THE MARKET

Real Estate 2008
ABU DHABI KUWAIT JORDAN YEMEN ROCCO SRI LANKA THE PHILIPPINES DUBAI OMAN LEBANON ALGERIA TUNISIA PAKISTAN SINGAPORE N. EMIRATES QATAR SYRIA EGYPT NIGERIA INDONESIA THAILAND BAHRAIN SAUDI ARABIA TURKEY LIBYA MOINDIA MALAYSIA

CONTENTS THE MARKET 2008

GOING FROM STRENGTH TO STRENGTH
2

New developments and opportunities have abounded in 2008. OBG’s geographical coverage has risen to encompass 24 countries, including Indonesia, a new arrival this year. Furthermore, a number of new partnerships with such prestigious real estate services and consultancy firms as CB Richard Ellis and Pak RE allow us to look forward to expanding our operations even further in the future.

21 Dubai hospitality: Catering to a wide range of

ISBN 978-1-902339-06-1 Editorial Director: Peter Grimsditch Senior Consultants: Andrew Jeffreys, Kate Godfrey, Safeena Rangooni Rakesh Kunhiraman, Siddhart Goel Senior Statistician: Wennie Wagan Consultant: Haridasan Nair Senior Research Analysts: Aditi Poddar, Saguna Wadhwa, Jadalla Khazaal Research Analysts: Alexandria Holland, Amjad Khan Editorial Assistant: Jill Luxenberg Operations Manager: Louise Muratha Operations Assistant: Pia Jiao Accounting Specialist: Sharon Magno Photography: Jeremy Johns, Deniz Ozgun Creative Director: Percy M Borg Art Director: Yonca Ergin Graphic Assistant: Ahmet Sa€›r Chairman: Michael Benson-Colpi Director of Field Operations: Elizabeth Boissevain For all editorial and advertising enquiries, or to order a copy of this publication, please call +44 207 403 7213 or contact us at : mail@oxfordbusinessgroup.com All rights reserved. No part of this publication maybe reproduced, stored in a retrieval system or transmitted in any form by any means, without the prior written permission of Oxford Business Group. Whilst every effort has been made to ensure the accuracy of the information contained in this book, the authors and publisher accept no responsibility for any errors it may contain, or for any loss, financial or otherwise, sustained by any person using this publication. 33 St. James's Square London SW1Y 4JS United Kingdom T +44 207 403 7213 F +44 1730260274 1403 Al Thuraya 2 Dubai Media City mail@oxfordbusinessgroup.com www.oxfordbusinessgroup.com

interests – from business to sport 22 Northern Emirates: Making the most of their location and space

GULF COOPERATION COUNCIL
26 Bahrain: Development takes off as the country 29 32 35 38

GLOBAL CAPITAL FLOWS
3

While property markets across Europe and the US continue to slow with the current economic downturn, the Middle East in general and the Gulf region in particular have managed to buck the trend. The UAE has been especially successful, sending large amounts of capital abroad and enjoying the protection offered by oil revenues, which reached record levels in 2008.

opens up to foreign investors Kuwait: Domestic demand fuels real estate and construction growth Oman: The country bounces back after a massive hurricane Qatar: Increasing population spurs growth in all sectors Saudi Arabia: Looking beyond oil, the economy offers more stable investments

MIDDLE EAST
42 Jordan: Great potential for further development 45 48 51 54

REAL ESTATE RANKINGS 2008
4

Focusing on some of the world’s most promising emerging markets, OBG has ranked the residential, commercial, retail and hospitality markets in order of their appeal to potential developers, taking into account supply and demand, potential returns and the current investment climate. In 2008 India continues to lead the field, followed by Malaysia and Indonesia.

remains in certain areas Lebanon: The real estate sector is making up for lost time Syria: Gradual and steady growth Turkey: A growing economy and population offer great opportunities Yemen: Immense potential waiting to be tapped

AFRICA
58 Algeria: Employment rates are rising along with 61 64 67 70 73

METHODOLOGY
8

The OBG emerging market rankings combine income statistics, economic data, political, economic and sovereign risk, supply and demand, market development and capacity, and a series of specific indicators showing market potential in each sector. Here we explain our methodology for gathering accurate, sector-specific information in countries for which data is often scarce.

tourism investments Egypt: Construction and real estate scramble to keep up with demand Libya: Real estate tops the list of lucrative investment opportunities Morocco: Seeking more stable growth sources through diversification Tunisia: High demand and an expanding economy drive growth Nigeria: A diversifying economy spells a bright future

UNITED ARAB EMIRATES
10 UAE introduction: Price stabilisation seen but 12 13 14 15 16 17 18 19 20

ASIA & FAR EAST
76 India: A very large market continues to expand 79 Sri Lanka: Despite considerable challenges, real 82 85 88 91 94 97

forecasts differ on timing Life on the islands: Expanding coastlines present both opportunities and challenges Abu Dhabi residential market: Strategies are implemented to avoid a housing crisis Abu Dhabi office space: Moving from high-rise to high standard in provision Abu Dhabi retail: The emirate boasts an impressive amount of mall space Abu Dhabi hospitality: Visitor numbers grow as Abu Dhabi's tourism strategy pays off Dubai master plan: Paving the way for expansion and diversification Dubai residential: New developments help ease demand for housing Dubai office space: Premium commercial property entices businesses to the emirate Dubai retail: Developers differentiate new products with clever add-ons

estate continues to grow steadily Pakistan: Momentum returns to the market Indonesia: Strong fundamentals override worries Malaysia: Steadily growing and rapidly diversifying The Philippines: Remittances and IT services are key Singapore: A healthy economy, but still room for development Thailand: The country bounces back from a series of challenges

INVESTMENT LAWS
100 Laws governing investment in construction, retail

or hospitality developments vary from region to region, but in most countries the process of economic liberalisation continues to ease the movement of foreign capital into national markets.

CI allows its clients to view information concerning supply and Oxford Business Group demand. In order to do this. CBRE’s expert technical staff will work in partnership with OBG researchers and consultants to create a joint research brand with unmatched geographical coverage and regional knowledge. particularly important as Pakistan remains one of the most popular markets with Gulf developers. Firstly. prices and yields from 18 countries throughout the Middle East. Findings from the 2007 edition of The Market were published in more than 20 countries. and for that matter. From mid-2008 this alliance will be formalised. With our office based in the UAE. exploring areas beyond our usual territory and taking on projects in Asia and West Africa. Senior Consultant. The amount of interest that OBG received on emerging markets in North Africa and the Levant did. We didn’t expect to be fielding requests for copies of The Market from Moscow or the Americas or to be responding to queries from law firms. . Following Cityscape Dubai. resorts. Finally. We intend to share some of this knowledge in a series of publications planned for 2008 and 2009. We look forward to it. However. expansion can mean more than coverage of new geographical markets and we have worked hard in 2008 not just to build our regional database but also to increase the range of services and the technical services offered to clients. however. OBG Consulting has formalised a number of historic partnerships. investment firms. the first print run of The Market lasted less than a week. banks. Pak Real Estate staff have expertise not just in their home markets but throughout Iran and Central Asia. come as something of a surprise. OBG is proud to have partnered with CI in 2008 to provide real estate information on the countries covered on the site. developers and real estate professionals working in emerging markets. Throughout 2008 our consulting offices have been invited to new market after new market. CB Richard Ellis (CBRE) is the world’s leading commercial real estate services company with more than 300 offices in 55 different countries. in 2008 OBG has also entered into an alliance that we anticipate will have a significant impact not just for our clients but also for the standard of research across the Gulf and beyond. OBG Consulting’s comprehensive annual round up and ranking of real estate markets in the Gulf. With Asia increasingly important for Gulf developers. Oxford Business Group (OBG) OBG is pleased to introduce the 2008 edition of The Market. North Africa and Asia. After a 2007 launch at Cityscape Dubai. OBG has also cemented our relationship with Pak Real Estate. retail developments. North Africa. the largest consulting and brokerage firm in Pakistan. the 2008 edition of The Market will leave OBG staff answering questions for months. Asia and the Levant. consultancy. while CBRE will in turn benefit from OBG’s network of offices across the region. requests for copies of the book kept our support staff busy for weeks. Consulting staff have carried out projects in 22 countries this year.2 INTRODUCTION Going from strength to strength Andrew Jeffreys. In the Middle East CBRE offers valuation. retailers and developers. The partnership allows our clients to access Pak Real Estate’s unparalleled database. Cityscape Intelligence (CI) is an invaluable online information resource intended for use by investors. In 2007 CBRE staff worked on more than 50. with OBG acting as CBRE’s research partner throughout the Middle East and North Africa.000 projects across the world. OBG will provide market research support for CBRE valuations and feasibility studies. we knew that reliable information on the Gulf Cooperation Council (GCC) markets is always at a premium. CBRE and OBG have worked together on some of the region’s biggest projects. If our experience last year provides any guide. through OBG Consulting’s new dedicated real estate website. free zones and funds. working on feasibility studies for mixed-use projects. leasing and market research.

The Institute of International Finance found that foreign direct investment to emerging markets rose from $119bn to $256bn in 2007. we look forward to highlighting the continuing strength and growth of real estate in the region. the Middle East has emerged as a cash-rich and confident exception. interest. CBRE economists believe that this downturn will be relatively mild compared to previous cycles in 2001 and the beginning of the 1990s. $125bn in the fourth quarter and $29bn in the first quarter of 2008. The Gulf region is perhaps the most visible exception to the idea that difficulties in property markets are a global rather than regional phenomenon. As with most macroeconomic data. global housing and commercial demand is now concentrated in Asia and Africa. Europe is experiencing a similar decline. Turning to the more localised domain of property. International real estate flows increased by just under 10% in 2007 and are expected to decline by more than 30% in 2008. but that the Middle East witnessed the strongest regional performance with an increase of 13% year-on-year. CB Richard Ellis With international property markets experiencing difficulties. with Russia. London and the US. Sellers are reluctant to add in the depressed market and are choosing to wait out the darkest hour. with the US and Northern European markets slowing considerably. With high occupancies and generous rents achieved since 2006. Results from the first half of 2007 were boosted by government sales of assets. with a fall in investment activity noticeable across most markets. Global capital flows are expected to decline in 2008. South-east Asia. With this in mind. Central Asia. Local investment and sovereign funds are looking at undervalued real estate assets globally. Investment activity in the US stood at $148bn in the first quarter of 2007. THE MARKET Real Estate 2008 . Jointly. rendering any concerns about the local impacts of the credit crunch academic. while Africa stood third with an 8% increase.INTRODUCTION 3 Global capital flows Nicholas Maclean.5bn people. Established markets continue to attract the greatest share of funds. In 2008 oil export revenues from the UAE are expected to exceed $100bn for the first time. the UK. In 2008 funds from Dubai and Abu Dhabi have been invested in real estate in Australia. Japan and France together attracting more than 80% of interregional purchases. though not a great deal of knowledge. Asia Pacific ranked next with a 10% increase. It is estimated that sovereign funds and Gulf banks will acquire $400bn of foreign assets in 2008. the picture also changes on the regional level. New Zealand. and there has been no significant decline in commercial prices. Managing Director. The 2007 UNWTO World Tourism Barometer found that tourism continues to climb internationally. Difficulties have also been concentrated in these markets. CBRE is pleased to announce our partnership with OBG in the Middle East and North Africa region. There is more intra-regional interest than ever in real estate in the UAE and across the Middle East and North Africa. An appetite for detailed research exists which no one company can meet alone in a region of 1. Gulf investors have once again been active and high profile investors. CBRE suggests that 40% of retailers interviewed in 2007 expect that emerging markets will be their primary source of growth in the next five years. Despite the global dearth of credit this is expected to further increase to $286bn in 2008. Equally. building owners are holding on and bunkering down. Hoteliers agree. Germany. acquiring the Chrysler Building and Barneys in New York and ExCeL in London. with the leading five markets of the US. and North and East Africa all standing out as highly attractive markets for the future. Markets in North Africa and Asia also continue to perform strongly. while large credit surpluses maintained by emerging markets rich in natural resources provide the best protection against international recession. but early results from 2008 are indicative. The IMF has calculated that China is largely responsible for driving or inhibiting global growth. CB Richard Ellis (CBRE) research shows that the value of real estate transactions has declined significantly during the year leading up to mid-2008. Indeed.

