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Al Mazaya report believes the Gulf
residential villa market particularly
could be heading for trouble if
suppliers do not take steps to stem
the flow of product given changed
liquidity conditions. If this does not
happen, then we forecast large drops
in sale and lease prices. It is important
that developers spread their project
portfolios across all sections of
the market and do not focus only
on one area – variety is what brings
investors, and no one is helped by
massive oversupply in one area.
8
Mazaya Monthly Real Estate Report -
Week 2 - October 2015
Over the coming months and years it
is critical that the real estate industry
pays close attention to economic and
population growth indexes, especially
as they correlate to the viability of
future development. The total value
of real estate projects launched in the
UAE since the start of the year is some
AED111bn. In Bahrain, we have seen
a seven percent rise on the value of
projects announced in 2015 compared
to 2014, the result of increased tourism
development. In Saudi Arabia, too, we
have seen a boom in building. The
industry must ask itself if the market
fundamentals can support this level
of development over the long term.
Al Mazaya report believes developers
must be cleverer when money does not
flow so freely in order to turn a profit. In
such times, areas of the market that are
being underserved must be found and
capitalised upon. For example, across
the Gulf it is noticeable that relatively
little development has been created
to date to meet the needs of the low
to middle income sections of society,
because returns on investment for such
work have traditionally not been as high
as they have for luxury developments.
We believe this will change over the
coming months as more developers take
an interest in this area of the market.