GCC economies are looking at a growth of 2-3% this year, following a contraction of 5% last year, Khatija Haque, Chief Economist and Head of Research at Emirates NBD said.

Haque was speaking at the Cityscape GCC Summit 2021. She noted that the growth wasn’t quite at par with bigger economies, due to a focus on monetary support and the financial system by GCC economies, versus a focus on household and private sector fiscal support in the other developed economies.

Next year, oil production is expected to contribute significantly to growth, although increases are expected to be scaled back, she said. Non-oil economies are also expected to continue recovering, provided there are no disruptions from COVID-19

THE PATH TO RECOVERY FOR GCC ECONOMIES

With prices rising more than expected, Haque noted that governments of GCC economies have been “disciplined” with their spending. Going into 2022, there is an “expectation in some quarters” that governments may increase spending if oil prices stay at USD 70 per barrel.

However, Haque noted that this is unlikely. Instead, governments need to focus on reforms that can wean GCC economies off of government spending for growth. They also need to focus on diversification, with a global shift away from oil and gas.

“We believe that governments will maintain fiscal discipline going forward. There is the recognition that, given the volatility that we see in the oil market, having the economy too reliant on government spending, which in turn is too reliant on oil revenue, is not a sustainable way forward,” Haque said.

In the short term, oil is still relevant, she continued. It is expected that the global economic uptick will boost oil prices and production next year. As a trade hub, recovering trade volumes are also expected to further support growth in GCC economies. This may be threatened by COVID-19 and its new variants, she cautioned.

The UAE has been investing heavily in infrastructure to the point of oversupply, and the focus is now shifting to “value added growth sector,” Haque said. These include manufacturing, technology, and clean and renewable energy.

Meanwhile, real estate has seen a stronger recovery than expected, Haque noted. Record-low interest rates, quicker reopening of borders, remote working and vaccine rollouts have all stimulated demand in different ways for real estate in the UAE, Haque noted.

Elsewhere in Saudi Arabia, there is still scope for infrastructural investments. Sectors that are likely to benefit from such investments include transport, tourism and leisure (especially due to domestic tourism), schools and hospitals.

In the private sector, consumer spending is up 10% year-on-year in the first seven months of 2021, despite higher taxes, Haque also said.

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The past year has been transformative for the real estate industry in the GCC, marked by positive changes to the market as it begins to recover post-pandemic. With high vaccination rates and rapidly easing restrictions to freedoms and travel, we are witnessing a gradual return to normality across the GCC.

In the real estate space, several giga-projects which are set to revive the market have recently been launched. In Saudi Arabia, developments such as Neom and Qiddiya have received extensive funding and represent an active collaboration between the private and government sectors.

“In KSA, the Ministry of Municipal & Rural Affairs & Housing has done an excellent job of building a trillion-dollar real estate market, working to meet the Vision 2030,” Yousef Betraoui, Executive Partner at Land Sterling said in a discussion as part of the Cityscape GCC Summit.

The residential sector remains one of the largest across the region, with developers struggling to meet current demand.

INVESTING IN CHANGE

“Saudi has changed dramatically in the past 10 years and has opened up to the rest of the world in line with Vision 2030,” Betraoui noted.

Various sectors are working collectively to address reforms and revive the economy, looking to incite economic, social, and cultural changes in the country. As KSA strives to fulfil the requirements of a modern country, it has introduced initiatives such as Invest Saudi in attempt to attract high levels of foreign investment and international business.

The Ministry of Investment is guiding the country’s foreign investment initiatives, working in alignment with various other ministries to assess the requirements for each real estate sector, including healthcare, logistics, residential and education.

Digitisation and technology are also easing processes for foreign investors in terms of licensing, for example.

BUILDING ONE OF THE WORLD'S LARGEST ECONOMIES

Seeking to end the KSA’s dependence on oil and diversify the economy, Saudi Crown Prince Mohammed bin Salman wants Riyadh to become one of the world’s top ten largest economies by 2030.

To achieve this, the existence of free zones and financing for giga-projects such as The Red Sea Development Company and NEOM, is increasing across the kingdom.