a market attracting increased interest from private equity firms from across Europe. and second only to the Philippines in the residential index. commercial. In 2007 alone tourism revenues in India increased by more than 30%. The 40. in which India has once again ranked first. Although continuing to rank most consistently highly of all countries studied. where the political situation is stabilising and the real estate markets are finally recovering. Indonesia. it is impossible to miss the rate at which changes to the economic and investment environment are taking place. In 2007 OBG cautioned that the development context in India would become more competitive. the shopping centres and the hotels and have checked or made their own determination of the quality standard or the amount of space available. Oxford Business Group The intention is to add other Asian countries as OBG opens more offices throughout the region. hospitality and commercial sectors. and Nigeria. This prediction has since been justified. allowing us to create a ranking methodology based on regular and reliable research updates from the ground. Working in countries such as Algeria. In 2008 we have added a further five countries to our emerging markets rankings. first for the retail. Our statistics are produced by researchers who have actually seen the buildings. It is estimated that as many as 100. Libya. which fell from . these three countries remain in the same order in this year’s rankings. Oxford Business Group (OBG) As part of the inaugural launch of The Market series in 2007 and in order to celebrate OBG’s links with emerging markets. Concerns about oversupply for grade A residential and commercial space have affected a growing list of cities. retail and hospitality sectors in a number of emerging economies. countries that were covered in the 2007 rankings have shown a remarkable degree of consistency. Senior Consultant. In 2007 India ranked first in the overall score. India has lost some ground in the 2008 rankings as the balance of supply changes in the key cities monitored by OBG. OBG also includes detailed income breakdowns. Nevertheless. which cover all the countries taken into consideration in the rankings and a few more of OBG’s most closely monitored markets in the Gulf. the Philippines and Turkey. such as Malaysia. while in Morocco no sooner had the first sizeable international standard mall been announced than another four were under active development. rents and sales prices continue to climb across CBDs. A total compound score has also been produced.000 sq metres of retail space now available in climate-controlled centres in Damascus could be 440. the amount of available office space could increase by 800% in the near future. Where other rankings may stress macroeconomic growth or policy.000 luxury units are due to be added in the coming 10 years. Setting aside the addition of new markets to the rankings. OBG developed a series of real estate and investment rankings highlighting the attractions of the residential.4 RANKINGS Real estate rankings 2008 Kate Godfrey. When new markets are subtracted. The rankings are restricted to emerging markets in line with OBG’s long-standing tradition of working with developers and investors in parts of the world that many other research organisations sometimes hesitate to enter. The three highest-ranked emerging markets in 2007 were India. The sheer scale of the Indian market remains its principal source of strength. we will include only countries where OBG has a full-time research presence. and retail and hospitality developers remain exceptionally positive. followed by Malaysia and Indonesia. the Philippines and the Gulf. Macroeconomic factors were also expected to be a source of concern in the Philippines. In Abu Dhabi 80. This is highlighted in greater detail in the country sections later in this book. have also been added as a result of the increasing interest in Asian emerging markets shown by Gulf developers in 2008. New Asian countries. For the meantime.000 hotel rooms could be completed by 2010. These include Lebanon. while investment funds are becoming more generally conservative. affordability. and supply and demand indicators.000 by 2012. Singapore and Thailand. In Dubai.

Real estate values have climbed consistently and prices for condominium developments commonly increase by 50% to 70% within a year of release. Take-up rates have slowed down in Thailand. Thailand is placed fifth in this year’s rankings. while occupancy rates in the capital rose by 7% and five-star room rates by an impressive 27%. Malaysia is clearly the most prominent investment market. and the Malaysian government actively encourages investment through the “Malaysia My Second Home” programme. with poor infrastructure in Jakarta having previously impeded development.6% between 2006 and 2007. The fall to fourth place can be explained by an increasing supply at the high end of the market. copper. this has helped the Philippines to again perform strongly. however. GDP growth remains strong. not because of any significant new weakness in the market. Expatriate remittances of close to $15bn from millions of Filipinos overseas continue to drive investments in the Philippine luxury property market. Turkey is ranked sixth this year. The retail and hospitality sectors have performed strongly as well. The real estate market in Malaysia is almost completely open to foreign investment. but due to the introduction of new Asian markets. Indonesia’s performance was. However. probably more so than any other market under consideration. down slightly from third place in 2007. some lingering concerns remain: real estate values have declined in 2008 as contagion from Europe has taken hold. while faltering commercial delivery since the end of the Asian property crisis in the late 1990s is being rectified through the creation of a new office district at Damansara. Despite the country’s unpredictable political situation. a spot previously occupied by the Philippines. natural gas. GDP growth has been above 6% for the first half of 2008 and the real estate market has been growing steadily.RANKINGS 5 second to fourth place in the rankings. The emergence of secondary markets outside the capital has helped. A recent addition to our list of publications. some room for improvement remains. Nonetheless. Growth rates remain in excess of 5% year-on-year. over 15m people will be added to Indonesia’s population of 227. although rents and sale prices continue to rise. Commercial yields are around 7%. With a wealth of natural resources. with Kuala Lumpur almost as dominated by the construction of office and residential space as Dubai. and remittances have held up strongly. hampered by often confusing laws governing foreign ownership and by comparatively flat real estate prices. ranked third in the overall score and is another example of a large market showing a strong performance. Together with political stability and sustained demand. Of all of the countries covered. Malaysia has acquired the second place in our rankings. there is more to Indonesia than a just size- able population. Indonesia. Meanwhile. Investment ranking: final score India Malaysia Indonesia Philippines Thailand Turkey Morocco Algeria Egypt Syria Nigeria Pakistan SOURCE: OBG research THE MARKET Real Estate 2008 . In addition. The hospitality sector is another strength: tourism arrivals climbed by some 9. tin and gold. the government continues to debate the rules under which foreigners may own property.8m over the coming five years. Already the most populous Muslim country in the world. Having said that. Malaysia has also been showing more consistent appeal across the property sectors than any other market. including oil.

6 RANKINGS Emerging markets index of residential opportunity Indonesia India Nigeria Pakistan Egypt Syria Malaysia Philippines Turkey Algeria Thailand Libya SOURCE: OBG research Emerging markets index of hospitality opportunity Malaysia Thailand India Turkey Philippines Morocco Indonesia Singapore Syria Algeria Jordan Egypt SOURCE: OBG research Emerging markets index of retail opportunity Turkey Malaysia Philippines India Indonesia Pakistan Nigeria Egypt Sri Lanka Morocco Syria Thailand SOURCE: OBG research Emerging markets index of commercial opportunity India Egypt Algeria Indonesia Thailand Pakistan Philippines Nigeria Morocco Malaysia Turkey Sri Lanka SOURCE: OBG research Oxford Business Group .

THE REPORT Oxford Business Group publishes economic.com .’ The World Bank To order today.oxfordbusinessgroup. our flagship series of 200-page annual guides to emerging markets.We have over a thousand sources You need only one. quoting reference Q73L Order hotline: +44 (0) 207 403 7213 Order online: www. The Report. political and business intelligence on global markets. ‘The most comprehensive and accurate review on the country available. is available both online and in print.

including field research. combining linguistic ability and regional expertise to ensure that data surveys are indicative of current market conditions. unemployment. ease of access.& 5-star rooms 40. Field research plays a crucial role in providing details as specific as the number of housing units in Yemen or Nigeria and the average rental price of a luxury villa in the suburbs of Lahore.000 10. for example. Additionally. Data for countries such as Libya. market liberalisation and proximity to key source markets. average length of stay and a compound score based on strength of the meetings. This in-depth information is sourced by our research team.000 30. visitor arrivals. interviews with property developers and ministry officials. conferences and exhibitions (MICE) market.000 20.000 35. key factors include population growth. average occupancy rates.000 40.000 100. age composition. income and consumption expenditure.000 250. Oxford Business Group Dubai 4.000 25. Syria. government statistics and other secondary sources. Accurate data is then collected from a number of sources. Nigeria and Yemen has difficult to collate and. retail provisions. incentives. rental prices and average takings of retail property have also been considered in determining demand for retail space. household size.000 30. data for these countries falls squarely within the confidence levels prescribed.8 METHODOLOGY Methodology OBG’s techniques and approach explained The OBG method for calculating the compound model began with listing major demand drivers for each of four sectors.000 50. market attractions. the proportion of the labour force needing offices and the number of new companies registering or set to register in the near future.000 50. economic expansion and the growth of the expatriate population.000 150.000 10.000 0 2002 2003 2004 2005 2006 2007 SOURCE: OBG research . Historical data has been checked and revised so that we are able to present the most comprehensive and up-to-date regional property market rankings available today. Demand drivers for the hospitality sector include tourism investment. the nature of the labour force.000 200. admittedly. However. Factors determining the fate of the office sector include foreign investment laws.000 300.000 15.000 5000 0 2003 2004 2005 2006 2007 2008 SOURCE: OBG research Abuja grade A office space (sq m) 60. as well as a detailed analysis of supply and demand.000 0 2002 2003 2004 2005 2006 2007 SOURCE: OBG research Beirut retail GLA (sq m) 350. For the residential and retail property sector. contains a margin of error.000 20.

9 United Arab Emirates Abu Dhabi Dubai Northern Emirates .

is expected to increase to approximately 16m sq metres by the end of 2012. The increases in construction costs are the result of a number of factors.10 UAE UAE introduction Price stabilisation expected but forecasts differ on timing The property markets in the UAE have seen another year of growth in 2008. the construction and delivery of these developments have been delayed by constraints in the construction sector. China. In 2006 EFG-Hermes forecast that property values would decline by 25-30% by 2010.2m2. never seem to rest when it comes to building impressive structures. developers have found it difficult to deliver projects on schedule.3m sq metres is now expected to be ready by the end of the year. DUBAI: Supply and demand ratios remain a core concern for the property market in Dubai. office space.to middle-income expatriate diasporas are difficult to come by. However. Banks and financial institutions seem to have reached a consensus that the market will see stabilisation in 2009 and a potential decline in values in 2010. However. Historically. There are other sources of risk. Furthermore. exacerbated by the fact that the country’s population is ever-growing. only about 1. and increased local competition. Similarly. are currently adopting a wait-and-watch approach Oxford Business Group to the property sector in Dubai. Both emirates. with a marked exchange-rate-related increase in the cost of imports from Europe. most of which look equally insoluble to beleaguered developers.3m sq metres of space could be available by the end of 2008. The lack of completed property has in turn fuelled an inflation of property values. The rental market is also currently showing signs of stabilisation. Morgan Stanley suggests that property values will fall by 10% between 2008 and 2010. Project announcements suggest that a minimum of 180. Forecasts of potential price declines have become a feature of the Dubai market as the release of new units escalates. However. Even exchange rates seem determined to conspire against Gulf-based developers. it was expected that around 2. based on current estimates. with many industry professionals forecasting gradual slowing of overall price increases.8m sq metres. increasingly on the back of rent caps imposed by the Real Estate Regulatory Authority. which is facing a shortage of skilled workers.000 residential units will be ready in Dubai by 2013. In August 2008 a Reuters survey of senior analysts concluded that prices would fall 15% from the end of 2009. With demand at insatiable levels. According to reports published in 2006. currently estimated to be 1. raw materials and rapid price inflation. so have rents and property prices in Dubai and Abu Dhabi. While the sale of off-plan property had been steady. a shortfall of 44%. these timelines are open to debate. The increased costs combine regional factors with stronger markets for construction materials in India and China. Investors. has slashed subsidies to producers of construction materials. what housing is available is priced outside of most residents’ means due to material shortages and inflation. with a further . Construction costs have been escalating across the UAE. famous for luxurious man-made islands. large-scale construction projects and malls that boast indoor ski resorts. with a further dramatic rise since the beginning of 2008. making these countries increasingly protective in practice if not in theory. Construction costs for residential space have been climbing consistently since 2005. and even if. however. with increasing debate about when. which supplies around 33% of all timber and steel materials to the UAE. Yet living accommodations for the low. rents and sales prices will stabilise. A number of research reports have now concluded that the market will experience a 10-15% decline in rents and sales prices by the end of 2009. as many of the developments that were announced in the intervening years from 2002 are due for completion between 2008 and 2012.

