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Qatar banks top the list in GCC real estate lending

Gulf Base, 27 June 2018

Qatar banks top in GCC real estate lending |

Aggregate credit to the real estate sector disbursed by GCC banks in first quarter of 2018 grew by 3.2 percent on quarter-on-quarter (Q-o-Q) to reach $193.2bn. Qatari banks were the largest contributors in Q1-18, as $3.36bn of incremental credit was disbursed Q-o-Q, followed by Saudi Arabian banks ($1.47bn).

In terms of mortgage lending, value of mortgages disbursed in Dubai declined by 21 percent Q-o-Q to AED30.7bn, while the number of mortgages improved marginally by 1 percent over the period, according to KAMCO Research.

Overall, recorded real estate sale transactions in the GCC (excluding Bahrain) in Q1- 18 declined Q-o-Q, as total value transacted declined by 37.3 percent to $21.5bn as compared to $34.2bn in Q4-17, according to KAMCO Research estimates. The number of transactions in the region fell by 11.3 percent over the same period to reach 126,854 transactions in Q1-18.

The drop in the region’s transactions was mainly driven by Saudi Arabia, as transacted value fell by 50 percent Q-o-Q, while transacted value in Dubai fell by 28 percent as compared to Q4- 17.

Kuwait and Oman were the only markets that witnessed Q-o-Q growth in transactions in Q1-18. On the market trends in Qatar, KAMCO analysts noted Residential related transactions contributed to 48 percent of the total number of transactions and 50.8 percent of the value transacted in Q1. Citing market data, they said, a flight to quality is evident in the residential market as tenants look to upgrade to better locations as rents have become more affordable.

Residential rents continued to decline in the first quarter as per ValuStrat as residential asking rents were down 3 percent on Q-o-Q basis. The fall in rentals is reportedly higher in secondary locations.

The sale transactions in Qatar were down in the first quarter on quarter-on-quarter basis. Number of transactions in Q1-18 was down 20 percent to 984 transactions, while value transacted declined by 60 percent over the same period to QR4.4bn.

Real Estate equities & REITs in the GCC underperformed the broader market in YTD-18. The slowdown of demand in the sector affected listed equities’ prices, as the Thomson Reuters GCC RE index fell by over 17.7 percent YTD in 2018 as of May-18.

Real estate indices in Saudi Arabia were the worst performers YTD, as the Real Estate Management & Development index and the REITS index within the country declined by 22.3 percent and 21.2 percent respectively YTD as of May-18.

Source: The Peninsula