“These kinds of projects will create new tourist destinations and many jobs in Saudi Arabia,” Betraoui said.

An ongoing relaxation of cultural and social rules, particularly concerning women’s rights, is also contributing to improving residents’ quality of life and to achieving the objectives of Vision 2030.

A FOCUS ON LOGISTICS

The logistics sector is a key focus for development, with investment into many industrial zones increasing across the Kingdom. The Saudi freight and logistics market is currently valued at around $23 billion and is experiencing annual growth of 5-6% annually, expected to reach $35 billion by 2026, Betraoui said.

“Saudi wants to become one of the world’s largest logistics markets … all of the private sector developers are gearing themselves towards addressing this gap in the market,” Betraoui noted.

DEVELOPMENTS IN THE TOURISM SECTOR

Saudi’s tourism sector is currently undergoing a vast transformation as developers shift from producing hotels to full-fledged resorts and cities, many in the southern mountainous regions.

By 2030, the Kingdom is aiming for 10% of the GDP to be from the tourism sector and the government has set-up a tourism development fund to support this. Saudi expects to welcome 22 million international arrivals by 2025 and is continually investing in infrastructure to accommodate this, such as the creation of new airports and a metro system.

Investment in the tourism sector is also having a positive effect on developing roles for women in a range of sectors. Increasingly, we are seeing women take-up roles in hotels, tourist centres, restaurants, and beyond.

“This is a very powerful workforce that’s been dormant for a long time … it’s really amazing to see women involved in tourism and reflecting the heritage of their country,” Betraoui commented.

With coastal, mountainous, green, and urban areas all under development, the KSA offers tourists a range of experiences and heritages.

“Saudi has positioned itself very well regionally to address tourism. Every region has its own style of tourism, so different regions are complementing and not competing with each other,” added Betraoui.

For more insights and discussion around the MENA real estate market and to catch-up on Yousef Betraoui’s session, attend the Cityscape GCC Summit from 5-6^th October 2021. Sign up for free here.

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Sharjah Architecture Triennial will be launching its new programme, SAT Talks: Re-materialise, in October this year. The programme focuses on recycled materials, and how these alternatives stack up against toxic and unsustainable materials in architecture and construction.

Delving into an “environmentally- informed approach to design and architecture,” Re-materialise focuses on the production of three regionally-accessible recycled materials. It also discusses challenges and opportunities in this space, their social and environmental impact, and introducing sustainable practices in design and architecture.

RE-MATERIALISE TO BE LAUNCHED WITH VIDEO SERIES ON RECYCLED MATERIALS

The programme will be launched with a series of videos featuring local players in the recycled materials space. Through interviews, they aim to demonstrate how circular economy solutions can help to address current waste management issues for the construction industry both in the UAE and the wider MENASA region.

Featured interviewees include environmental engineer Ziad Abi Chaker, who recycles materials collected both in his town of Beit Mery and other areas of Lebanon, chemist and founder of Steel Wood Ghassan Afiouni, who makes boards of recycled wood collected in the UAE, and Dr. Nicolas Calvet, a physicist, engineer and founder of Seramic lab, which is working on ceramic tiles made from recycled materials.

Fashion designer and Founder of Outsider Fashion Noorin Khamisani, and architect and Co-Founder of Nyxo, Mirko Daneluzzo, will also be joining the series as interlocutors. Both Khamisani and Daneluzzo are lecturers at the Dubai Institute for Design and Innovation.

They will be joining a discussion on the potential of recycled materials to provide new opportunities for designers and architects at introducing ethical and sustainable changes in architecture. 

SHARJAH ARCHITECTURE TRIENNIAL WAS INAUGRATED IN 2019

The inaugural session of the Sharjah Architecture Triennial was held across three months starting from November 2019. It was conceptualised to be the first major platform on architecture and urbanisation in the Middle East, North Africa, and South Asia (MENASA) region.

The initiative was founded under the Sharjah Urban Planning Council and backed by the Sharjah government.