One-bedroom apartments in the 26. with estimates showing only 20% coverage of the shortfall by new projects in 2008. Such activity chiefly affects residents in the low. The current prices for luxury units in developments such as Reem Island’s Ocean Terrace and Sky Gardens start at Dh14.000 luxury units to the market by 2018. with prices believed to have increased by just below 20% in 2006 and 2007.and low-income earners. and the standard of amenity provision is higher. with some developers in the UAE buying back units.000) to Dh55. ABU DHABI: Affordability issues are. following a 30% rise in 2005.000 of Dubai’s 1. In turn. who are avoiding building for the middle and lower segments of the market. rents for studio apartments in International City have increased from Dh40. It is likely that medium. These rises in construction costs have resulted in a congruent rise in tension throughout the market. will still be struggling to pay high rents with the supply unable to relieve pressure on this group. The completion of the Al Raha Beach.000 units. including professional workers with above-average salaries. At the beginning of 2008 residents were asked to vacate buildings in order to make way for the Jumeirah Garden City development. will add more than 80.000-unit Discovery Gardens are now advertised at Dh110. The luxury segment has also caught the attention of most developers. International City is one of the developments most affected by the lack of affordable units. The climbing cost of land and construction makes it difficult for developers to justify construction of anything but expensive luxury property. The high cost of construction and acquiring land is shrinking their margins. THE MARKET Real Estate 2008 . Saadiyat Islands and Al Reem Island. many of whom prefer to live in proximity to traditional community areas near Dubai Creek. Even though the demand-to-supply dynamics of the market allow developers to pass on this cost to the buyers. Part of the lack of affordable property is the convergence of prices seen across Dubai. as construction costs make it nearly impossible to deliver at the prices originally quoted. along with numerous other projects on Corniche Road and in Zayed Sports City. The understanding that property ownership would convey the right to residency has provided motivation for many overseas buyers to purchase property. Dubai has a number of diverse expatriate groups. A further 20% increase is expected for 2008. as the lack of affordable property impacts living costs and ultimately labour supply. if anything. putting them beyond the reach of a substantial majority of the population. and has seen a substantial upswing in prices and rents. Rents are moving ever closer to equilibrium for units in New Dubai and the areas closer to Dubai Creek.000 ($30.000 ($15. but has yet to be confirmed by the government.500 ($4000) per sq metre and climb to Dh20.5m residents. The cost of housing stretches the pockets of many residents. where the demand is highest. as margins for both types of firms are falling.000) per annum. while construction costs make it difficult for developers to justify building anything but prime space. Initial estimates suggest that redevelopment of Satwa could affect 100.000 ($11. who constitute 85% of the total demand. Over the third quarter of 2008 alone. on the other hand. but patterns of demand are complex.000 ($5400) per sq metre. The shortage in supply in 2008 is now calculated at around 50. Some 50% of the units scheduled for release in 2008 and 2009 are defined as luxury or high end. more severe in Abu Dhabi. prompting an increasing proportion of workers to commute from other emirates. Units are often larger in the masterplanned developments of New Dubai. The market for prime residential supply constitutes close to one-quarter of the entire residential market in Abu Dhabi. the middle.UAE 11 upward increase in 2008. while relocation will place yet more pressure on the limited supply of affordable housing in the emirate. Jumeirah and Al Wasl.000) per annum. while as much as 80% of units are rented in other developments. Supply and demand relationships are not the only factors supporting high prices.and middle-income segments. this leads to another source of risk in the market. Government policy will also help to keep prices high.and low-income segments can bear such costs only to a limit. Approximately 40% of the units in the Greens and the Springs are owner occupied. Values in the Abu Dhabi residential property market continue to escalate. with the beginnings of a programme of demolition and replacement being introduced in Satwa. Tension also exists between contractors and developers. Other developments designed to appeal to the affordable and middle-income demographic have become increasingly expensive. The Dubai market is supported by a high rate of foreign ownership.

2bn cu metres per year. It is hoped that the variety of transport options will diffuse passengers throughout different transit systems. This should not only enable a coherent infrastructure plan in line with development. The emirate has an abundance of prime real estate. ensuring that heavy vehicles are kept out of the central areas of the city. Many private sector developers suggest that the publication of the masterplan has eased anxiety over the nature of development. transmission and distribution for the power grid. will have a minimum of 10 bridges connecting to the Al Mina area of the main Abu Dhabi Island. Al Sowwah Island.000 people. While Dubai has gone to great lengths to build the Palm Jumeirah. The government is also seeking to address transportation issues in the city. with the private sector expected to shoulder 60% of the financial burden. Therefore. making explicit the expected infrastructural demands in terms of population increases. Al Reem. water. The UAE has one of the highest global water consumption rates per capita at 3. Beyond the man-made Lulu Island. the need for cohesive thinking between the public and private sectors is paramount. the burden of creating the infrastructure will fall upon the private sector. A third bridge linking Abu Dhabi Island to the mainland is also close to completion.and public-sector construction. the UAE is primed to have the biggest water usage increase in the region. However. the infrastructural challenges are significant. but rather must be integrated into the larger infrastructure of the emirate. The government has declared that $200bn will be spent on infrastructure and real estate through 2013. The Al Sowwah. . Although the government will retain control of generation. including the construction of several bridges connecting the islands. Abu Dhabi has an almost overabundance of riches when it comes to islands. Saadiyat and Yas islands as an integral part of its masterplan. Developers must ensure that all construction is sympathetic to the needs of service providers so that an undue burden is not placed on the system. Saadiyat and Yas islands will have a combined population of 450. The plan caters for a light-rail metro network connecting different districts of the city as well as a high-speed rail line that will eventually connect with Dubai. thus doubling the length of its coastline. placing a significant burden on all services. The authorities have decreased congestion in central areas with the upgrade of the arterial expressway linking the Corniche to Mina Zayed. which will straddle the new central business district. as well as to Al Reem Island. Yet significant challenges remain. avoiding overburdening any one network. When the development of Saadiyat Island was first announced in 2006. but also ensure delays are avoided with no lag between private.12 ABU DHABI Life on the islands Expanding coastlines present both opportunities and challenges Oil is not the only natural resource with which Abu Dhabi has been blessed. the government is looking to silence any doubters with an overarching masterplan laying out how the infrastructural challenges of developing these islands will be overcome. it was estimated that it alone would require 1500 Oxford Business Group MW of power. Abu Dhabi Water and Electricity Company predicted in March 2008 that there will be a shortfall of 774 MW between capacity and consumption by 2012 and 2000 MW by 2013 for the whole of Abu Dhabi. while this presents opportunities. Abu Dhabi is set to develop the Al Sowwah. as part of its development strategy. With demand set to increase by a minimum of 10% per year. and transport corridors and networks. Indeed. it also creates challenges. setting out a plan to overhaul the road network. The government realises that the development of these islands cannot stand alone as ad-hoc attractions. Indeed. Al Reem. Plan Abu Dhabi 2030 has now set the blueprint for development. which constitutes 31% of existing demand in the emirate. Consequently. the overarching vision for the city has provided the parameters for other governmental agencies to work with the private sector and plan for future development. including electricity generation and distribution.

a $3. Short-term schemes include rent ceilings and freezes for a certain period of time. are aimed at boosting accommodation. In 2005 the Abu Dhabi Executive Council put a cap on rent increases by specifying that no rent hikes should be made within the first two years of a new contract.308 1. with demand for new housing ranging between 225. Saadiyat Islands and Al Reem Island.108 39.228 Population growth (%) 6. which lays down the urban structure framework required to accommodate an estimated population of more than 3m by 2030.86 6.74 4. will provide 50.4 1. However.743 109. Mohammed bin Zayed City. Abu Dhabi: economic and demographic indicators. The Khalifa Committee.890 GDP per capita Average ($ at PPP) household size 35. the Department of Planning suggests measures to avert a housing crisis.190 123.595. with the Al Reem (100.821.90 4.ABU DHABI 13 Abu Dhabi residential market Strategies are implemented to avoid a housing crisis Average apartment sale rates stood at $3150 per sq metre in 2007.500 ($4000) per sq metre and climb to Dh20. along with numerous other projects on Corniche Road and Zayed Sports City.704.258 651.151 158.080. The Marina Breakwater development will add 300 villas.896 1.78 6.82 6. will provide more than 80.86 4.857 717. The high-end luxury segment stretches developers’ profit margins to almost 30%. while the government may ultimately subsidise the cost of extending utilities and infrastructure in order to ensure the supply of affordable units. In the meantime.000 units. The market for prime residential supply constitutes one-quarter of the entire residential market and has seen a surge in prices and rents. The 20% to 25% of yields generated by the mega developments are preferred to the 10% to 15% of leasing revenues from lower-income segments.71 Labour force 587.4 1.321 1. Developments conform to Plan Abu Dhabi 2030. experts still fear a housing crisis in 2009.80 6.4 1.262 40. Other suggestions include providing plots on the outskirts of the city for a nominal price or free for those developers who provide units for 50% of current prices for lower-income segments.337 41. One reason for this is the preference shown by developers to invest in the luxury segment. World Bank THE MARKET Real Estate 2008 .705 140. after which any rises should not exceed 20%.258 891. The population is expected to double in the next decade.88 GDP ($m at current prices) 97.4 SOURCE: IMF. The current prices for luxury units start from Dh14. Apart from these. The completion of the Al Raha Beach.8bn development with 265 residential and commercial buildings.000 units upon completion. with some estimates showing only 20% coverage of the shortfall by new projects in 2008. The new Khalifa Cities A and B.946. Reports estimate the shortage in supply in 2008 to be as high as 50.711 1. a number of tower developments will add a substantial number of apartments.270 2. which is responsible for providing housing to nationals and has constructed a large portion of the city of Abu Dhabi.882 37.000 residents) and Al Raha (120.000 ($5400). 2006-11 Population 2006 2007 2008 2009 2010 2011 1.78 4.000 units by 2018. while the mid segment allows only narrow margins of 15%.84 6.782 179.4 1.293 38. consisting mainly of residential villas and low-rise properties. is now tackling the lack of supply in the market.762 Unemployment rate (%) 1.4 1.494.82 4.719 4.284 903.000 units.000 residents) developments slated to contribute as well.042 810.000 and 250.

