In a signal of confidence, real estate in Bahrain is expected to receive an influx of Saudi investments. 

With the reopening of the King Fahd Bridge that connects the two countries driving up tourism prospects, and an increase in demand and transactions for residential and retail real estate in Bahrain, experts suggest that non-Bahraini investors, particularly those from Saudi Arabia, will be looking closely at the country’s real estate potential.

Here’s a look at the sector’s performance in recent months, and what the outlook is moving forward.

PICKING UP POST-PANDEMIC

2020 looked shaky for real estate in Bahrain at the start, with several construction projects being rescheduled due to the global pandemic. The sector eventually picked up. Real estate deals in Bahrain rose by an average 17% in the second half of 2020, and real estate transactions reached a total value of USD 1.9 billion in the year. Overall, however, the outlook for real estate in Bahrain remained subdued owing to macroeconomic factors and oversupply in the residential space.

Notable highlights for real estate in Bahrain include a delivery of 30,000 homes across the past five years up to 2020, 769 tenders worth USD 1.75 billion awarded in H1 2020, 45,000 completed online transactions last year (amidst a bid to digitise real estate services in Bahrain), and ownership and regulatory reforms to amp up the sector’s investment appeal.

In 2021, real estate in Bahrain went on to record a surge of 36% in property transactions in Q1. About 3000 properties were sold for a total value of USD 600 million. Compared to transactions in last year’s Q1, this represented a growth of 51%.

WHAT'S IN THE PIPELINE FOR REAL ESTATE IN BAHRAIN 

A key forward-looking development for the sector is Bahrain’s National Real Estate plan for 2021-2024. The plan follows up on the Bahraini government’s vision of increasing the economic contribution of real estate through diversification. In addition to five initiatives and 17 projects, the plan also includes regulatory boosters, long-term plans and operational initiatives, the Economic Development Board of Bahrain has said.

The interest in Saudi investments doubles down on several other initiatives expected to bolster real estate in Bahrain. The sector is bracing for a potential resurgence amidst plans to heavily promote tourism post-pandemic. All in all, real estate in Bahrain currently faces a climate of cautious optimism.

 

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A contract of AED 180 million for the development of three high-end apartment blocks in Aljada was awarded to Dubai-based Al Ashram Contracting, Arada announced. Construction will begin immediately, with handover of the completed project, called The Boulevard, expected to take place by the end of 2022.

Located in the East Village district of Aljada, The Boulevard will feature three nine-storey blocks comprising a total of nearly 600 one, two, and three-bedroom units. The apartment complex will also have amenities such as smart home technology, a fully stocked health club, a shared swimming pool, and cafes and retail outlets on the ground floor.

OTHER ALJADA PROPERTIES BY ARADA ARE IN THE WORKS

The contract for The Boulevard is the latest in a number of Arada projects that are underway at Aljada. The property development company has so far completed 465 units at seven apartment buildings, and has seven more apartment buildings, and a townhouse and villa community, in the pipeline.

Earlier this year, Arada awarded a contract of AED 367 million for a student housing complex near University City, called Nest.

“This milestone is evidence of our determination to move forward rapidly with our construction plans at one of the UAE’s fastest-growing communities,” Chairperson of Arada, Sheikh Sultan bin Ahmed Al Qasimi said about the contract for The Boulevard. “These distinctive and high-end homes in one of the most desirable parts of Aljada have been welcomed by investors and end-users and will be a valuable addition to Sharjah’s property landscape on completion”.

ALJADA AS A RESIDENTIAL INVESTMENT DESTINATION

Aljada is a 7 million square metre community in New Sharjah, developed by Arada. Launched in 2017, the mega project comprises residential districts, as well as retail, hospitality, entertainment, sporting, educational and healthcare establishments. Residential real estate in Aljada, spanning 2.2 million square metres, has a total sales value of AED 24 billion, with a capacity for 70,000 residents.

Family entertainment destination Madar at Aljada, designed by Zaha Hadid Architects, is the first part of the project to have been completed. Launched in February 2020, it has so far attracted over 1.5 million visitors.