The first edition was curated by Adrian Lahoud, Dean of the School of Architecture at the Royal College of Art London. It followed the theme of ‘Rights of Future Generations’. The theme aimed to “rethink fundamental questions about architecture and its power to create and sustain alternative modes of existence,” an earlier statement from the Sharjah Architecture Triennial said.

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With the Bahraini government continuing its focus on economic diversification (much like its GCC neighbors), Bahrain’s real estate is expected to benefit from government and landlord-led developments and initiatives.

In a recent report on Bahrain’s real estate, CBRE outlined a number of such efforts that are expected to support the recovery of the wider real estate market in the country.

HERE ARE THE LATEST TRENDS IN BAHRAIN'S REAL ESTATE

RESIDENTIAL SECTOR

While affordable and social housing segments largely drive demand in Bahrain’s real estate, the millennial demographic is likely to benefit from a government backed loan scheme, Mazaya. The loan scheme enables them to purchase their first homes.

On the developers end, rent-to-own schemes, attractive payment plans and guaranteed returns, are popular in what remains to be a tenant-led market.

Meanwhile, regulations concerning staff accommodation and space per person are being reviewed, and several sites may be expected to upgrade their accommodation conditions.

OFFICES

Demand for office space in Bahrain’s real estate is up, with 60% of respondents in the CBRE survey saying that they preferred physical offices. Key government initiatives are being announced across the country to support and encourage innovation and technology, as demand from local tech and fintech startups rises.

At the same time, with an increase in second generation space over the last 12-18 months, rental performance will continue to be pressured amidst supply increases and limited demand.

RETAIL SECTOR

The report noted that landlords have “supported” tenants during the pandemic restrictions through efforts such as flexible lease terms, and flexible/convertible/open spaces for greater retailer interest.

Meanwhile, omnichannel retail is here to stay, although the physical retail experience will very much be a critical part of this. Further, drive-thrus and plazas remain especially popular within the retail real segment of Bahrain’s real estate.

HOSPITALITY

Occupancy has largely been driven by domestic tourism, staycations, and quarantine requirements. Pre-pandemic pressures on this sector are also likely to continue, calling for a “cohesive strategy that connects destinations, attractions and accommodation,” the report said.

Niche opportunities for affordable, family-friendly and quality, 3 and 4-star properties accommodation, are gaining traction. Further, government efforts to improve beachfronts are also underway.

INDUSTRIAL AND LOGISTICS SECTOR

With booming ecommerce adoption, demand for warehousing is expected to continue growing within and outside of formal industrial and logistics parks. Further, a shift away from underperforming traditional asset types is also expected to spark investor interest in this sector.

Leasing of international grade logistics warehouses is especially popular by demand, while secondary grade assets will face pressure as occupiers move towards more “sophisticated” offerings.

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Major construction works for Stage Two of the UAE’s Etihad Rail project have been completed two months early, the country’s official news agency WAM reported.

Construction works for Package A of Stage Two of the UAE’s Etihad Rail project has been completed, the report said. Work on a connection through the town of Al Ghuwaifat, at the border of Saudi Arabia, has also been completed.

Package A of Stage Two extends over 139 kilometres, while the Al Ghuwaifat connection extends for 264 kilometres, from Habshan to Ruwais areas.

Stage Two is broken down into a total of four packages, with Package A extending from Ruwais to Al Ghuwaifat. As of 2019, Package A was valued at AED 1.5 billion.

Meanwhile, 40% of the network’s annual transport capacity has also been reserved. On completion of Stage Two, this will come up to 60 million tons of goods per year. Reservations were made through commercial contracts, including those with quarrying company Stevin Rock, Western Bainoona Group, and Al Ghurair Iron and Steel (AGIS).

Etihad Rail is looking to raise further commercial and strategic agreements, WAM reported.

Etihad Rail is one of the UAE's largest infrastructure projects. It will connect all seven emirates of the country via a 1200 kilometre-long track.

ETIHAD RAIL WAS ESTABLISHED IN 2009

The rail project is managed by Etihad Rail. The company was established in June 2009 to develop, construct and operate a national freight and passenger railway network in the UAE.

