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No less than 20,000 residential units will
come onto the market in Dubai in 2015,
exerting downward pressure on sale prices
and lease rates. In 2014, leasing rates in
Dubai improved by some seven percent on
2013 rates, which in turn improved by 24
percent on 2012 rates. The lease rates in
2015 are expected to prove less attractive
to investors than the 2013 rates, though
the market will remain active, servicing
local demand for sales rather than bringing
in large numbers of external investors.
In Sharjah, 175 real-estate projects
were launched in 2014 and we
expect to see some 3,000 further
units brought to market in 2015.
In Saudi Arabia, construction activity is high
on the residential side as the government
looks to provide sufficient quantities of
homes to keep pace with a rapidly growing
population. Investment into residential
supply is expected to be some SR82bn
in 2015, and more than 750,000 units
will be finished. A significant proportion of
the financing costs for such large-scale
construction will be met by the Saudi Real
Estate Development Fund, while the rest
will likely emanate from the private sector.
6
It is expected that, as a result of the new
residential unit supply, prices for homes
in much of the country will face pressure –
currently, market demand is sufficient only
to absorb 25 percent of supply. Already,
prices in Saudi Arabia for completed homes
have weakened by between five and fifteen
percent since the start of the year, while
land prices have dropped by as much as
nineteen percent. As a result, investors
are content to wait on the sidelines for
further falls before entering the market.
Mazaya Monthly Real Estate Report -
Week 2 - APRIL 2015