This trend for office space on a large scale has been set by Aldar. although significant demand for high-quality office buildings exists within the emirate. mezzanine and 10 upper floors on 60.000 sq metres of office space will be concentrated in Abu Dhabi National Exhibitions Company’s (ADNEC’s) mixed-use Capital Centre development. Formerly known as the MDC-ERWDA building. The decision to locate the Capital Centre on Khaleej Al Arabi Road. with service charges at 15% of rent. Where supply is now sparse. Outside of these high-profile buildings. of which two stand out.000 sq metres. the mixed-use development will have six branded hotels. Historically. Another 57. Al Mamoura comprises ground. has encouraged other developers to consider the airport road and embassy district for new commercial developments. these two developments are expected to contribute to the shift in commercial orientation away from the traditional areas in Al Markhaziyah. Demand has prompted developers to move towards building of commercial space. and five mixed-use buildings. ADNEC is a semi-governmental authority. with a move from office towers to office parks and from high-rises to a high standard of provision. The building will have a library along with display areas. This primacy will be confirmed at least until 2009 and the completion of ADNEC’s space. and with some exceptions. ADNEC’s Capital Centre is a $2. a day care centre and a gymnasium. It is Aldar’s first completed office development and will be the first in Abu Dhabi to be designed and finished to international grade A standards. with new office supply in Abu Dhabi resulting in a dramatic inversion of the current situation. outside the traditional CBD. the standard of office space in Abu Dhabi has been below expected standards.14 ABU DHABI Abu Dhabi office space Moving from high-rise to high standard of provision As in the residential sector. The remainder Oxford Business Group will be concentrated in smaller developments.2bn development. Both of these problems are set to disappear. The development is already pre-let to blue-chip companies such as the Mubadala Development Company. while the number of new companies being established in Abu Dhabi is climbing at an annual rate of 5%. Providing space for third-party occupiers has been a profitable addition to company balance sheets. male and female prayer rooms.000 sq metres of leasable area is to be provided in a single development in close proximity to ADNEC on the airport road. a 150-seat auditorium. OBG forecasts that the relationship of supply and demand could stabilise from 2010. with an average size of 30. With a total of 23 buildings on site.000 sq metres (gross built area).3m and 1. office space has been owned and built by major tenants. A number of large flagship developments are under construction in central areas. .6m sq metres and has been growing at an annual rate of 25%. Together. As well as contributing to a lessening of the chronic traffic surrounding the corniche. Approximately 100. Environment Agency Abu Dhabi and other premier tenants. with the developer’s Al Mamoura office complex remaining Abu Dhabi’s flagship development. UAE Offsets Group. Abu Dhabi has few available office buildings of an international standard. eight residential and serviced apartment towers. a restaurant. four dedicated office buildings. originally established to manage conferences and exhibitions in the emirate. Economic diversification and growth of the industrial sector is expected to increase demand for offices. As yet. The size of the market ranges between 1. a high-tech business and conference centre. Vacancy rates in office space are under 1% and monthly office rents in the central business district (CBD) have gone up to $50 per sq metre. the development has been renamed Al Mamoura. the transition away from the central areas should also result in a higher quality and variety of commercial space. the demand for commercial units has outstripped supply. in some cases for 20 years.

935-sqmetre extension to the Al Wahda Mall by 2011.56 sq metres. a 167. the available leasable area in Abu Dhabi should increase from under 650.000 sq metres Mazyad Mall as a part of Mohammed bin Zayed City and 30.595. and a complex of serviced and residential apartments.200 sq metres as against 526. with the average annual cost ranging from Dh3400 ($926) to Dh5500 ($1500) per sq metre for line units at prime shopping centres. the retail sector in Dubai has enjoyed a level of government support.108 – one of the highest in the world. a five-star hotel. due for completion in 2011.005 50.821. Line Investments. Per capita GLA in Abu Dhabi is now 0.000 sq metres of GLA.ABU DHABI 15 Abu Dhabi retail The emirate boasts an impressive amount of retail space The value of the retail sector in UAE is projected to exceed $500bn by 2010.000 sq metres of leasable area in 2010. It also acquired a 10year contract for the management of Madinat Zayed Shopping Centre and Gold Centre.38 sq metres.228 Household consumption expenditure ($m) 25. Sorouh Real Estate is set to open the Al Reem Mall with 130. The development will be anchored by an traditional Arab souk and three towers. bringing GLA per capita up to 0. International Macroeconomic Data Set THE MARKET Real Estate 2008 . In 2006. An additional 46. One undeniably attractive aspect of the market is that retail rents remain considerably lower in the capital.225-sq-metre mall above the central fish market by the mid of 2010 and a 157. IMF.1bn in 2005. Line Investments was launched with the induction of Khalidiyah Mall and Al Wahda Mall and went ahead with Al Raha Mall. In total. the Dubai Shopping Festival and Dubai Summer Surprises combined to 5.5bn in sales. Though there was a continuous growth in shopping areas in Dubai.308 1.03 9.8 18. Available GLA in Abu Dhabi in 2001 was 278. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 1.2 20.4m visitors and $3. while the Al Yas development will add a further 300.080. By 2009 they are coming up with 42.2 19. there were no significant shopping centres or malls released in Abu Dhabi until 2006.321 1.030 29. One of the most anticipated retail developments is Aldar’s $1.1bn Central Market.5 Inflation (%) 9.27 11.898 sq metres in Dubai. Second. an offshoot of EMKE group. which consist of grade A office space. Sales in Abu Dhabi’s shopping centres have risen from $871m in 2000 to $1. Abu Dhabi: retail indicators.6 18.04 5.482 60.3m sq metres by 2012. with another 5m metres under development.682 35. there is just under 3m sq metres of existing mall space.946. This compares to the rents in Dubai. This is despite a per capita income of $38. The development is in the heart of the city and is located at the site of the city’s traditional souk – at the intersection of Airport Road and Khalifa and Hamdan streets.7 20.66 4.000 sq metres was added in 2007 with the completion of the Al Khalidiyah Mall. is the major player in the Abu Dhabi retail sector in terms of managed space. Thus significant potential for retail growth remains in the emirate. which range from Dh4400 ($1200) to Dh6600 ($1800). the Gulf Cooperation Council is home to approximately 5m sq metres of shopping mall gross leasable area (GLA).711 1. First. with climatecontrolled centres now accounting for 54% of all retail activity.1 sq metres in Dubai. so far unmatched in Abu Dhabi.000-sq-metre boutique mall. The opening of Al Raha Mall and Al Wahda Mall increased the existing supply by a total of 169.000 sq metres of GLA to the city’s available retail mall stock. Excluding the UAE. with future supply more than doubling this total. which will be similar to a traditional Arab souk.270 2.09 SOURCE: World Bank. Inside the UAE.704.896 1. This disparity can be accounted for in two ways.000 sq metres at the beginning of 2008 to over 1.090 42.33 4.000 sq metres. which is now known as Madinat Zayed Mall.494.835 Growth rate (%) 25. phase II of the Marina Mall contributed an additional 40. compared to 1. Line Investments is coming up with the Mazyad Mall in the Mohammed bin Zayed City by 2009.

410 993.465 2. Abu Dhabi has aggressively marketed its tourism offering over the past two years and has allotted an annual marketing budget of $20m-$25m.500 hotel rooms catering to a total of 7.781. which will be the home to Abu Dhabi’s cultural district.9m annual visitors.9 Total stay-nights 2. such as the Guggenheim Abu Dhabi and the Louvre Abu Dhabi. to the emirate. The majority of private-sector developers may steer clear of hotel development. Abu Dhabi has a more discerning approach. The emirate saw a total of 1.1bn) in 2015. given that Abu Dhabi faces an undersupply of hotels. The lion’s share of development will be carried out by the Abu Dhabi Tourism Authority’s development arm.6 6.6 2.153 1. The hospitality industry represented only 18. Beyond this.130. for much of the year. Abu Dhabi’s stated strategy is somewhat different than that of its sister emirate.979 1. Revenue per available room is also relatively high in Abu Dhabi.8% of non-hydrocarbons GDP in 2006.& 5-star guests) 959. This trend is likely to continue with a Dh30bn ($8. Indeed.8 2. the semi-government-owned developer responsible for building the Yas Island and Al Raha Beach developments. Abu Dhabi: tourism and hospitality indicators. as construction costs and. the emirates tourism GDP grew 62% in the five years before 2005.367 SOURCE: Local statistical authorities. as the emirate is looking to attract more business visitors by in the coming years. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.504 2.9% of all the UAE’s hotel room stock in 2006.948. with the sector representing 17% of the country’s non-oil GDP. This is ironic.1 -1. 5% above its stated target.16 ABU DHABI Abu Dhabi hospitality Visitor numbers grow as Abu Dhabi’s tourism strategy pays off The tourism sector is growing in Abu Dhabi.829 3.331. the $27bn Saadiyat Island development.394 1. which hit Dh576.4m ($156.053.081. Where Dubai has gone for mass tourism and ever-increasing visitor traffic. Abu Dhabi has sought to attract cultural tourists by bringing highend museums.8 2. land prices are making such development more challenging than commercial and luxury residential real estate. OBG Research Oxford Business Group .55m business visitors by 2015.772 3. such as the National Corporation for Tourism and Hotels.7 4.2m leisure tourists and 1. the Tourism and Development Investment Company.9 2. Abu Dhabi remains less reliant on tourism than the rest of the UAE. Indeed.6 2. to a lesser extent.and fourstar segment that has been performing best in the emirate by attracting a variety of business clientele.8% for five-star hotels.8m) for all five-star hotels in 2006.137.45m hotel guests in 2007. This is supplemented by strong average banqueting and food and beverage revenues. up from 6.945 2. However.009. accounting for 6.990 1.94 ($187. occupancy rates are well over 90%. averaging Dh687.3 5. with other government-owned companies. Most of the five-star hotels in the centre of Abu Dhabi will benefit.495. is a key component of the strategy to create a unique tourism offering. Even with new supply expected to hit the market by 2010.0 2. The existing hotels in the central districts are therefore likely to concentrate on business guests and exhibition tourists.285 Tourist arrivals growth (%) 3.4% in 2005. Aldar. However. Occupancy rates in 2006 stood at 83. the emirate envisages 74.04) in the five-star category in 2006.624. it is the three. Although targeting the luxury segment. The government expects tourism revenues to hit Dh4bn ($1. also has a portfolio of mixed-use projects with significant hospitality components. targeting the top 2% of the world’s business and leisure visitors. Occupancy rates in April 2008 were averaging approximately 95%. existing hotels on Abu Dhabi Island are in a strong position. Many of the new hotels will be resorts that are being developed around the emirate. While Dubai’s strategy has been the development of man-made islands such as the Palm Jumeirah and the World.17bn) airport expansion set for completion by 2010 and a target of 1. under the Plan Abu Dhabi 2030.5 Average stay length (days) 2.