The project is aimed at connecting trade, industry, manufacturing, production, logistics, and import and export hubs, as well as the population in the UAE. It will also be part of the GCC railway network.

Stage Two of the Etihad rail project will extend from Al Ghuwaifat to Fujairah. It will connect Abu Dhabi, Khalifa Industrial Zone, Khalifa Port, Jebel Ali Port, Dubai, Sharjah, Ras Al Khaimah and Fujairah. Stage Two is fully funded, agreements have been signed with ports and industrial complexes, and Design and Build contracts have also been awarded for packages from Al Ghuwaifat to Fujairah.

Stage One, meanwhile, has been operational since January 2016. It facilitates the transportation of 22,000 tonnes of granulated sulphur for ADNOC on a daily basis, from Habshan and Shah to Ruwais. Stages One and Two coincide at the cities Ruwais, Mirfa and Tarif in Abu Dhabi.

Etihad Rail also has plans to expand in the future, including stops at Al Ain and Saqr Port.

_{Photo credit: www.chinaconstruction.ae/package-a-for-stage-2-of-etihad-rail-project-awarded-the-best-health-and-safety-performance-in-the-year-2020/}

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Egypt-based real estate developer Radix Development has plans to infuse EGP 5 billion into new projects within real estate in Egypt by the end of 2025, Daily News Egypt reported. Radix Development is a subsidiary of the Saudi holding company Mwafaq Holding Group.

Of the total planned expenditure, EGP 1.25 billion will be deployed by the end of next year, the report said. Funding will be deployed across a number of projects, including its first project Radix Agile.

RADIX DEVELOPMENT HAS SEVERAL PROJECTS IN THE WORKS FOR REAL ESTATE IN EGYPT

The report noted that Akram Al-Sheikh, Executive Vice President of Radix Development, highlighted a number of projects in the pipeline for real estate in Egypt, and especially the New Administrative Capital.

This includes an integrated urban project spanning 30 feddan, or 1,25,048 square metres, in Egypt’s New Administrative Capital. The project will include both residential villas as well as a commercial administrative tower across 12,000 square metres.

The company also intends to develop two coastal projects in New Alamein and El-Galala as part of its 2022 plans. New Alamein is a key focus of Radix Development, with several projects planned for the city, Al-Sheikh said.

For 2021, Al-Sheikh noted that Radix Development aims to reach EGP 1 billion in sales. So far, it has sold 60% of units of the 7,500 square metre-wide Radix Agile project in the New Administrative Capital for contractual sales of EGP 600 million. It also sold 50% of its medical and administrative units, and 25% of the commercial units.

Investments of EGP 850 million have been made in the Radix Agile project, with construction costs standing at EGP 400 million. Al-Salmaniyah Real Estate Development was tasked with executing the construction contracts on the project.

The project was launched in February 2021. It is currently pending a construction permit, and Radix Development has set an implementation timetable not linked to sales for the project.

In addition to Radix Development, companies held by Mwafaq Holding Group intended to grow their business volume in Egypt. This included contracting works in the New Administrative Capital and other governorates, design and engineering consultancy companies, a landscaping company, and an agricultural business, the report noted.

_{Photo credit: www.worldarchitecture.org/article-links/eccvp/the-construction-of-the-35km-green-river-in-the-egyptian-new-administrative-capital.html}

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Expats in Oman will now be able to purchase homes through Oman’s usufruct scheme using bank loans, the Times of Oman reported.

With the new decision by the Omani government, local banks will be providing loans to help expats fund their apartment investments. According to Fahad Al Ismaily, CEO of Tibiaan Properties, expats in Oman will be able to pay for flats under Oman’s usufruct scheme through bank loans repayable in instalments.

The scheme allows expats in Oman to purchase property in certain areas of Muscat, including Boushar, Seeb and Amerat.

“[MoHUP] has expanded and amplified the rule to make it understandable. They have issued a document which provides an explanation about the work being done, which is good, because there was a lot of confusion among people in this matter, as well as incorrect information sometimes given by real estate agents,” the Times of Oman cited Al Ismaily as saying.

