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KSA
Al Mazaya’s Report points out that
trends in the KSA real estate market
are not independent from internal and
external developments or supply and
demand forces. The data in circulation
shows a decline in real estate prices by
20–40 per cent, at the end of the first
quarter of this year. The government’s
application of taxes on land that
has been left undeveloped has also
led to a decrease in site plans on
the outskirts of major cities. Adding
to that, registered real estate sales
marked a decrease of 20 per cent,
compared to the same period last year.
Real estate transactions in April
marked a decrease of 52 per cent, on
a year-on-year basis, according to
statistics released by the Saudi Arabian
Ministry of Justice. Housing and
commercial building transactions also
declined by 52 per cent, while deals in
the commercial sector noted a 54 per
cent decrease, for the same month in
2015. These reported recessions reveal
a state of hesitation in the market’s
overall performance. That said, further
declines in pricing will be beneficial
to the real estate market, following
extremely high and unjustified rises
in prices over the past few years.
Jordan
Al Mazaya’s Report has also confirmed
that while Jordan's real estate market
is following a similar path to KSA, the
underlying reasons are very different.
The official data indicates a decline in
real estate sales by four per cent, during
the first quarter of this year, compared to
Q1 2015. Market indicators imply that the
reported recession is mainly attributable
to a state of instability in the region,
domestic issues related to a decline in
investment liquidity, and a lack of balance
between supply and demand forces. There
is currently anover-supply in theKingdom.
It is worth mentioning that liquidity in
Jordan’s real estate sector is one of the
most important factors determining the
country’s pace of economic activity.
Market indicators currently indicate a
decline in market liquidity, which has led
to a high rate of defaults on installment
payments – a matter that is influencing
financiers to put a hold on financing
real estate projects. Al Mazaya’s Report
also adds that forecasts for a further
decline in real estate prices are still
in place; however, rental prices are
expected to maintain their current levels.
Conclusion
Al Mazaya’s Report asserts that the
gradual decline in real estate prices will,
ultimately, be beneficial to the market,
over the coming period. However, real
estate markets that are noting sharp
and accelerating declines will face
many challenges in maintaining the
value of their assets and investments
and will have considerable difficulties
attracting more investment, in 2016.
The general trend of reported and
expected declines is attributable
to a decrease in demand and an
increase in supply – not just a rise
in supply. Economic conditions of
this nature may be pointing to further
recession before there is a rebound.
It is noteworthy that sales in Qatar's
residential real estate market are heading
for a decline. This is a consequence of
the reluctance of investors to offer new
projects while prices of undeveloped
lands have seen a marked decrease
of 15 per cent, in several locations in
Doha. In this regard, real estate prices
and rentals have marked record rises
over the past few years and the current
correction will be principally be more
beneficial to the market and end user.
Mazaya Monthly Real Estate Report -
Week 4 - May 2016
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