Investors in the Middle East show preference for hotel and residential assets
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The number of transactions and enquiries is expected to continue rising in 2012 with the supply/demand gap narrowing.
This review focuses on the three most dominant residential markets in the Eastern Province of Saudi Arabia, namely Dammam, Dhahran and Al Khobar.
The buoyancy in the economy coupled with a growing population has increased consumer confidence in Jeddah’s residential property market.
Colliers International has released its 2011 Global Investor Sentiment Survey, which takes the pulse of property investors worldwide, measuring their appetite for risk, optimism, key concerns and sense of market cycles.
In the Middle East, 70% of investors surveyed reported they were more than likely to look to increase their real estate holdings over the next 12 months, with two-thirds reporting target returns in the region of 15-20%.
Investors remain relatively nervous regarding risk, with half reporting that they did not feel compelled to move up the risk curve at all compared to early 2011. This view is in line with global investors, the majority of whom reported no increased risk appetite.
Investors in the Middle East stated an appetite for hotel and residential assets above the other asset classes, with residential in Saudi Arabia and hotels in Egypt the most popular investment targets.
Two key issues were flagged by respondents in terms of what factors would play a key role in their ability to expand their portfolios: the supply of “for sale” property and “political risk”.
The political concerns stem from the great uncertainty in the region regarding the future shape of governments and what impact their decision making may have on the real estate market.
“Demand continues to outpace supply in the lower end of the residential property sector in the Kingdom of Saudi Arabia.
However, with government plans to spend nearly $70 billion on low-income housing to satisfy the demand of a growing and financially empowered middle class, the market outlook for Saudi looks particularly strong.
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