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March week 1

Al Mazaya considers M&A trend efficient solution for real estate companies & other real estate shared economy sectors to survive challenges

Al Mazaya Holding's weekly real estate report affirmed that the significant impact of the movement of the US Dollar on real estate performance is undeniable.

Evaluation of local and external supply and demand forces, which are often related to pricing and economic stimulation policies, is considerably affected by the strength of the US currency.

Neither can we ignore the impact of specialised real estate exhibitions, which are playing a key role in stimulating real demand among end users and foreign investors, the report indicated, noting that real estate markets across the Middle East need more of such themed events to sort out efficient solutions to existing challenges.

Al Mazaya's report highlighted the trend towards mergers as one of the most efficient options for survival in view of the accelerating financial and economic changes besetting the industry.

As part of the ongoing quest for attracting more foreign investments into the region's real estate markets and strengthening its financial and economic position globally, the strength of the US currency is  back to be the talk of the global economy, with nearly 90% of global trade conducted in Dollar, a verified fact that means a powerful dollar  may, however, adversely affect and accelerate the collapse of emerging markets  when it becomes difficult for them to honour their debts, and maintain  their purchasing power, which will ultimately lead to slower growth.

Al Mazaya says that the strength of the dollar against the quoted prices of real estate units and villas offered at present is an incentive to boost demand and accelerate dollar-denominated foreign investments, which leads us to say, according to the report, that the development of effective marketing and promotion plans within this framework will reflect positively on demand this year.

On the other hand, real estate events during the current year, particularly the organisation of specialised real estate exhibitions on the local, regional and international markets, are one of the most important tools that real estate developers should utilise to promote their products that are still under-construction and those in the pipeline. This means that real estate companies must comprehensively understand market requirements along with end-user and investment trends in order to achieve further successes in the real estate exhibitions and events to be organised during the current year.

The weekly real estate report of Al Mazaya Holding indicated that such specialised real estate exhibitions are one of the significant factors that stimulates the real estate industry as they invoke knowledge transfer and best international practices that are directly and indirectly related to the sector. Judging by experience, real estate exhibitions and events have a direct role in attracting various investments and stimulating business sectors, including tourism. They ensure alignment with medium and long-term development goals and strategies up to 2030. This coincides with the focus being laid by the public & private sectors on specialised cultural, tourist and sports activities that are set to play a role in stimulating the exhibition industry as well.

The report emphasised that the trend towards integration and mergers adopted by real estate companies, especially small and medium-sized ones, needs be thoroughly studied and evaluated in order to improve efficiency and competitiveness of local and regional markets. The need also arises to study the real conditions of companies operating in this sector and get ready for further acquisitions and mergers to create entities with financial and technical capabilities that enable them to launch major real estate projects.

The Mazaya report also pointed out that quality projects, be it residential, commercial or industrial, can only be implemented through those companies that have the power and ability not only to carry out reconstruction and construction works, but also ensure market balance and competitiveness, build trust, develop the industry and stimulate demand on real estate products.

Within this context, the current regional economic landscape seems to be supportive of M & A decisions because of their positive impact on the performance of the real estate market in particular and all active economic sectors in general.

Al Mazaya said that the real estate companies have several options and prospects to expand their activity and continue to grow in light of the rapid developments in the regional and global financial performance. The report noted in this regard that the tools and mechanisms used in the introduction, construction and display of real estate products have to develop radically to meet the rapid changes occurring with regards to financing channels and investor trends around the world. This is coupled as well with the rapid changes in interest rates and exchange rate fluctuations, which are all developments that have not been witnessed over the previous stage, during which real estate markets recorded the highest ever demand for all products without having to track all indicators as well as current and future developments to maintain good demand levels and higher competitiveness.