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Conclusion
Al Mazaya’s Report concludes that
currently decreasing levels of building
materials costs are good and beneficial for
refreshing the building and construction
sector for the middle-income group,
across the GCC. This will become more
relevant as the numbers of middle-income
groups are increasing. Therefore, there
would seem to be no time like the present
for developers to commit to projects
that will meet this new demand category.
While the expansion of the construction
sector and building of houses for
middle-income earnerswill have adirect
contribution to the national economy
of GCC countries, it is also understood
that it will also grant GCC markets
further competitiveness in the minds
of international real estate investors.
5
Mazaya Monthly Real Estate Report -
Week 1 - May 2016
KSA
In Saudi Arabia, Al Mazaya’s Report
notes that in spite of the kingdom’s
high production of steel, the domestic
demand is also high and increasing due
to an undeterred production of real estate
and housing projects in the country.
Therefore, the Saudi market will remain a
target for global steel companies both in
the immediate and medium term. Market
indicators point out that steel prices are
prone to an additional decrease due to
continuing negative forecasts in relation
to the Chinese and European markets.
That said, Al Mazaya’s Report stressed
that a recession in prices of steel and
building materials, in the Saudi market,
is having a positive impact on the cost
of real estate and ready-made housing
products. It is, therefore, anticipated that
prices will go down further – at rates
proportional to the reduction in steel
prices and other materials (namely oil).
Observers of the Saudi market also
believe that there will be a direct impact
on the price of housing caused by
citizens' large-scale abstention from
purchasing property (60 per cent of the
KSA market are tenants not owners)
due to the high costs. It is, therefore,
expected that such a recession will
contribute to a re-offering of real
estate products, at prices that are
appropriate for the domestic demand.
Qatar
Al Mazaya’s Report notes that the Qatari real
estate market has seen a marked increase
in the volume of consumption of building
materials, in 2016, and has had to resort to
importing materials to meet the requirements
of hosting the 2022 FIFA World Football Cup.
Therefore, indicators of the construction
market reveal a rise in building costs with
an intense concentration on the execution
of infrastructure projects. In this respect, Al
Mazaya’s Report suggests that any marked
rise in building costs may increase the
cost of real estate products and will likely
delay the handover of a number of other
projects. It is worth mentioning here that
the high demand for building materials and
their high prices will lay the foundations
for a new phase of development for other
industries in Qatar and pushes towards an
inauguration of new production lines for
building material factories. This, in turn, will
encourage the private sector to enter into this
industry. High building costs, in Qatar, are
also often affected by transport costs, which
increase during the high demand periods.