OMAN'S USUFRUCT SCHEME

Last year, the Ministry of Housing and Urban Planning (moHUP) granted usufruct rights for the ownership of limited lands and properties, including multi-storey commercial and residential buildings, to non-Omanis.

The move is aimed at boosting real estate investments in Oman through foreign investment opportunities. It was rolled out in addition to other initiatives in this space, including property ownership in integrated tourism complexes, and ownership of properties by GCC citizens outside restricted areas

Al Ismaily added that Oman’s usufruct scheme will be expanded to other governorates as well, especially commercial areas where non-Omanis may prefer to stay.

Oman’s usufruct scheme comes with certain conditions. Only those flats in buildings that are completed and are less than four years old are available for investment. Buildings must be at least four storeys high, with a minimum of two bedrooms.

Moreover, only 40% of apartments in a building can be allowed for purchase under the scheme, with a quote of up to 20% for people belonging to the same nationality allowed to buy apartments within the same building.

“This rule also looks to maintain the demography of the country, while ensuring every community maintains a healthy way of living and making sure everyone in the community is able to meet their needs,” Al Ismaily said.

Apartments should also have a minimum investment amount of OMR 35,000 (USD 90,000). Flats are transferable to legal heirs, and owners can retain ownership of apartments even after leaving the country.

Sale of apartments purchased under Oman’s usufruct scheme is only permitted four years or more post-purchase.

_{Photo credit: www.constructionweekonline.com/business/268145-oman-grants-non-omanis-usufruct-rights-to-buy-residential-units}

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A capital raise of KWD 250 million (USD 830 million) has been approved for Kuwait’s Touristic Enterprises Company (TEC), according to a statement by the company. The funding is aimed at boosting tourism in Kuwait.

TEC is a government-backed company mandated with supporting tourism in Kuwait through the development and management of tourism and recreational assets.

CEO, Abdulwahab Ahmed Al-Marzouq, said that the Kuwait Investment Authority had approved the capital increase for a new strategy for Kuwait’s recreational and leisure sector.

“Today, we are setting the course for a new era for the recreational and leisure sector in Kuwait. As part of the new strategy, we will pursue calculated growth and expansion, modernize, redevelop, and reposition existing facilities and diversify our assets to offer new world-class experiences to everyone in Kuwait,” Al-Marzouq said.

The increase would take TEC’s capital to KWD 300 million, from its current value of KWD 50 million, Reuters reported. The company also intends to borrow KWD 50 million from banks in the country as financing for part of its projects. Over the next 10 years, TEC has plans to implement a total of 95 initiatives and projects, at a cost of KWD 380 million, the report said.

The strategy to promote leisure, entertainment and tourism in Kuwait was in line with Kuwait Vision 2035’s goals of human capital development and economic diversification, Al-Marzouq added.

Kuwait Vision 2035, otherwise known as “New Kuwait”, is an economic diversification and development plan announced in 2017.

11 REDEVELOPMENT PROJECTS TO STIMULATE DEMAND FOR TOURISM IN KUWAIT

The strategy also involves the redevelopment of 11 anchor projects by TEC and immersive experiences, the statement said. The projects are aimed at creating and growing demand for tourism in Kuwait and will be developed following planning and financial viability studies.

The 11 projects up for redevelopment are distributed across five verticals connected to tourism in Kuwait. These are: park and family entertainment, hospitality, recreational clubs, highways rest areas and waterfront marinas.

Plans for the redevelopment of three key projects in the first phase of the new strategy were unveiled at a media briefing. These included Nuwaiseeb Rest Area, Ras al Ardh Club and Messilah Beach.

TEC also specified plans for the redevelopment of other projects in the second wave of the strategy. These projects were Shaab Park, South Sabahiya Park, Salmiya Yacht Club, Abdali Rest Area, Salmi Rest Area, Egaila Beach, Khiran Resort and Touristic Park.

_{Photo credit: www.archinect.com/AhmadHamed/project/highway-rest-area, https://worlds-exotic-beaches.com/kuwait/messilah-beach-kuwaitian-beauty}

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