Saudi Arabia is forecast to become one of the best performing real estate markets in the world in 2012, Damac Properties, a leading private developer said.
With investment bank Rasmala predicting five per cent growth in house prices over the next two consecutive years, Saudi Arabia’s property sector is poised to become one of the world’s leading property markets.
“The European debt crisis is likely to constrain real estate prices across the Euro zone, the USmarket is still flat and with China and Hong Kong property prices tumbling, the Middle East is where investors are most likely to see growth in the New Year. We predict that Saudi Arabia, in particular, could easily edge into the world’s top-ten list next year,” said Ziad El Chaar, managing director of Damac Properties. Saudi Arabia’s economic fundamentals are strong, with Real GDP growth projected to be 6.4 percent in 2011, which is the highest in eight years, a statement from the company said.
Corporate profits in the kingdom rose nearly 25 percent in the first nine months of 2011, and net income from the petrochemical sector surged by 55 percent according to a report by Global Investment House.
“There is very strong positive sentiment about the outlook for Saudi’s economy, and that is fuelling demand for high quality properties within the Kingdom. We are seeing strong demand from both end users and investors seeking a market with high yields and plenty of scope for capital growth,” El Chaar said.
Increased oil revenues in 2011 have spurred a wave of fiscal spending as the Saudi government continues with its strategic push to diversify its oil-based economy.
King Abdullah’s commitment to spend 30 percent of the Kingdom’s annual GDP on public projects aimed addressing unemployment and the country’s housing shortage is already stimulating the housing and construction sectors, the statement said.
“The investment world is so preoccupied with growth from the BRIC countries and emerging markets that they are overlooking a major powerhouse economy right here in the Middle East. Saudi Arabia is undergoing a once in a generational transformation, and property is an excellent vehicle to gain exposure to the Kingdom’s economic expansion,” El Chaar added.
Damac Properties is well established in Saudi Arabia, having been one of the first international developers to be granted a license, under the jurisdiction of the Kingdom’s new real estate laws, to develop and sell properties off-plan. The company is currently constructing the Al Jawharah Tower on the Jeddah Corniche, which was recently awarded the Arabian Property Award for ‘Best High Rise Architecture.’
At 47 storeys, Al Jawharah will be one of the tallest towers in Jeddah, and among the tallest developments in the country. Construction is currently up to level eight, with block work up to level three.
The ‘Damac Residences, with Interiors by Versace Home’ will occupy the highest ten floors of Al Jawharah. The Versace-branded residences were launched at Harrods in London during the summer, and showcased for the first time in Saudi at the Riyadh International Urban Development and Real Estate Investment Event.
Damac will unveil its Versace show apartment at Al Jawharah this month, it said.
Saudi has a very young demographic profile, with around 45 percent of the population currently aged below 20 years old. The young population and rapid rate of urbanisation has been a significant factor driving the real estate market, with many young professionals now looking for units away from the traditional family home.