_{Photo credit: www.aljada.com/en/discover/residences/the-boulevard}

 

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Come June 1, 2021, the UAE will be allowing for full company ownership for non-Emirati investors and entrepreneurs.

The UAE government has amended its Commercial Companies Law to allow full company ownership of UAE businesses to foreign investors and entrepreneurs, according to a Ministry of Economy announcement reported by state news agency WAM. 

The decision was “a new step that reflects the importance that the UAE government attaches to supporting the economy and enhancing its preparedness for the future,” the UAE government said in a tweet on May 19.

COMPANY OWNERSHIP CHANGES IN THE MAKING SINCE 2020

The amendment was first announced in November last year through a decree by UAE President Sheikh Khalifa bin Zayed Al Nahyan. 

The government has since widened the scope of UAE businesses covered by the amendment to include 10 new strategic sectors, according to local papers. License requirements for these sectors will no longer call for Emirati sponsors to hold a 51% stake in onshore companies. Certain UAE businesses, such as oil and gas, telecom, and banking, will not be covered by the new amendment.

A committee of Department of Economic Development representatives is expected to share further information in the days to come, local papers suggest.

Minister of Economy Abdulla bin Touq Al Marri said that the amendment was aimed at bolstering the UAE’s “competitive edge” and facilitating business in the country. The minister added that the move would make the UAE a more attractive business destination for foreign investors, entrepreneurs and talent.

“It will further strengthen the country’s position as an international economic centre and encourage the flow of investments to the country’s vital economic sectors,” the minister also said.

SURGE IN FDI MORE GOOD NEWS FOR UAE BUSINESSES

The UAE’s FDI inflows grew 44.2% in 2020, reaching USD 19.88 billion, a recent Ministry of Economy report announced. FDIs in 2019 amounted to USD 13.4 billion.

Investment partnerships between ADNOC and foreign businesses contributed heavily to this development. The report further stated that FDIs inflows were directed towards several technologies, including artificial intelligence, Internet of Things, blockchain, augmented and virtual reality, robotics, autonomous automobiles, renewable energy, agritech, and healthtech.

Outflows touched $9.2 billion, covering aviation, transportation, mining, renewables, real estate, construction, communication, oil and gas, logistics, ports and infrastructure, tourism, leisure, banking, and agriculture.

Commenting on the FDI numbers, more measures to “strengthen the investment landscape and grow investor confidence in priority sectors,” could be expected, bin Touq Al Marri said.

 

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Dubai’s first green hydrogen project was launched at the emirate’s Mohammed bin Rashid Al Maktoum Solar Park earlier last week. The project was inaugurated by Sheikh Ahmed bin Saeed Al Maktoum, who chairs the Dubai Supreme Council of Energy and the Expo 2020 Dubai Higher Committee.

Dubai Electricity and Water Authority (DEWA), Expo 2020 Dubai and Siemens Energy serve as partners to the project.

The project “seeks to strengthen the UAE’s leadership across various fields,” bin Saeed Al Maktoum said. “These initiatives seek to ensure people’s happiness and wellbeing and provide solutions to challenges that may hinder our development journey.”

DEVELOPING A GREEN HYDROGEN ECONOMY IN THE UAE

The solar-driven industrial-scale green hydrogen plant is an early step in this direction for the MENA region. The project will facilitate production as well as long-term storage of green hydrogen.

The green hydrogen initiative aims to encourage the use of hydrogen-powered mobility, facilities and equipment. It is also in line with the Dubai Clean Energy Strategy 2050, with a goal of sourcing 75% of Dubai’s total energy needs from clean sources by 2050, and the Dubai Green Mobility 2030 initiative, which promotes sustainable transportation.

DEWA MD and CEO Saeed Mohammed Al Tayer noted that the plant was a part of the UAE’s drive to expand clean energy adoption, and use “tools of the Fourth Industrial Revolution” to drive sustainable impact in energy and water. 

