials and transportation
costs, and we can expect to see more
downward pressure on construction costs
over the coming months, especially as
increased residential unit supply comes onto
the market in some Gulf countries where
construction activity has recently been high.
Al-Mazaya: oil price declines will likely affect
Gulf developers’ appetite to bring units to
market in 2015.
Mazaya Monthly Real Estate Report -
Week 2 - APRIL 2015
5
Looking at the residential units to be
offered in the real-estate market this year,
it is evident they surpass the demand
forces across the regional market. This
is the nature of real estate construction:
market forecasts must be long-term
in outlook but it is hard to accurately
forecast the variables that will affect
demand and supply costs accurately. As
a result, the sector is often exposed to the
consequences of extreme fluctuations.