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The real-estate market in the Middle East and North Africa (MENA) may start to see moderate recovery over the short term, but it might take up to two years before it recovers completely, industry experts have said.
Of the 488 respondents polled recently by Informa Markets, organiser of Cityscape’s Real Estate Summit, 74 percent said they anticipate the market to bounce back completely within one to two years. About a third (32 percent) are expecting signs of improvement within the next six to twelve months, while more than half (52.5 percent) agreed that a “speedy recovery” may be possible.
The comprehensive study gathered the feedback of experts in the region such as developers, architects, designers, brokers, private and institutional investors, consultants and market analysts. The results were highlighted in the inaugural “UAE & MENA Real Estate Report” for the second half of 2020.
Activity within the market over the last several months has mostly been low compared to last year, but transactions in markets like the UAE have started to pick up since the global lockdown.
CONFIDENCE WITH PRAGMATISM
Chris Speller, Group Director for Cityscape, Informa Markets, said their analysts saw a “mix of confidence, pragmatism and caution” in the participants of the survey.
According to the respondents, the growth in the industrial and manufacturing sectors will be critical to both the property market’s recovery and non-oil revenue diversification in the region. The key growth areas will be warehousing, cited by 60 percent of the respondents, data centres (56 percent) and manufacturing plants (55 percent).
Foreign direct investments (FDIs) are expected to play a huge role as well, with 86 percent citing it as the primary growth factor, particularly in markets like the UAE.
Despite challenging economic conditions, an encouraging 42 percent of real-estate professionals pegged the MENA region for growth. Similarly, 46 percent also forecast growth across the Gulf Cooperation Council (GCC) region.
UPCOMING TRENDS
Within the residential segment, industry professionals are optimistic about the future of the market, with the majority believing that landlords will be inclined to agree to monthly rental contracts after the pandemic.
About 75 percent of those polled said they foresee an influx of FDIs, which will help the market with its recovery.
In the commercial real-estate sector, the respondents said that high-tech infrastructure, commercial and residential mixed-use complexes, and a flexible approach to work environments and rent are some of the factors that will ensure growth in the next 12 months.
The introduction of space for social distancing, reliable Internet speed, flexible contracts and ease of parking are some of the additional factors that may also help the sector recover.
“All things considered, the commercial real-estate outlook looks more optimistic in [the second half than in the first half of 2020], but with a clear need for more flexible tenancies, a higher focus on the design and finishing of office space and a more considered cost base,” said the report.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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