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News Release


Selective Improvement in MENA Investor Sentiment

According to the region’s premier investors, responding to JLL MENA’s 5th Real Estate Investor Sentiment Survey for the MENA region.

  • ​Sentiment has improved on a selective basis
  • There remains demand for income-producing, investment grade product
  • Buyers outnumbering sellers in the majority of MENA markets

The latest JLL MENA Real Estate Investor Sentiment Survey reveals that investor sentiment is improving in the MENA real estate market overall while Dubai remains stable. With investors becoming increasingly selective between regional real estate markets, the survey also confirms that they are becoming more focussed on the more populous markets of Saudi Arabia and Egypt.

The findings from JLL MENA’s Fifth Investor Sentiment Survey, an in depth study of real estate investors, conducted in association with Cityscape Intelligence, also indicated that the majority of respondents anticipate capital values to modestly increase in most MENA markets except the UAE over the next year. In addition, MENA yield expectations are seen to have largely stabilised over the past six months as they have remained in double digits across all markets.

At a regional level, the report revealed that buyers exceed sellers in most markets, with a continued appetite for income-producing, investment grade real estate assets. Although MENA investor sentiment favours Asia Pacific, this opinion is not reflected in actual transactions as the cashflows are mostly towards Western Europe and the UK in particular.
Andrew Charlesworth, Head of Capital Markets at JLL MENA, commented:

“Sentiment is stabilising and marginally improving, as investor confidence returns on the back of the region’s economic recovery. Market regulation and legislation remain the most important factors influencing investment decisions, particularly for organisations addressing a variety of risk management and corporate governance issues. Oil wealth and large local populations are other vital factors which are positively shaping investor sentiment, especially in the cases of Saudi Arabia and Egypt.

Despite the high expectations about the Saudi market, investors are still challenged by local transparency and finance issues. Overseas investors find it difficult to penetrate the Kingdom’s market as they face problems in identifying and securing investment-grade products. This may negatively affect sentiment going forward. On the other hand, Dubai may be challenged by short term market fundamentals but investors still acknowledge this market as the regional leader in terms of its infrastructure and general business environment. The Dubai market continues to be preferred by investors but only for the right product with this confidence expected to gradually improve as the UAE rebuilds its population and employment base and the government works towards market reforms and a more transparent regulatory environment.

Within the MENA region, with the exception of Saudi Arabia, investor focus is generally moving away from the GCC towards North Africa and Levant. This northward shift is happening because of investment opportunities in new product development are increasing and these markets have not been impacted by high supply levels.”

Key findings of the report include:

Sentiment continues to favour Asia Pacific Region:

  • Middle East investor sentiment continues to favour Asia Pacific. The largest number of respondents (44%) anticipate the strongest real estate performance to come from the Asia Pacific region, a 6% increase in favourable sentiment compared to this time last year;
  • Strong Asia Pacific sentiment is largely fuelled by China’s robust economic growth which has enabled it become one of the world’s five most active real estate investment markets;
  • The Middle East continues  to be the second strongest market after Asia Pacific with investor sentiment remaining relatively stable at 23%;
  • Inspite of strong Asia Pacific sentiment, Middle East institutions are seen to be investing mostly in Europe, with a 24% increase recorded in the first half of 2010 in comparison to last year.

Saudi remains favoured destination, Egypt emerges strongly:

  • Saudi Arabia remains the preferred market amongst investors in both this and the pervious survey. More investors (32%) anticipate the kingdom to perform stronger over the next 12 to 24 months, a 6% increase in favourable sentiment compared to this time last year;
  • As with the last survey, strong domestic demand and an energy rich economy again emerged as the key drivers of investment sentiment in Saudi Arabia;
  • Due to favourable demographics, Egypt is the other MENA country after Saudi Arabia which is emerging strongly with 10% responding favourably this year.

Increasing signs of recovery in selected markets:

  • Compared to last year, investor sentiment towards MENA markets looks more selectively positive this year. More than 50% of respondents believe that the Saudi Arabian market is already recovering, while 35% feel the same for Egypt and 30% in case of the Levant;
  • As in the previous survey, strength of local or end-user demand has again emerged as a key issue for recovery in many markets including Dubai which is affected by the demographic factor as well;
  • In the case of Dubai, 54% of the respondents anticipate that market recovery will take another 24 months which is a much longer timeframe than projected in our survey in October 2009.

Sentiment towards UAE lags other markets:

  • Inspite of a negative net balance, the Dubai market sentiment has improved by more than 70% from the April 2009 survey. This positively incremental sentiment is largely due to the government’s debt restructuring initiatives which has improved investor confidence but it still lags behind other MENA markets;
  • The Abu Dhabi market has bright prospects in the future but this survey shows that investor sentiment has weakened over the past six months due to a general slowdown in the economy, continued tight liquidity and the inter-relationship with the Dubai market coupled with an increase in supply;
  • Across the MENA region, negative changes in real estate values are the highest in Dubai at -18%, followed by Kuwait, the Levant, Bahrain, Abu Dhabi, Oman and Qatar.

Yield expectations stabilising:

  • Yield expectations have increased in all MENA markets over the last year, reflecting a continued concern over risk assessment, financing costs and a potential oversupply in many asset classes across all markets;
  • Average yield results from previous surveys indicate a low of 9.3% in October 2008, with rates peaking at 11.3% in April 2010. The October 2010 survey results suggest that expectations may have stabilised over the past six months, indicating an improvement in price expectations and a possible recognition that prices for income producing core assets may have reached the bottom;
  • Over the past twelve months, all market segments have shown an increase in yield expectations with the hotel sector registering the largest increase from an average of 11.3% in October 2009 to 12.4% one year later, while the residential sector saw 70bps increase.

Northward shift within MENA region:

  • Drawing parallels with the previous survey, there is a continuing scenario of more potential buyers than sellers of real estate assets across the MENA markets. Such a situation is largely due to the limited availability of suitable, investable grade product and a lack of competitive debt finance rather than a lack of potential buyers; 
  • However, this survey shows that the Dubai market has an equal number of potential buyers and sellers, a change from the sentiment 6 months ago when buyers outnumbered sellers by around 8%;
  • The study also indicated that 52% of investors still prefer to ‘hold’ assets in Dubai. This remains the largest percentage of ‘hold’ among all MENA markets, with other GCC markets and Abu Dhabi coming in second and third, respectively.

Reducing risk and increasing certainty remain paramount:

  • In comparison to the previous survey, there has been little notable change in the factors influencing investor decision-making. Investors still believe the most significant factors are market regulation/legislation and risk, and the region requires further improvement in terms of application of real estate laws and accessibility to market data and information;
  • Dubai retains its position as the most transparent market in the MENA region, and one of only four MENA markets that lies within the semi-transparent level defined by the JLL MENA Global Transparency Index. In spite of Dubai taking the lead in introducing important regulation, many of these reforms have yet to filter down in actual day to day visibility; 
  • In this survey, most (30%) respondents indicated that regulation/legislation is the most important  factor influencing investor decisions, followed by capital growth, risk, rental, income, transparency, product availability, finance availability, cost of finance and exit strategy.


Notes to the Editors:

About the Survey:

JLL MENA​’s Fifth Investor Sentiment Survey, incorporates the views of leading real estate institutional investors from across the MENA region and beyond. These institutional investors include sovereign wealth funds, investment banks, private equity investors and large high net worth family businesses. The survey provides a benchmark for the state of regional real estate markets and offers valuable insights on investor attitudes and future expectations. The detailed report of this survey is available on