Other efforts include recent cabinet approval for a nationwide system for hydrogen vehicles. The move is aimed at developing a green hydrogen economy in the UAE, introducing hydrogen-powered vehicles to the UAE market, and boosting sustainable economic growth efforts.

HYDROGEN TAKES PRECEDENCE, IN THE MENA REGION AND GLOBALLY 

The UAE is not alone in its endeavour to build hydrogen capabilities. Saudi Arabia, for instance, recently announced a USD 5 billion hydrogen project in its planned megacity NEOM earlier this year.

Demand for hydrogen is rising across the world, growing by 3X since 1975. The world’s current supply of hydrogen comes predominantly from fossil fuels.

Green hydrogen does not rely on fossil fuels. It uses electrolysis to split water molecules into hydrogen and oxygen. The oxygen is released into the atmosphere, thereby not contributing to emissions. Further, the electrolysis process is powered by renewable energy sources, making green hydrogen more appealing as a clean energy. 

Green hydrogen is favoured by global policy agendas that lean against the fossil fuel industry. At the same time, it is more expensive, and the production process involves a higher degree of technological complexity.

_{Photo credit: www.siemens-energy.com}

 

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Striatus is the world’s first concrete bridge built by 3D printing technology. The project has been developed by ETH Zurich’s Block Research Group, and Zaha Hadid Architects Computation and Design Group, in collaboration with Austrian startup incremental3D and Holcim.

The bridge is being built at Italy’s Giardini della Marinaressa in Venice, for the “Time Space Existence” exhibition at the ongoing Venice Architecture Biennale 2021. The exhibition is hosted by the European Cultural Centre. Striatus will open in July this year.

EVERYTHING YOU NEED TO KNOW ABOUT STRIATUS

The word striatus comes from Latin, and refers to grooves, or striations, on a surface. Presumably, the name is indicative of the texture of items that are manufactured using 3D printing technology. 

Striatus is an unreinforced masonry bridge that supports itself through compression. It is built using traditional building techniques combined with computational design, engineering, and robotics manufacturing technologies.

Since the 3D printed bridge does not use reinforcement and relies on the dry assembly without binders, it can be repurposed several times. It relies on its natural, circular geometry for structural strength.

Striatus has a displacement of 26 centimetres. Layer heights range from 4 to 11 centimetres, with a point count of nearly 60,000. Weighing close to 1000 kilograms, the bridge has a print length of 1600 metres, and a print time of 140 minutes.

Further, in order to control the ecological footprint of the project, the bridge is being built onsite, and with only the necessary materials.

“The concrete is structurally informed, fabrication-aware, ecologically responsible and precisely placed to build more with less,” according to the project’s website.

3D PRINTING IN THE MENA REGION

Globally, the 3D printing industry was valued at about USD 13 billion in 2020. It is expected to double in size by 2022. By 2024, the industry is estimated to reach over USD 40 billion. 

For the MENA region, this represents an opportunity that will be worth USD 1 billion in the next few years. 

3D printing has also emerged as a frontier technology in architecture and infrastructure, albeit in its early days. The UAE and Saudi Arabia have emerged regional leaders on this front, having announced several 3D printing infrastructure projects in the past few years. 

The region is home to the world’s largest 3D-printed two-storey building in the UAE, and a 3D-printed sand pavilion called Sandwaves in Saudi Arabia. Dubai developer Emaar also announced plans in 2019, to build 3D printed townhouses at Arabian Ranches 3 in Dubai.

_{Photo credit: www.zahahadid.egnyte.com}

 

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Showing early signs of recovery, sale prices of residential properties in Dubai will continue to pick pace in the long run, a report by Morgan Stanley has said.

“Robust demand, peaking supply growth and long lead times for new projects could lead to a tighter-than-expected market over the next several years,” Bloomberg reported, citing the report on Dubai’s property market. 

Government reforms in the past year and appealing mortgage rates in Dubai’s property market have bumped up demand for residential properties, the report added.

COVID-19 AND DUBAI'S RESIDENTIAL REAL ESTATE

Already facing problems of chronic oversupply, the 2020 pandemic resulted in high availability of residential units, after expats exited the country according to a report by S&P Global, which noted there was an 8.4% drop in population.

