S&P Global Ratings forecast economic growth of 2% to 3% in the Gulf Cooperative Council (GCC) region in 2024 on Monday, with sustained oil-related growth and a solid 4% to 5% rise in the non-oil economic activity in the UAE and Saudi Arabia benefitting from large public investments and FDIs (Foreign Direct Investments).
S&P Global Ratings reported the GCC countries are now seeing stability in the credit quality of their real estate companies after the unexpected pandemic shutdown and inflationary pressures.
The ratings company noted most real estate firms in the region have beaten their revenue and profit margins in comparison to 2019, and highlighted the performance of Dubai’s real estate sector, which has weathered fast price hikes and a rise in volumes of properties established, resulting in a positive recovery in the country.
Also, the analyst firm projected population growth between 2% and 3% in the real estate sector, attracting consumers to visit the region, given the benefit of easing cost inflation on retail chains.
However, unwavering geopolitical tensions between countries pose potential risks to supply chain and oil prices.
S&P Global said Dubai’s residential property market is expected to cool over the next 12-18 months resulting from a rise in supply and global economic pressures hurting demand.
While, the company also forecast Saudi Arabia’s interest rate decline from the second half of 2023 could revive mortgages after a 35% drop in 2023, which will boost existing demand.
The rating firm is cautious about the sluggish global economy, which can weaken international demand for its properties and vacation resorts. The company also noted the shortage of real estate properties in Riyadh, keeping pressure hot on prices, killing the interest of buyers amid high mortgage rates.
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