Pricey homes and packed hotels: the year in GCC real estate

Reuters

• GCC real estate prices largely rose
• High office occupancy
• Tourism boosted hospitality

The story of the Gulf property market this year was about decreased housing affordability and a growing gap between top-quality properties and second-tier ones.

Meanwhile, surging numbers of international visitors in the UAE, Saudi Arabia and Qatar brought thriving hospitality and retail sectors in the main tourist hotspots.

Industry observers expect 2025 to bring more of the same.

Saudi Arabia

Housing became a scarce commodity in Saudi Arabia in 2024. Expat workers flocked to Riyadh, attracted by the Vision 2030 push. Government policies boosted the home ownership rate for nationals. 

Rising land and construction costs also made housing and commercial units more expensive, says Imad Damrah, Colliers’ managing director for Saudi Arabia.

“Freehold residential apartments in high-rise towers in Riyadh performed strongly, as did affordable National Housing Company residential communities,” Damrah tells AGBI.

Residential sale numbers in the capital climbed 31 percent year on year in the third quarter, CBRE says. Average villa and apartment prices rose five and four percent respectively.

Riyadh’s offices enjoyed sky-high occupancy and spiking rents in the face of a dearth of supply.

Hotels and shops in areas visited by Hajj and Umrah pilgrims benefited from a 27 percent jump in overall international visitors from January to September, Damrah says.

However, retail in less central locations struggled with reduced footfall. 

Continued demand for mid- to high-end housing is expected in 2025, Damrah says, driven by continuing urbanisation and population growth. Riyadh’s Vision 2030 initiatives should attract multi-national businesses, sustaining demand for premium office spaces, he says.

United Arab Emirates

The UAE’s property market beat expectations in 2024, producing record transaction volumes and strong price growth in Dubai and Abu Dhabi.

Haider Tuaima, director and head of research at ValuStrat, wrote about Dubai’s third-quarter performance: “Home sales and mortgage applications reached all-time highs, while office and warehouse prices also hit record levels.” The average size of homes sold fell to historic lows.

Off-plan properties accounted for an increasing share of sales value in the emirate in the summer, CBRE says. That has observers worried about a bubbl brewing in the segment.

Abu Dhabi had robust residential price and rental growth into the third quarter.

“Transaction volumes for ready properties surged, up 18.9% quarterly and 51.1% annually,”  Tuaima wrote.

The median sales price for office spaces rose 15.3 percent year on year, and rents in central commercial districts increased 25.6 percent, ValuStrat said.

In Ras Al Khaimah, the development of a massive Wynn resort, which will house the nation’s first casino, triggered a flurry of construction activity. 

Qatar

Stability was the hallmark of Qatar’s property sector in 2024. However, the gap grew between the performance of prime properties and lesser-quality ones.

Johnny Archer, Cushman & Wakefield’s head of research and consulting for Qatar, says: “Grade A offices, prime retail malls and high luxury apartments have all experienced high demand in 2024, but there has been a lag on the secondary markets, where older stock is struggling to maintain high occupancy rates.” 

Qatari homebuyers took out mortgages at a fast clip during the first two quarters, when interest rates were high, but put the brakes on from July to September, as rates began declining, perhaps in hope for more cuts to come.

Anum Hasan, ValuStrat's head of research for Qatar, says: "Despite rate cuts, the decline in mortgage activity underscores consumers' cautious approach and their strategic timing of major purchases, showcasing a market highly attuned to macroeconomic shifts."

Increasing tourist arrivals boosted the hospitality sector, with new launches such as the Simaisma development targeting visitors. 

“The establishment of Qatar’s real estate regulator, Aqarat, and the introduction of new regulations on real estate ownership signals a strong intent to attract more international investment to Qatar’s real estate market in 2025 and beyond,” Archer says.  

Hasan says the peg to the US dollar means the Federal Reserve’s interest rate decisions, as well as the return of Donald Trump to the White House, will directly affect Qatar’s economy. 

“Monitoring these macroeconomic variables, including US inflation trends and fiscal policies, will be critical for forecasting the market's direction,” she says.

Oman

Land and property prices in Oman remained subdued in 2024, weighed down by high interest rates.

Third-quarter data from the National Center for Statistics and Information ashowed that apartment prices fell nearly 13 percent year on year. Villas were the standout, registering a 2.5 percent price increase.

Observers remain confident that this is only a blip, as Oman continues to attract expat workers, has put its financial house in order and is improving its investment climate.  

The re-election of Donald Trump to the US presidency bodes well, some industry players think, as the president-elect strives to protect investments in Oman and elsewhere in the Gulf. 

“Local construction and hospitality professionals are generally optimistic,” Saleh Al-Shaibany, CEO of AlSafa Press & Publishing, wrote in AGBI last month. 

Bahrain and Kuwait

Bahrain’s Real Estate Regulatory Authority says the value of transactions jumped nearly 18 percent in the third quarter of 2024.

That is good news for a market that has been struggling with oversupply across segments, including offices. 

Stephen Flanagan, Knight Frank’s head of valuation and advisory for Mena, told AGBI in the summer: “Bahrain was previously the financial centre of the Middle East, but now the UAE and Riyadh have really come to the fore.” 

In Kuwait, the government imposed new restrictions on home ownership last month, with housing affordability having become a major issue. 

Residential sales picked up in the third quarter, and prices have been gradually falling for six quarters now, the National Bank of Kuwait says.  

In October the bank wrote: “Overall prices remain high, especially in the inner areas, and in terms of affordability, real estate prices in Kuwait City are still one of the least affordable among GCC peers.”

Commercial property sales in Kuwait dropped after surging in the second quarter.