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Mazaya Monthly Real Estate Report -
Week 1 - May 2016
In cases of economic recession,
particularly in respect to real estate
projects, the decline in prices of energy
and building material costs can lead to
more affordable real estate products
and would increase the pace of external
demand, given the attractive power of
ready-made real estate products that
are already available in the market.
Al Mazaya’s Report notes the presence
of positive indicators in the building
materials market in the region,
despite the upward and downward
movement depending on current
real estate activity. The key will be
for developers to identify the right
opportunities and prevailing prices and
to use them proportionate to demand.
Al Mazaya’s Report also reveals that the
key drivers in this economy are related to
the timing as much as the price movement.
Real estate markets and developers'
accounts must reflect the supply and
demand forces in all economic conditions
and they cannot rely on achieving
objectives simply based on fluctuating
prices. At this level of transparency there
may be a need for intense competition
among the contracting companies,
although this is unnecessary for steel
and cement given that the stability and
flexibility of their prices grant developers
an ability to plan and calculate the cost
– throughout the project’s duration.
It is worth mentioning that a recession
in business volume may motivate
contractors to reduce profit margins
to win tenders, a matter that has led
to and will lead to reduced building
costs. With existing low or intermediate
costs of building materials, real estate
products of stable and fair prices will
help activate demand, irrespective
of recession or boom cycles.