security. while the construction sector outweighed this with a contribution of $6. Dubai has not seen any major private sector participation in the infrastructure initiatives other than the allotment of a few various contracts for construction. one of the highest in the region. The Mobility Management Plan (MMP) targets these factors as ones that will lead to improved public health and safety. between 1995 and 2005. • Meet and secure energy. • Upgrade and align environmental regulations with international standards. land and environment. the city has displayed a strong desire not to rest on its past laurels. and • Develop the required enforcement mechanisms. The government anticipates that the population will climb to 1. • Provide an adequate supply of housing for low. Jordan. THE MARKET Real Estate 2008 . and accommodate future needs by increasing the share of public transportation. This increasing population has resulted in rapid urbanisation in the form of increasing construction activities in all segments of the real estate sector.9m by 2010. land and environment. The Dubai Electricity and Water Authority estimates that it will require $37bn and three years to increase supply to this level. pollution and greenhouse gas emissions. Through master plan developments. The private sector has been called upon to play a larger role in the plan. increasing the number of buses and upgrading the road network. while medium-term demand is assessed at 11. electricity and water needs • Provide an integrated road and transportation system addressing current congestion problems. developed and controlled to ensure sustainability. Watershed legislation in 2002 allowing foreigners to purchase and own freehold property in New Dubai has increased investor activities. which seeks to sustain real economic growth at a rate of 11% per annum. The Regional Transport Authority is implementing a number of measures to reduce car use.5bn to GDP in 2007. has taken a number of steps to implement the plan.4bn in 2007. Dubai’s urban landscape is being planned.000 in 2005). decreasing transport by private vehicles and increasing the capacity of road networks and transportation systems. traffic congestion. Demand for water and electricity has been increasing by an estimated 12-14% each year. To ensure sustainable development of infrastructure. The Dubai Strategic Plan 2015 covers five areas: economic development. infrastructure. In addition. The growth of the economy and the population has placed significant pressure on Dubai’s infrastructure. justice and safety.6% in line with historic growth. providing immense momentum to the construction and real estate sectors.000 MW.DUBAI 17 Dubai master plan Paving the way for expansion and diversification The success of Dubai’s economic diversification towards a non-oil-dependent economy and status as a global city has attracted regional competition from Abu Dhabi. a CAGR of 7. The government. in April 2007 Dubai and Iran signed a memorandum of understanding that could see Iran supply Dubai with electricity via a 180-km underwater cable. Chief among the suggestions in the MMP are the construction of the metro. The IMF reports that construction contributes to a stabilised 8% of GDP.3m at a compound annual growth rate (CAGR) of 6. social development. Current electrical generating capacity is 5000 MW.and medium-income families. through various agencies.7%. the government is examining the possibility of importing electricity. However. It is estimated that the real estate sector contributed $5. The road network is strained by the increasing number of cars and resulting traffic snarls.8bn in 2007) and to increase real GDP per capita to $44. Saudi Arabia and Egypt. and public service excellence. It unveiled the Dubai Strategic Plan 2015. Oman. the plan proposes to: • Optimise land use and ensure sustainable development while preserving natural resources. to reach a GDP of $108bn in 2015 (from $53. The Real Estate Regulatory Authority has introduced a number of rules to control and regulate the real estate markets. The population of Dubai increased to 1.000 (from $31.

which witnessed strong investor interest as highlighted by the 100% off-plan sale of developments announced within the 2002-06 period. Projects delays extending over one year are commonplace in the market today. which has eased supply constraints to a certain extent. Downtown Jebel Ali and Dubai Sports City. Additionally.78 4. The influx of new supply has led to some stabilisation of rents in the past six months.135 1.000 residential units. With large-scale mixed-use developments. the current level of rentals and the rising confidence among end-users owing to the delivery of new projects have provided encouragement for the growing owner-occupier market in Dubai.882 37. Currently. the construction and delivery of these developments have lagged due to the constraints in the construction sector.4 2.719 Average household size 4. Dubai: economic and demographic indicators.000 units. a significant new supply of residential units is expected to be made available in late 2008 and early 2009. Investors remain the majority buyers of any newly launched development and they continue to earn handsome profits.834 622. Rentals have consistently climbed across all property categories. The relative ease of mortgage financing from local and international banks. The advent of the freehold market in 2002 led to the release of a number of master-planned developments. leading to a constant high demand for quality rental accommodations in Dubai. Since 2005.780.702. a number of new projects were announced in developments. prompting developers to create new projects to meet the demand in the market.108 39.139 1. In 2007 a number of projects were delivered and ready for occupation. which is highlighted by the steady increase in rents for commercial and residential accommodation. rental and capital values for both residential and commercial property in Dubai have witnessed steady. respectively.834 62. such as Palm Jumeirah and Old Town at Burj Dubai.392.291 99.71 Labour force 529.95 4.549. and this may continue.000 ($27.035 558. continuous growth.418 1.806 657. while in 2009 developers are planning to release another 80.62 GDP ($m at current prices) 45.782 GDP per capita ($ at PPP) 35.182 86. which is facing a shortage of skilled workers.122).4 2.889 53.32 4.000 ($38. respectively.74 4. By the end of 2008 Dubai should have an additional 44. While the sale of off-plan property has been steady.471.4 2.35 5.82 4.86 4. many residents rent. command the highest annual rents in the city.064 1.626.68 5. rental rates have been more consistently high over the past few years than ever before – an issue further exacerbated by the lack of supply.4 2. fast approaching their final phase of construction. rentals within developments.4 SOURCE: IMF. with annual rents for a studio and one-bedroom apartment being quoted at Dh100.626 Population growth (%) 5.18 DUBAI Dubai residential New developments help ease demand for housing The rental market in Dubai has been witnessing supply shortages since 2002. Subsequently. So much so that the appreciation in capital values and construction costs has prompted a number of developers to buy back previously launched projects from the initial investors. climbing almost 25-60% and 25-30%.337 41.262 40.67 4. such as the City of Arabia. 2006-11 Population 2006 2007 2008 2009 2010 2011 1.403 Unemployment rate (%) 2. Jumeirah Village South.608 589.285 74.90 4. As a result.206 1. such as the Jumeirah Lake Towers and Downtown Burj Dubai. World Bank Oxford Business Group .230) and Dh140. raw materials and rapid price inflation.4 2.293 38.621 673.

Strong economic fundamentals. representing an increase of 33% and 14%. coupled with construction delays. Average rentals are highest in the Dubai International Financial Centre (DIFC) at around Dh5300 ($1443) per sq metre. Current average rents in privately-owned buildings between the one and two interchanges along Sheikh Zayed road are around Dh4360 ($1187) per sq metre. Port Saeed and Festival City. and a business-friendly environment have ensured that many international companies prefer to set up their offices in the emirate and use it as a base to enter regional markets. have further added to the increased prices for office space. while free zones have seen the number of businesses registered with them increase by an astonishing year-onyear increase of 72% in 2007. a year-on-year increase of 16%.2m sq metres of office space is expected to be made available in the next three to four years. Dubai World Central. private sector employees in offices.600 ($8060) and Dh16. plots have been allotted or sold to private developers. respectively. compound annual GDP growth of 20% from 2001 to 2007. space in the DIFC continues to command a premium over other areas. New plots under development within the DIFC and Dubai Media and Internet City exhibit current sale prices around Dh39. excessive planned supply is expected to create the potential for oversupply. Dubailand. Rising costs of land. Prior to 2004 development activity was negligible.700) and Dh18. and Dubai Silicon Oasis.224 in 2007. THE MARKET Real Estate 2008 .300 ($10. This increased demand has resulted in an acute shortage of space. Demand for space has boosted rent levels by around 30-40% in the past 12 months. as the space is nearly fully occupied in all the office districts and vacancy rates remain between 1-3%. This amounts to a growth rate of more than 400%. Some developers are also continuing to build in Old Dubai as well.340 ($4449) per sq metre. City of Arabia and Falcon City of Wonders. Motor City. technicians and associate professionals. respectively. Additional office space is planned and/or under development in the free zones. Around 9. and space has also been made available in the many private master-planned developments in New Dubai. creating a situation of severe oversupply. As a free zone for financial and professional companies. Bur Dubai reflects slightly higher or comparable rentals to Tecom mainly because it forms part of the old central business district with inherent demand and little scope for further addition of space. Major projects aimed at contributing to the office supply are under development chiefly along Sheikh Zayed Road and close to Business Bay. The current supply of office space in Dubai is estimated to be 1. The Dubai Statistics Centre calculates that the number of companies in Dubai grew from less than 50. resulting in a build up of demand. clerks and other white-collar. Finished buildings in the master-planned areas will be released from the market from 2008 onwards until around 2012. political stability. Dubai Internet and Media City.DUBAI 19 Dubai office space Premium commercial property entices businesses to the emirate The increased demand in Dubai’s office market is a direct result of economic growth. Within the free zones. while the lowest rates of Dh3250 ($884) per sq metre are recorded in the Tecom-administered areas of Dubai Media & Internet City. From 2004 onwards development activities for office space have increased exponentially. Included in these mixeduse developments with a commercial component are Dubai Marina. Jumeirah Lake Towers.000 in 1998 to 105. The average prices in 2007 were Dh29. As in the case of the residential sector. It is estimated that in 2005. which are emerging as the suburban business districts of Dubai. about 20% of the population was working as professionals. Jumeirah Village.900 ($5146) per sq metre. reflecting high demand. specifically targeting Garhoud. Dubai Silicon Oasis.81m sq metres. Studio City. raw materials and labour. Current rentals show an increase of approximately 15-18% over previous years’ rentals.

288 36.130 50. and the projected per capita GLA will increase to 1.139 1.44 sq metres.626.135 1. IMF. including neighbourhood shopping malls. it is unsurprising that newer malls are providing incentives such as lower rents and rent-free periods during fit-outs to attract tenants. The constant demand for retail space in the market has ensured that Dubai’s malls are currently operating at 95% occupancy. this trend may change over the coming years as more shopping malls are introduced into the market. a 22-screen multiplex. Tourism spending sustains space per capita in Dubai. was based on a Renaissance theme with Italian.04 5.20 DUBAI Dubai retail Developers differentiate new products with clever add-ons From a total gross leasable area (GLA) of under 70.549.6m sq metres.6 16. The Dubai Mall will feature 1200 stores.996 43. As the market becomes more competitive. New malls such as Dubai Mall and Mall of Arabia.626 Household consumption expenditure ($m) 27.702. Dubai currently has one of the highest shopping mall GLAs in the region and it is expected to overtake Saudi Arabia in the 2012-15 period. representing a per capita GLA of 2. developers have worked hard to differentiate their projects. Current market rates for retail space average just under Dh4000 ($1089) per sq metre per annum. Bloomingdale’s. kiosks and food outlets can expect to pay in excess of Dh7500 ($2042) per sq metre per annum. Given the amount of shopping mall GLA under construction across the different sectors of Dubai.471.3 Inflation (%) 9. a Spinneys. Mercato. shopping mall GLA will increase by a further 450. well below rates quoted by established malls in the emirate.041 Growth rate (%) 24. which represent per capita GLA of 1. Dubai Mall will boast the world’s largest aquarium.08 sq metres currently.6 17.418 1. and themed malls have played an important role in connecting retail with hospitality.983 32.7 16. According to AC Nielsen’s shopping mall survey. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 1.09 SOURCE: World Bank. If projects are completed as scheduled. which has become the largest trading centre for products from China outside the mainland. It is anticipated that tourism levels in excess of 15m (government estimates) should be able to support the new space.66 4. and was followed by themed developments at Wafi City. Dubai is set to have approximately 4. are quoting Dh3000-3500 ($816-953) per sq metre for line units. Souk Madinat Jumeirah. an Olympic-sized ice rink and a 20metre long hydraulic walkway and stage area.770 59. representing the highest rates in the UAE. Large anchor stores would be expected to pay less than Dh500 ($136) per sq metre per year. The remaining areas within these new malls have not been pre-leased in anticipation of additional brands and retailers in the market. Dubai now has a total GLA of approximately 1. an indoor-outdoor streetscape with a fully retractable roof.5m sq metres of shopping mall GLA. for completion by 2012. regional and international retail brands. When it opens in October 2008. the first themed mall in the Middle East.780.27 11.2 15. Hamley’s of London.31 sq metres by the end of 2008. while small outlets. shopping centres in Dubai derive 55% of revenue from tourists.33 4. However. French and Spanish flavours.03 9. Macy’s. Anecdotal information from managers of upcoming shopping malls indicate that nearly 75% of the new retail GLA has been pre-booked by local. which was conducted in the region in early 2007. Dubai: retail indicators.064 1. Ibn Battuta and Dragon Mart. Based on developments that are currently planned. 12 Starbucks cafes.206 1. the largest gold souk in the region. This represents a doubling of the current available space within two years.392.000 sq metres in the early 1990s.000 sq metres.4 14. International Macroeconomic Data Set Oxford Business Group . a 36lane bowling centre and other entertainment centres. with a number of new market entrants including the Galeries Lafayette.

