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News Release


MENA Real Estate Investor Sentiment Stabilises

according to the latest investor sentiment survey conducted by JLL MENA in association with Cityscape Intelligence.

​There are more buyers than sellers of investable assets in MENA real estate markets, according to findings from JLL MENA’s Fourth Investor Sentiment Survey, an in depth study of real estate professionals market views conducted in association with Cityscape Intelligence. The findings of the survey revealed a steady demand from institutional investors mainly seeking to buy strong revenue generating property – but at the right price. The report also revealed that there are signs of maturity and greater market stability in MENA markets as investor sentiment has remained broadly stable over the past six months. In general most respondents expect to see real estate prices in the region rising over the next 12-24 months albeit it at moderate levels. Further, the UAE is seen as the region’s most competitive market according to investors surveyed, largely due to the high rankings of Dubai and Abu Dhabi in the city competitiveness criteria. Internationally, investors were most optimistic about Asia as the region most likely to offer strongest growth in terms of real estate. 
JLL MENA’s Fourth Investor Sentiment Survey, incorporates the views of over 100 institutional investors comprising investment companies, sovereign wealth funds, investment banks, private equity firms and high net worth investors. The survey provides a benchmark for the state of regional real estate markets and offers some insight on investor attitudes and future expectations.

Andrew Charlesworth, Head of Capital Markets at JLL MENA​, commented:

“In spite of the subdued markets, as far as institutional investors are concerned there are currently more active buyers than sellers of real estate in comparison to last year. This has not led to any increase in deal flow as there has been a limited amount of institutional grade real estate assets with strong revenue streams being offered for sale. Investment transactions have been further restricted by the continued limitations of debt available to finance acquisitions and what debt is available is expensive – this has exacerbated the gap in pricing expectations between vendors and potential investors.

Institutional investors are risk averse and are focussed on buying completed, cash flow generating properties at the right price as the market moves away from a “develop-and-sell” to a “buy-and-hold” model. However, existing owners of such assets are averse to selling at what they see as discounted prices thus creating a buyer-seller mismatch. Markets that are of most interest to investors tend to be those with large local indigenous populations which will be the  drivers of real estate demand  in the near term - with  Saudi Arabia and Egypt topping the list. Abu Dhabi is also seen as an interesting market in the long term, as it offers distinct competitive advantages in terms of its hydro carbon economic base and a defined long term vision.

In broad terms investor sentiment appears to have remained relatively stable since our last survey in October 2009. There is also some sign of confidence returning as investors indicated they expect to see regional real estate values starting to increase over the next 12 month and 24 months for Dubai."

Key findings of the report include:

MENA declines marginally but outlook broadly positive:

  • Throughout the MENA region, whilst sentiment indicated values have fallen slightly since the last survey (October 2009) the outlook for the next 12-24 months was broadly positive;
  • Across the MENA region except Qatar, overall yield expectations have increased by an average of 90 bps over the past six months to an average of 11.3%;
  • The largest increase was in the logistics sector where yield expectations grew from an average of 10.3% in October 2009 to 12% in April 2010;
  • Asia-Pacific continues to be the strongest global performer and MENA region investors showed a 21% increase in favourable sentiment this year towards Asia-Pacific particularly China and India

More buyers than sellers: 

  • In comparison to our previous survey, there is a continuing mismatch of buyers and sellers in terms of pricing which are still constraining investment volumes. The percentage of buyers outnumbering sellers in the survey was around 8% across MENA;
  • However, institutional buyers are very selective in terms of product – seeking high quality cash flow generating assets ideally leased on long term basis;
  • The lack of investment transactions reflects limited income generating product being offered in the market, limited and expensive debt financing and the expected pricing differential between buyers and sellers.

Local demand is key to recovery:

  • Investors are prioritising markets like Saudi Arabia and Egypt both of which have favourable demographics and strong domestic demand. 40% of respondents say that the Saudi market is already recovering, while 30% feel the same for the Egyptian market;
  • A much slower recovery is expected by investors in markets where there are concerns about demographics and genuine end user demand. As in the extreme case of Dubai, over 75% of investors believe recovery to be at least twelve months away and over 40% expect no recovery for at least two years.

UAE seen as region’s most competitive market:

  • In terms of city competitiveness, Dubai and Abu Dhabi have the highest MENA rankings;
  • Notably, investors ranked Dubai in the first place as the city was top ranked in 10 of the 13 criteria of city competitiveness in the MENA region. Abu Dhabi topped the other 3 out of 13. Collectively therefore the UAE scored highest in all categories of city competitiveness;
  • Investors consistently scored Dubai highly on factors such as infrastructure, connectivity, real estate transparency, quality of life and other attributes.

Saudi Arabia emerges as the preferred market:

  • From being seen as a market of considerable potential in the last survey, Saudi Arabia is now the investors most preferred market and is expected to be the strongest performing in the MENA region;
  • Saudi Arabia is the only MENA market which scores highly on key drivers of strong domestic demand and an energy rich economy. Egypt is the only other MENA market which has similar favourable demographics;
  • Energy-rich Abu Dhabi and Qatar were interesting to investors due to their energy rich economies and the potential for wide scale infrastructure development which were seen as key real estate demand drivers in future. 

Reality check across all markets: 

  • Presently, investors are slightly more bearish about most MENA markets than six months ago but still expect to witness an increase in real estate values over the next twelve months with the exception of Dubai
  • Saudi Arabia is expected to lead the growth in MENA real estate values over the next twelve months, followed by Egypt, Abu Dhabi and Qatar.

Clearer regulations remain a priority for investors: 

  • Factors such as market regulation and legislation continue to influence investment decision making;
  • Improved transparency remains an issue for many investors but has now dropped in importance, largely due to the current economic environment where managing broader financial and market risks have taken precedence.