Saudi real estate market 'will weather downturn'
Riyadh, April 8, 2009
Top oil exporter Saudi Arabia will weather a tough real estate market in 2009 thanks to demand for residential property, outperforming a downward trend in the rest of the Gulf, Moody's Investors Service said on Wednesday.
Residential and commercial real estate markets in the Gulf are under pressure due to tight liquidity, lower demand and a worsening consumer confidence, the rating agency said in a report on market conditions for the next 12-18 months.
'Saudi Arabia is the notable exception as it benefits from a large and growing indigenous population base and structural under-capacity for residential property, especially for low- and middle-income families,' Martin Kohlhase, assistant vice president and analyst at Moody's, said in the report.
The once-booming real estate markets of Dubai and Doha will be affected most with a decline in property prices and a slowdown in construction activity, said the agency.
Layoffs by many companies in the wealthy Gulf region, hit hard by a global economic crisis, will also affect demand for residential properties and create over-supply in the rest of the Gulf, said Moody's.
Dubai's real estate sector is facing a sharp price correction and hundreds of billions of dollars of construction projects have been cancelled in the United Arab Emirates as a result of the economic slowdown.
Despite that, Moody's said it expects strong government support to continue which will benefit most real estate firms in the region.
'Public infrastructure spending remains buoyant on the back of economic stimulus packages, which have been bolstered by government surpluses accumulated during the period of high oil prices,' the report said. - Reuters