The number of hotels and hotel apartments is expected to increase to 488 by 2010 and Dubai’s room strength will also rise to 64. the emirate has multiple points of entry and specifically caters to business tourism.5bn ($2.226. the development of the Dubai Cruise Terminal and the expansion of Emirates Airlines.265 Tourist arrivals growth (%) 15. The strong performance of Dubai’s hospitality sector.272.5 14.000 additional rooms over the next five years.629. One of the main drivers of expansion in the hospitality sector is the Al Bawadi tourism and leisure development with an estimated value of $100bn.657.& 5-star guests) 2.184.6bn) in 2006.005 15. Each visitor to Dubai generated hospitality revenues of $238 in 2000. of which 325 were in the budget category. leisure stopover. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. from 3m visitors in 1999 to almost 7m visitors in 2007.6bn) in revenues.832 13.158. Total revenues from the hospitality sector increased by 22%.869 4. both in terms of supply and demand. OBG Research THE MARKET Real Estate 2008 . Leisure visitors account for approximately 68% of the market. with the hospitality sector generating Dh13. With the DTCM targeting 15m visitors by 2010. which is expected to be completed in staggered phases starting in 2011 and ending in 2016. This estimate takes into account only 55 projects that are in various stages of planning and/or construction today and does not take into consideration a further 71 projects that have been proposed to be completed by 2016. sports and long-term stays.DUBAI 21 Dubai hospitality Catering to a wide range of interests – from business to sport Saleh Mohammed Al Geziry. including the following: • Movement of Arab funds from Europe and the US to the Middle East.9 Total stay-nights 7. and Emirates Airlines. This growth has continued into 2007. The average rate per room in budget hotels increased from Dh241 ($65) in 2006 to Dh287 ($78) in 2007. • A strong economy and the government’s commitment to increasing private investment in the sector.58bn ($430m). representing a CAGR of 12%. of which the budget hotels and apartments contributed Dh1. a dramatic increase from 51. the DTCM has projected the number of hotel visitors to Dubai to rise to 10m by 2010.2bn ($3. from around Dh8bn ($2. • The development of major tourism-related infrastructure.224 10.030 4.2bn) in 2005 to over Dh9.167 SOURCE: Local statistical authorities.163. • The government’s promotion of the tourism sector over the decade through initiatives such as DTCM.6 2.9 2. at a CAGR of around 20%. and • Increased travel regionally within the Middle East and the GCC states and the growth of budget airlines.6 12.0 13.763.0 14. estimates that over $272bn of hospitality projects in Dubai are expected to be completed by 2016. With the expansion of Dubai International Airport.161. Dubai: tourism and hospitality indicators.508.168 room units in 2007.475 8. according to industry experts.6 2. The number of tourists to Dubai increased by a compound annual growth rate (CAGR) of over 11% per year from 1999 to 2007.8 2.260 3. However. the demand for hotel rooms in Dubai exceeds supply.7 14. • Increased liquidity in the UAE on the back of record oil prices. it is expected that Dubai will need approximately 45. can be attributed to a variety of factors.932 3. and in 2007 revenue per tourist was $520.644.1 Average stay length (days) 2.285 11. the overseas promotions director at the Department of Tourism and Commerce Marketing (DTCM). nearly 72% of the total number of hotels in Dubai. With occupancy levels reaching 85% currently. Dubai has managed to more than double its tourism numbers in eight years. the construction of Al Maktoum International Airport.179.8 2. shopping festivals. according to a recent survey by the DTCM. shopping. In 2007 the total number of hotels and hotel apartments was 452.266.933 5.

picturesque mountains.882 37. The RAK economy is expected to grow by more than 15% in 2008.194 35. 7%.74 4. storm water systems and sewage systems.464. which is expecting inward investment worth $15bn. NEW FOCUS: The cultural centre of the UAE. as are the textiles and leather. with $45m due to be spent as part of an integrated infrastructure plan for Sharjah. 7%.919.457 865.66 5.283 42.56 5. courting more industrial companies and developing industrial and commercial clusters.936 Population growth (%) 5. and housing Hollywood’s biggest post-production studio.2 3.229 1. These are located between the UAE’s main transport arteries of the north-south Emirates Road. Fujairah. they have each been making a mark in their unique way.78 4. it already accounts for 48% of the UAE’s entire industrial output. It has successfully witnessed a 40% rise in tourist arrivals in the last two years. Sharjah also serves as a major regional transport centre.61 5.2 SOURCE: IMF.725.82 4. including construction of 32 km of roads in Khozamiyah and Tala.2 3. basic non-metals.328 1. As such.812 906.2 3.634.381 32.2 3. 2006-11 Population 2006 2007 2008 2009 2010 2011 1.262 40.612 1.5bn in the real estate sector. Additional infrastructure development Northern Emirates: economic and demographic indicators. It boasts of being the world’s largest tile producer.71 Labour force 758. deserts and beaches – to attract tourists.337 41. World Bank Oxford Business Group . being a US Food and Drug Administration-approved pharmaceuticals producer. The emirate is also opening up the industrial sector for local.108 39. Ras Al Khaimah (RAK). 4%. foodstuffs and wood industries.820. 1%. Sharjah is also developing its hydrocarbons sector. Central to this effort was the decision in the 1990s to establish 11 industrial zones that are spread over 26 sq km. as well as international.663 GDP per capita ($ at PPP) 35. Although these five smallest emirates of the UAE have a lot of catching up to do with their two larger. Ajman.71 5. TOURISM: RAK is leveraging its diverse natural features – an abundance of greenery. The success of these zones has led to substantial GDP growth since 2006.262 969.753 36. In addition to industry.039 39. with the emirate attracting $2.293 38.90 4.000. The emirate’s other major advantage is its operating costs.509 1.873 Unemployment rate (%) 3.023 807. Sharjah’s strategy has been to focus on industrial development.86 4. the Northern Emirates accounted for around 18% of the UAE’s total GDP in 2007 and 34% of its population.51 5.838 1.2 3. which are significantly lower than those in Dubai and Abu Dhabi. wealthier and more high-profile counterparts. and Umm Al Quwain (UAQ). such as the Hamriyah Free Zone and the Sharjah Airport International Free Zone.374 1.4bn investment in the industrial sector and more than $9. Further infrastructure improvements are planned.547. with Sharjah International Airport being the region’s largest airfreight cargo handler. and the east-west highway to Khorfakkan and Fujairah. and yet not endowed with its neighbours’ abundant resources.47 GDP ($m at current prices) 26.719 Average household size 4. investors through the RAK Free Trade Zone and the RAK Investment Authority Free Zone. The petrochemicals industry is well developed. The population is distributed with Sharjah having 28%.22 NORTHERN EMIRATES Northern Emirates Making the most of their location and space Together.

saving valuable fuel and time. of which a large percentage are offering freehold ownership.106 Tourist arrivals growth (%) 0. Mina Al Arab and Yasmin Rural Village. inadequate parking and delayed deliveries. These emirates have numerous cost advantages over Abu Dhabi and Dubai. Julfar Towers.814 1. Sharjah and Ajman have benefitted from the rise in demand in Dubai by providing reasonably priced overflow accommodation for Dubai’s workforce. Saraya Islands. In the past couple of years.0 -0. the infrastructure in these cities has not moved at the same speed as the fast pace of real estate development. and has benefitted from several infrastructure upgrades in recent years. including Mangrove Islands. Sharjah does not permit freehold ownership for nationals who are not from Gulf Cooperation Council (GCC) member countries.8 2. In spite of the number of projects currently under construction. Rents. A number of residential developments are under construction in the Northern Emirates. Residential rents in Sharjah were reported to have risen by an average of 20% in 2007-08.648 566. In Sharjah.662. the 12msq-metre Al Zorah City and Amber Islands. as the Northern Emirates: tourism and hospitality indicators. Fujairah already has the world’s third-largest bunkering port and with additional investment being pumped into the sector. Projects worth more than $8bn are expected to be built in RAK.3bn UAQ Marina and the $8bn Al Salam City. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. Sharjah is reported to be the least expensive emirate to invest in the UAE. although they can obtain 99-year leasehold properties. RAK has an annual 7% cap on rent increases.273 588.570. free zones and ports. rental yields have risen from 8% to between 10% and 18%. as well as more than 20 tall. however.530.000 TEUs. UAQ has the $3. with yields on labour accommodation reaching as much as 20%.024 541.5 -4. mostly due to a queue for utility connections.3 5. particularly with the development of industrial clusters. they have 39% of the country’s housing units.6 2. after which a 15% increase is permitted in Sharjah.584 1.6 -1. Rent caps have been introduced in all of the emirates in an effort to control rental costs. Like Dubai. which is planned as a residential and commercial development. $700m Goldcrest Smart City.911 1. Marjan Islands.9 Total stay-nights 1. In Sharjah the $5bn Nujoom Islands. Low-income tenants have not been able to afford the increase and have moved further north to Ajman and UAQ. which has resulted in traffic congestion. Cove Beach Resort.539.9 2. in that the port of Khorfakkan can shave several days off a passage through the Strait of Hormuz.867 1. In Sharjah and Ajman rents cannot be increased for the first three years of a tenancy contract. which will consolidate Fujairah’s role as a transport centre. the emirate hopes to become a centre for regional trade. It has a handling capacity of 3m 20-footequivalent-units (TEUs).6 2.644 573.NORTHERN EMIRATES 23 is being carried out throughout the emirate. The Dubai Ports Authority has taken over the management of the container terminal at Fujairah Port.007 SOURCE: Local statistical authorities.4 -2.625.8 Average stay length (days) 2. which will have 3500 luxury homes equipped with modern digital home network solutions.& 5-star guests) 592. with RAK International Airport and Mina Saqr Port undergoing expansion and upgrades. slowing down considerably from the 40% rise that was seen in 2005-06. However. COMMERCIAL: Rising office demand is associated closely with industrial growth in the Northern Emirates. Al Hamra Village. OBG Research THE MARKET Real Estate 2008 . Ajman is planning the high-tech. with costs running about 35% less than in the other emirates.584. UAQ and Ajman have both witnessed growth in the real estate and industrial sectors. RESIDENTIAL: The UAE’s population has been rising at an annual growth rate of around 7% since 2000. Though the Northern Emirates have only 34% of the UAE’s population. the increasing demand has consequently driven up rents and property prices in Sharjah and Ajman as well. still remain as much as 50% cheaper than the rents for comparable properties in Dubai. Port Arabia. mixed-use towers. are currently under construction and many more are planned. Meanwhile. However. and a 20% increase is permitted in Ajman.767 1.8 2.686 580. Sharjah has a strategic advantage over several of its neighbours. This fact has resulted in an economic boom for Khorfakkan. including a new $156m berth and a stacking room with a total capacity of 43. the property boom in the UAE has spilled over to the Northern Emirates as a result of economic fundamentals and the revamping of real estate regulations to allow foreign ownership. now ranked among the world’s top-100 container ports.