Residential sale prices in Dubai’s property market were already on a downward trend since 2018, according to Knight Frank. Things started to look up after transaction volumes in 2020 registered the strongest start the market had seen since 2017. However, they eventually ended up falling by 14.4% year on year as of June 2020.

LUXURY HOMES BOLSTER ROAD TO RECOVERY FOR DUBAI'S PROPERTY MARKET

The current dip in residential prices is attracting wealthy home buyers to Dubai’s property market. A record 84 luxury homes, worth upwards of USD 2.7 million, were sold in March 2021.

Further, an uptick in the sale of luxury villas, sea-view apartments and second-hand family houses has brought much needed reprieve to Dubai’s property market. While apartment prices were still falling in February, high-end villas saw prices stabilise. 

Villa prices rose 3.9% in Q1 this year, buoyed by interest from international investors. They also registered a growth of over 137% in Q1 transaction volume, as compared to the previous period. Comparatively, apartments registered a growth of 41% in secondary market transactions for the same period.

Overall, recovery is expected to be subdued, with tailwinds expected only after 2022. The S&P report expects Dubai residential real estate to be shored up by cutbacks in new supply and launches, low mortgage rates and declining residential prices in Dubai’s property market. 

Transaction volumes, including those in the secondary market, will continue to remain strong, and villa prices will be more resilient, the report anticipates. In the interim, an oversupply of residential units is likely to keep the pressure on for property prices, and real estate stock as well.

 

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Hotels in Saudi Arabia’s USD 500 billion planned zero-carbon megacity NEOM could open by the end of next year, according to reports.

Plans are in place for the first few hotels in Neom to open by the end of 2022, The National reported sector head of tourism at NEOM, Andrew McEvoy saying at the Arabian Travel Market, 

From 2023 to 2025, Saudi Arabia will further open up to 15 hotels in NEOM each year, and about twice that much subsequently.

HOTELS IN NEOM TO PROP UP THE CITY'S "VISITOR ECONOMY"

In line with the country’s push for sustainable tourism, the mega-city plans to welcome a million visitors by 2025, and five million by 2030, to accommodate NEOM’s “visitor economy,” McEvoy noted. Between 20,000 to 50,000 visitors are expected next year. 

The drive to build hotels in NEOM is aimed at absorbing this influx of expected visitors. Deals with IHG, Hilton, Accor, and other brands are underway, McEvoy added. 

McEvoy also noted that work is in progress to develop NEOM’s natural assets for visitor activities such as snorkelling, diving, kitesurfing, hiking, and mountain biking. As of now, 10 of the 39 islands near the city are expected to be developed in the future.

Other initiatives, such as tourism projects along the Aqaba Gulf and the Red Sea coast, and surrounding mountains, as well as a port development project, are also in the books, the tourism head added. As of now, delivery targets are on track, McEvoy also said.

WHAT IS NEOM?

NEOM was announced in late 2017 as a futuristic Saudi destination, part of the country’s Vision 2030. It is one of several projects by the Saudi government to promote the country as one of the most visited destinations across the world.

NEOM is being planned as a destination that will connect Europe, Asia and Africa. Investments are also being directed towards a number of specialised sectors, including energy, water, mobility, food, manufacturing, biotech, and media. 

In addition to becoming a choice tourist destination, NEOM will also accommodate one million residents.

The project is banking heavily on clean energy and technology to drive economic diversification and growth.

Earlier this year, for instance, Saudi Crown Prince Mohammed bin Salman, who also serves as Chairman of the NEOM Company Board of Director, announced a 170-kilometre hyperconnected clean energy community project The Line. 

The Line is expected to attract investment and talent, create more jobs, diversify the Saudi economy, and contribute USD 48 billion to the country’s GDP by 2030. 

_{Photo credit: www.re-thinkingthefuture.com}

 

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Saudi Crown Prince Mohammed bin Salman bin Abdulaziz recently announced the allotment of 20 million square meters of land in north Riyadh towards the development of a residential area.

