Buoyed as it is by strong demand, high rental yields, and a growing population and GDP, real estate has long served as the dependable choice for investors in the Middle East. But with the continuing volatility of oil prices, a mutable regulatory landscape, brewing trade wars, and the economic downturn spurred into motion by the COVID-19 pandemic, are real estate investments in the Middle East still a preferred asset? And how will the ongoing, widespread economic, social, environmental and technological upheaval shape the future of the real estate market in the Middle East?
The forecasted prolonged stretch of low oil prices will require regional governments to continue working on their diversification strategies, which will in turn stimulate a slew of mega projects in the MENA region — already multiple high-profile infrastructure projects in the Middle East have entered into their design, planning and construction stages. Over the next few years, the MENA real estate market will experience heavy growth and will present several attractive opportunities for investments.
But the building and construction sector accounts for a sizable chunk of the world’s carbon emissions — as high as 39% in 2018. Since the Middle East, particularly Saudi Arabia, the UAE and Egypt, are set to witness strong growth in construction, the use of modern methods of construction (MMC) and the adoption of smart and sustainable building technologies will emerge as one of the key trends to shape the future of the Middle East’s real estate sector.
The region’s real estate sector is also likely to benefit from growth in the vertical farming industry. In a bid to drive up self-sufficiency, vertical farming in the Middle East, and particularly vertical farming in Dubai, is on the rise, which will have a positive impact on the demand for warehouses.
The recent upswing in Chinese investments in the Middle East will also have long-term implications on the Middle East’s real estate market. Egypt was the largest recipient of funding from China’s Belt and Road Initiative (BRI), and Chinese funding is pivotal to Oman’s development plans for its industrial zones. Stronger China-Middle East economic relations will boost growth in the region’s real estate sector.
This report investigates the recent trends in the real estate sector, and how these shifts will impact real estate in the Middle East, as well as the future of real estate after COVID.
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