from 1. the Sharjahbased Al Safeer Group plans to open new malls in RAK and Fujairah.612 1.04 5. The mixed-use development of Nujoom Islands will have a significant hotel component. with a focus on cultural and educational tourism.936 Household consumption expenditure ($m) 19.000-sq-ft shopping complex being built in Ajman. while RAK has eight quality hotels. RETAIL: Malls were introduced in Sharjah later than in Dubai. Ajman and RAK that are expected to cater to the demand for office space. Ajman is developing the $4.1 19. As a result. a number of Dubai-based companies have relocated their back office and administrative operations to Sharjah. Due to these factors. Additional roads and bridges are under construction to ease traffic flows. Development of the tourism sector has been held back.869 23. restaurants and a 1500-vehicle car park. with 5400 registering in 2007 alone. The introduction of Air Arabia and RAK Airlines has provided a boost to the sector. which has the highest footfall in the Northern Emirates (10m visitors in 2007 and 5m in the first half of 2008. New retail supply will be concentrated in large.2 Inflation (%) 9. Shopping centres in Ajman include Ajman City Centre and Safeer Mall. with the former providing some 40% of all air traffic to Sharjah’s airport. are being planned.547. Occupancy rates in the emirate increased from 77% in 2005 to 85% in 2008.000 in 2005.328 1.594 49. Fujairah Dana (Pearl) development and Fujairah Paradise in Fujairah.45m in 2007. with 280. such as a hovercraft service between Dubai and RAK.000 members. Retail space in Sharjah is significantly less costly than in Dubai or Abu Dhabi. RAK has Manar Mall. It will have 200 retail outlets with international brands. and other infrastructural improvements. providing 3000 rooms.24 NORTHERN EMIRATES government subsidises 70% of the cost of water and electricity. a considerable increase from the 5000 rooms available in 2005. These numbers are expected to grow further as the free zone makes efforts to attract Fortune 500 companies. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 1. as well as large hypermarkets like Lulu.03 9. with over 114 shops. Switzerland-based Movenpick Hotel in Ajman. In RAK the number of hotel guests was a modest 157.553 sq metres. as well as ecotourism. mixed-use developments such as the Nujoom Islands and Al Hamra Village. The Sharjah Chamber of Commerce and Industry now has more than 40.374 1.31m in 2006 to 1. This will take the mall’s total retail area offering to over 37.5m by 2012. due largely to a need for more quality hotel facilities. an upmarket 150. Al Hamra Palace Hotel. IMF.919. up more than 5% from 2006. foreign investments coming into the emirates have climbed. a 15% increase over the same period in 2007).1bn Emirates City and UAQ is developing the marina waterfront community. The number of hotel guests grew 11%. will open by the end of 2008. International Macroeconomic Data Set RAK is planning a large theme park and has ambitious plans to venture into space tourism. Around 10 hotels. Upcoming industrial projects – such as Rakeen’s RAK Financial City and Hanoo Holding’s $2bn Emirates Industrial City – are expected to help the office market reach maturity.857 28. which is expected to grow to 2.7 20. Oxford Business Group . Germany-based Kempinski’s Fujairah Resort. A number of office complexes are under development in Sharjah.9bn Emirates Flag project to develop a commercial spaceport from which suborbital flights may one day be operated.509 1.27 11.538 34. Apart from these.66 4. Grade A office space will be added with projects like Sahara City and Sharjah Investment Centre.464. with 37 hotels and 65 furnished apartment buildings providing 7486 rooms. are under construction. HOSPITALITY: Sharjah’s ambitious tourism sector is hoping for growth of 8%-10%. Northern Emirates: retail indicators. Sharjah’s hospitality sector is showing the fastest growth. renovation and redevelopment programme that is set for completion in December 2008. with around 600 rooms.164 40.7 18. Ajman has only four hotels.229 1. Sharjah’s malls and shopping centres now account for little more than 8% of total UAE gross leasable area. Upcoming projects include the Jebel Jais Resort and Mina Al Arab in RAK.956 sq m.820. is undergoing an expansion. with the $1. The $109m Dana Mall. Ansar Mall and Safeer Mall. Robinson Club.33 4. while 25 top-end hotels are expected to open in Ajman by 2015. Sharjah City Centre and Sahara Centre – followed by Al Taawun Mall. Sharjah City Centre. and occupancy rates reached 80%. Al Waha Centre and Lulu Centre.725.6 19.586 Growth rate (%) 24. A new five-star beach resort.09 SOURCE: World Bank.8 22. in RAK is expected to start operations in late 2008.634. Three malls opened in 2001 – Sharjah Mega Mall.

25

Gulf Cooperation Council
Bahrain Kuwait Oman Qatar Saudi Arabia

26

BAHRAIN

Bahrain
Development takes off as the country opens up to foreign investors
Bahrain has historically acted as the financial capital of the Gulf Cooperation Council (GCC). Financial services continue to thrive, despite greater regional competition. The economy had a compound annual growth rate (CAGR) of 6.8% between 2003 and 2008, with the same expected in 2008. According to the 2008 Index of Economic Freedom, Bahrain’s economy is 72.2% free and ranks 19th in the list of the world’s most free economies. The kingdom is also expected to be the first GCC member to run out of oil, which has resulted in the diversification process starting in Bahrain long before its neighbours. The real estate and building boom that has been part of this diversification has given Bahrain one of the most developed property markets in the GCC. Land prices appreciated by around 300% between 2001 and 2005 and by three to four times more recently. Land prices in high-end districts such as Saar and Budaiya have increased at the most rapid rates, with Juffair and Busaytin having performed the most strongly of all districts. The real estate and construction market continues to be extremely active, with a large number of high-profile projects currently under construction in the kingdom. The total value of traded land permits rose by a CAGR of 35% between the years 2001 and 2006, while the number of land permits rose by 13% in 2006 alone. Commercial bank lending to the sector rose by more than 50% in 2007. In August 2008 statistics from the central bank showed that the mortgage market stood at a healthy $1.19bn. However, contractors are presently facing challenges with regard to fulfilling their commitments due to supply constraints and skills shortages. The crackdown on illegal immigrants has ultimately led to a shortage of workers, while the export restrictions imposed by Saudi Arabia and the lack of domestic production of cement have resulted in huge increases in the construction cost index. Since 2001 several decrees have been passed in the region to permit all foreigners, in addition to GCC nationals, to buy and invest in real estate. Both foreign buyers and investors can enjoy 100% ownership of land in predetermined areas. Foreign investors in Bahrain may either lease government land through the Ministry of Finance and National Economy or purchase land in the five districts of Manama: Ahmed Al Fateh, Hoora, Bu Ghazal, the Diplomatic Area and Seef. They can also buy into three projects – the Amwaj Islands, Durrat Al Bahrain and Dannat Hawar. International investors are also attracted to the country’s infrastructure and urban development. Major upgrades to the road network, building of flyovers and tunnels and additions to existing roads are projects that are currently in progress. Bahrain has the 2030 National Strategic Masterplan in place that has already approved land-use plans for residential, commercial, industrial and agricultural uses, result-

Bahrain: economic and demographic indicators, 2006-11
Population 2006 2007 2008 2009 2010 2011 749,000 764,000 779,000 795,000 811,000 827,000 Population growth (%) 2.04 2.00 1.96 2.05 2.01 1.97 GDP ($m at current prices) 15,823 19,660 24,395 25,442 26,405 27,226 GDP per capita ($ at PPP) 29,873 32,064 34,043 36,206 38,437 40,757 Average household size 5.36 5.33 5.30 5.27 5.24 5.22 Labour force 380,000 352,000 369,600 388,080 407,484 468,607 Unemployment rate (%) 15.0 15.0 15.0 15.0 15.0 15.0

SOURCE: IMF, World Bank

Oxford Business Group

BAHRAIN

27

ing in greater investor confidence. Large-scale, multibillion-dollar projects currently under construction include Durrat Al Bahrain, Bahrain Bay, Reef Island, Al Areen, Riffa Views, Diyar Al Muharraq and the Seef District Development. High-rise tower developments include Bahrain World Trade Centre, Abraj Al Lulu, Infinity Tower and Era Tower. RESIDENTIAL: Of all the construction permits issued in Bahrain, 30% are for new construction, primarily for villas and houses, of which there is a severe shortage at the lower end of the market. Bahrain’s population has been growing at an average of 2% per annum over the past four years, with the population expected to reach around 779,000 in 2008. The market for mid- to high-income housing has been boosted further by the government’s decision to allow expatriates to buy property, but estimates suggest that 40,000 social-housing units are needed, and with half of the population under the age of 15, the pressure to build more units within this segment is likely to continue. Residential property prices have been rising at an average of 10% to 15% per annum over the past three years, with reports of a 20% increase in some projects in the nine months from third quarter 2007 to second quarter 2008. In Durrat Al Bahrain, the price of a 500-sq-metre villa doubled from around BD150,000 ($400,500) in early 2007 to BD300,000 ($801,000) in early 2008. Costs in new projects in Manama now range from $1000 per sq metre upwards, with prime developments selling from $1200 per sq metre on lower floors, and $1500 per sq metre onwards for upper floors. Rents in residential areas are also rising sharply. Though rents for existing tenants have been capped at 10%, new leases in 2007 have been showing 30% to 40% increases. Annual rent per sq metre ranges from $300 in Jufair to $400 in Seef. It is worth noting that the new villas and apartment developments command rents that are more than 40% higher than that of similar older properties. The government housing bank lends up to BD40,000 ($106,800), around half of the cost of most family homes. Also, though the mortgage sector in Bahrain is strong with banks offering up to 30-year loans with down payments as low as 10%, affordability is still an issue. Developers have therefore largely ignored the low- and middle-income housing sector, and the government has therefore initiated affordable projects such as the 15,000-unit North Town project. In spite of this, speculators and investors have ensured that there is little expectation of a downward turn in prices. But uptake in residential projects is slowing. With supply so firmly targeted at the upper end of the market, concerns over the potential for oversupply are inevitable. OFFICE: The office market in Bahrain has suffered as a result of the increase in competition from Dubai and other emerging financial centres. In spite of this, office developments in the first year of opening recorded occupancy rates of between 35% and 55%.