The land allotment is aimed to expand the Al Jawan suburb to 30 million square meters, with 53,000 new residential units built under a private partnership.

The new housing units come on top of 20,000 previously announced units, in line with Vision 2030, which outlines several goals for Saudi real estate. In further alignment with Vision 2030, the Saudi government will also be relaxing a home ownership ban in Mecca and Medina, Arab News reported

OWNERSHIP OPENED TO INTERNATIONAL COMPANIES

At the same time, companies listed on Tadawul, Saudi’s stock exchange, will also be allowed to own properties in Mecca and Medina. This is likely to drive demand for commercial real estate, and prop up Saudi real estate for a stronger post-pandemic recovery, Arab News reported.

Residential real estate is a priority of the Saudi government, especially as demand for this sector is rising. However, affordability is a key challenge for residential real estate in Saudi Arabia. 

Vision 2030 aims to tackle this and other issues in this sector. This includes a waiting period of 12 to 15 years for housing subsidies, with waiting lists running into hundreds of thousands of beneficiaries. By outlining specific goals for the industry, the agenda also aims to solve the lack of a cohesive policy for real estate in Saudi Arabia.

DRIVING INVESTMENTS, OWNERSHIP FOR REAL ESTATE IN SAUDI ARABIA

In a statement to Saudi Press Agency, Minister of Municipal and Rural Affairs and Housing Majed Al-Hogail noted that Saudi’s housing sector contributed over SAR 115 billion (over USD 30 billion) to the country’s GDP. Riyadh represented almost half the country’s non-oil economy, he added.

Al-Hogail further said that lower costs of development in Riyadh incentivised infrastructure and real estate projects, including housing. Growing private sector participation would enable Riyadh to accelerate towards becoming one of the 10 biggest global economic cities, one of the goals under Vision 2030.

 

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Abu Dhabi-based property developer Aldar Properties is looking to invest  USD 1-1.5 billion in local and international opportunities, including those in Egypt, within the next 12 to 18 months, Bloomberg reported.

The company is already halfway through the due diligence process for a deal that would give it a majority stake in Egyptian real estate group Sixth of October for Development & Investment Co. (SODIC), the report states. It is now looking for additional opportunities to invest in Egypt.

ALDAR IS BIDDING FOR A 51% STAKE IN SODIC

In March this year, the company submitted an offer to purchase 51% of SODIC’s share capital via cash acquisition. It offered an indicative purchase price of EGP 18-19 per share. SODIC is headquartered in Cairo, and trades on the Egyptian Exchange (EGX).

The deal values SODIC at a potential EGP 6.6 billion (USD 420 million), with shares at a premium of 14% to SODIC’s closing price on 11 March this year. The valuation puts a premium of 18% on SODIC’s volume-weighted average share price over the last three months.

A consortium, owned and controlled by Aldar, is expected to implement the deal. The consortium will be making a mandatory tender offer once the due diligence process is complete. 

A MANDATE TO INVEST IN EGYPT

The developer announced, in late January this year, that it would be undertaking a “new group operating model.” This new company direction would focus on two core businesses – Aldar Investment and Aldar Development.

The group’s Egypt mandate falls under Aldar Egypt. An Aldar Development subsidiary, it will invest in Egypt through long-term property market opportunities, aiming to develop "integrated mixed-use communities.” Other subsidiaries of this vertical include Aldar Projects and Aldar Ventures.

Noting that Egypt’s property market was lucrative to the company, Chief Executive Officer Talal Al Dhiyebi has said that the SODIC deal “is one of a number of opportunities we are looking at in Egypt,” the Bloomberg report noted.

The deal can potentially bolster infrastructure and real-estate in Egypt, where a number of other top-of-the-line projects are underway. This includes the addition of six new planned cities, and a USD 23 billion high-speed electric railway line.

The country’s real estate sector also emerged as a strong regional contender in the MENA region, with the government pushing to develop infrastructure and drive private partnerships. This has laid further ground for developers to invest in Egypt.

_{Photo credit: www.africaincmag.com}

 

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