Rents are low by Gulf standards, and they remain in the bottom quartile internationally. Rental yields have fallen from 8% in 2005 to 6.5% in 2008. The market has the potential to move towards oversupply given the number of ambitious commercial projects that are currently under way. The kingdom’s fight against the regional competition in financial services, on the other hand, has been comparatively successful, with total banking assets growing by an impressive 34% in 2006. The total number of banks and financial institutions at the end of November 2007 was 404, with this being made up of 153 banking institutions, 165 insurance firms, 34 investment banking firms, 13 capital market brokers and 39 specialised licensee firms. The Bahrain Financial Harbour (BFH) is a $1.3bn project intended to act as a physical flagship for Bahrain’s traditionally strong financial services sector, with space for international firms, banks and insurance companies, and the Bahrain Stock Exchange. The gross building area is reported to be approximately 570,000 sq metres. BFH is now partly operational with monthly rents at around BD12 ($32) per sq metre and an additional 15% service charge. It is a higher price compared to other office spaces, which range between BD7 ($19) and BD9 ($24) per month per sq metre. The 50-storey Bahrain World Trade Centre (BWTC), another major office development, has already

Bahrain: tourism and hospitality indicators, 2006-11
Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4- & 5-star guests) 398,157 448,589 507,716 574,597 649,825 735,524 Tourist arrivals growth (%) 12.8 12.7 13.2 13.2 13.1 13.% Average stay length (days) 2.0 2.0 2.0 2.0 2.0 2.0 Total stay-nights 796,313 897,179 1,015,432 1,149,195 1,299,650 1,471,048

SOURCE: Local statistical authorities, OBG Research

THE MARKET Real Estate 2008

Retail space for rent in the development is at a premium. On average each international visitor spent $1356 per day outside the Bahrain International Circuit. the mall is reported to have been completely rented out. which marked a 40% leap from 2006. such as Durrat Al Bahrain. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 749. MAF’s Bahrain City Centre is a $400m.34 3. IMF. is the latest addition.000 779.4 9.000 people over the course of three days. mixed-use mega-projects that are currently under construction. The Seef Mall is a perennial Bahrain: retail indicators. The government is hoping that it will be possible to double this figure.0 9.9 9. such as Sitra Mall and the already mentioned Isa. RETAIL: Bahrain’s retail sector has matured substantially over the past decade and the country is reported to have the fourth-highest private spending on retail in the region.39 3. which had its soft opening in September 2008. In 2007 the event drew a total of 90.000 827.000 sq metres. The hospitality sector boasts of an estimated 6700 rooms in 2008. while space is being released in the Bahrain Financial Harbour. but most analysts expect that the towers will be completed by the end of 2008. The Banyan Tree. which was up from 68. rising from less than 5m in 2002.1 9. increasing the sector’s contribution to GDP to 10% by 2014. It will offer twin office towers. which will be located on the west coast of Bahrain at Zallaq. Given the success of Seef. a second Ritz-Carlton on a man-made island off the Seef district.000 764.3 Inflation (%) 2. International Macroeconomic Data Set favourite. and it is certainly the strongest performance for some time. and is on the market at BD40 ($107) per sq metre per month. 150.000 Household consumption expenditure ($m) 5476 5993 6563 7163 7809 8534 Growth rate (%) 7.19 3. which opened in the Al Areen development in 2007. Shopping centre supply in Bahrain is concentrated in the Seef area. The Grand Prix has also had a substantial impact on the retail sector. In 2007 tourism had accounted for close to 7. redevelopment or change of use available for older buildings. Still. Visitors from Saudi Arabia are reported to account for a 30% to 35% increase in footfall during the weekends.000 sq metres. Around 15% of its energy needs will come from turbine-generated wind power. it is not surprising that a raft of further development is planned for Bahrain.10 2. By offering generous car parking allowances and flexible space.6% of GDP. Upcoming projects include the Renaissance Marriott on the Amwaj Islands. The higher end of the market is satisfied by Al Aali Mall.5 9. Oxford Business Group . while other older malls are renting at an average of BD16 ($43) per sq metre per month. the five-star Sheraton Hotel and Moda Mall. Change is therefore expected in the secondary tier of the market. Historically there has been little marketing of Bahrain’s hospitality sector. The zones identified for tourism include the large. Engineering issues are rumoured to be the main cause for the delay on the project. with revenues reportedly passing the $1bn mark. with smaller properties targeted at the lower end of the market found elsewhere in the kingdom. but this is set to change in the years to come. In 2007 a number of hotels reported occupancy close to 80%.000 811.14 3.000-sqmetre facility. opening its doors in 1997 and later expanding its gross leasable area (GLA) to 135.000 795.8m in 2007. resulting in a gross economic impact of $548m. with investment including an $800m development headed by Ithmaar Bank to rehabilitate Bahrain’s main public beach. a new Four Seasons on the Bahrain Bay development and a new Accor beach resort. These developments are considerably above the current standards of market provision. driven partially by higher bookings from American military personnel. Moda Mall at the BWTC will have double the space originally planned. Seef itself has recently undergone an expansion.8% in the previous year. they may end up attracting corporate occupiers from less well-equipped buildings.95 SOURCE: World Bank. Retail GLA in 2007 was around 400. with refurbishment. HOSPITALITY: Bahrain has witnessed an impressive increase in visitor numbers over the past few years. with arrivals by foreign nationals reaching 7.28 BAHRAIN become an iconic landmark in the Manama skyline. with more than 2000 expected to come up by 2010. A tourism master plan has been created which recommends the establishment of a public-private tourism authority as in other Gulf states. the Amwaj Islands and Al Areen. along with Dana Mall and Bahrain Mall. with stock expected to triple by 2010. Bahrain’s five-star hotels reported average occupancy of 72% in 2006. Sitra and Lagoon Malls. Also recommended is the creation of 12 zones dedicated to tourism development.

9% in 2006 and contributes approximately 6% of the nation’s economy. Post-September-11 repatriation of funds. construction costs have been rising. of which the expatriate population accounts for 68%.903 Average household size 5. tourism and construction projects can be attributed as both the cause and effect of growth in the economy.22 Labour force 1.093. domestic demand growth accelerated to 19% and this slowdown is expected to have negligible effects on the overall performance of the economy.452.159 42. which grew by 12.27 5.000 3. utility. and the Silk City.000 Population growth (%) 6.339 145. The sector has been receiving increased investor attention.183. In its latest economic brief on the macroeconomic indicators in Kuwait. as compared to the same period in 2006.9%.5%. The real estate and construction sectors grew by 7. whereas the expatriate population increased by 8.36 5. moderate inflation rates.443.946 161.000 Unemployment rate (%) 2.748.50 GDP ($m at current prices) 98. the value of real estate sales grew by 67% in 2007.000 3.000 2.49 3.817.4 2.247 171.014 33. Population Kuwait: economic and demographic indicators. 2006-11 Population 2006 2007 2008 2009 2010 2011 3.99 4.000 3. RESIDENTIAL: In 2006 Kuwait’s population grew by 6.563.2m.723 44. Volume of units sold expanded by 54% in the first half of 2007.51 3. following a streak of four consecutive years of double-digit growth.000 3.2 2. Developments trends have shifted with a wider acceptance and affinity towards taller buildings and international-quality offices. the $6bn Boubyan Island.42 3. a mixed-use development.634 42.6% in 2006 in spite of government subsidies. The country is reported to hold 10% of world reserves.5 2.33 5. bested the oil sector. new real estate construction is expected to reach $129bn up to 2010.7bn) during the fourth quarter of 2007 with a decrease of 21.30 5. at 13.7 SOURCE: IMF.1%.0 2.000 2.310. political stability and increased earnings from investments have all been responsible for the buoyant Kuwaiti economy.596.000 2.924 43.6% in 2006. and wages rose by 6.717 111. Around $8bn of private investment and $3bn in government investment is expected to come into the sector in the next five years.275.KUWAIT 29 Kuwait Domestic demand fuels real estate and construction growth Kuwait is another emerging market which has benefitted from the increase in oil prices.3%.963. World Bank THE MARKET Real Estate 2008 . In total.141 152.3bn) compared to KD490m ($1.688. New infrastructure. apartments and hotels.1 2.24 5. Total real estate investment tradings have increased during first-quarter 2008 to account for KD385m ($1. Project Kuwait.1%. with a huge concentration of unskilled male workers. In 2006 the Kuwaiti national population grew by about 3. 95% of export revenues and 80% of government income. with the sector accounting for 55% of GDP. Despite this slowdown. Major projects include the $5bn Failakha Island. the National Bank of Kuwait (NBK) reported that Kuwait’s GDP grew by only 8% to KD31. Another source of weakness for development of the sector is that the large expatriate population (68%) is not permitted to own property. Figures released by the Central Statistical Office also indicate a slowdown in non-oil sector growth though. However. with a jaw-dropping price tag of $86bn covering 250 sq km. building material costs went up 32.000 2. the $20bn Khairan and Arifijan residential projects.000 3.8bn ($111bn) in 2007.000 2.394 GDP per capita ($ at PPP) 31.4% to reach 3.02 3. According to the NBK.

& 5-star guests) 344. OBG Research in 2006. rates of which have witnessed an increase of approximately 18. Sabah Al Ahmad. The average commercial price per unit went from almost $1. demand for commercial property in Kuwait has been stimulated by the Iraq war. especially within Kuwait City. A large number of new companies have set up shop in the country. Limited supply and a consistent demand for commercial lands.325 Tourist arrivals growth (%) 6.8% in 2006 and vacancy rates are low. including BNP Paribas. Rental costs have been going up. A number of residential projects are under development – Silk City (500. particularly in Kuwait City. According to figures from the Public Authority of Civil Information. However. with vacancy rates rising from 8. According to the Public Authority of Housing Welfare (PAHW). following the Iraq war was difficult to meet with existing supply.30 KUWAIT growth and the influx of expatriates attracted to the country’s booming economy have resulted in undersupply in the residential sector.2 8.171. Commercial land rates have grown by some 11. HSBC and Citibank.9%. PAHW housing (27 projects) and Khairan (30.000 residents).572 1.6% CAGR between 2000 and 2006. using Kuwait as a base to target the large and wealthy Iraqi market.000 new jobs created in 2006.1% in 2005. This surge in demand played a role in the push for new legislation to allow the building of taller buildings. Residential Shuwaikh. For the expatriate population. the average vacancy rate by mid-2006 was 12.000. A number of foreign banks have been granted licences to operate in the country. BankMuscat estimates 2. All these factors have resulted in an economic boom in Kuwait.3m in 2005 and to $2. analysts expect that this will result in an oversupply. up from 12. Previously. The surge in demand from 2003.5m in 2006.000 residents).2 6.4 3.4 3. Project Kuwait is a $14bn project that will develop the northern oilfields and other offshoot projects. with a potential oversupply of units targeted at the high-income expatriate population and a shortage of low. Meanwhile.000 high-quality units is reported. However. creating a huge demand for office space.848 438. According to the recent reports by KFH the price indices showed a decrease in the prices of residential lands in the governorates of Kuwait during the first quarter of 2008 as the price per square metre was marked down to KD739 ($2584). up from 25% in the 1990s and 17% in the 1980s. The situation with apartments is slightly different. as there is already a surplus of housing of the style that is generally developed to cater for expatriate rentals.2 6. reflecting the price stability in certain areas such as Abdullah Al Salem.735 1.711 - SOURCE: Local statistical authorities.4% in 2004 to 12.6% Kuwait: tourism and hospitality indicators.321. This is something that those within the construction and real estate industry appear to be expecting in the coming years. low-cost apartments remain the segment most under-supplied. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. and according to industry analysts. Furthermore.4 Average stay length (days) 3. COMMERCIAL: As in Jordan.445 475. An estimated oversupply of 30. although it increased by over 7% for residential properties. Kuwait had a maximum height for buildings of 20 storeys. with approximately 144. which has increased yields and therefore the demand for commercial land.4 3.and middle-class apartments. In February 2008 the Public Authority of Housing Care (PAHC) announced its plans aimed at distributing 1000 housing units every month up to the year 2014 in the new cities of Jaber Al Ahmad. Sabbeya (50. the value of apartments and commercial properties declined by approximately 21% in the first four months of 2007. have helped push prices up even further.051 388.5m in 2003 to $2. according to OBG’s Oxford Business Group . Khairan and Mitlaa.913 1.680 366.746 412. Saad Al Abdullah.4 3.000 sq metres. total expected supply coming up until 2009 is around 750. The waiting list of applicants in mid-2007 exceeded 30. equal to a slight decrease of 5%.683 1. while prices decreased significantly at Al Qadessiayah. This opportunity has encouraged a rush to develop a new skyline in Kuwait City. In total.000 residents).403.2 6. and Faiha. Arefijan (100. Jabr Al Ahmad (78.000 units).4 Total stay-nights 1. there are some question marks surrounding such large-scale projects. There has been a short supply of office space in Kuwait over the years.490.62m housing units will be built to meet the demand up to 2020.2 6. the waiting list for housing has risen to over 50% in the last few years. It is therefore reasoned that the market will need to be opened to foreign investors to prevent an oversupply situation.000 units).244. Doayah and Surrah. but in 2005 new legislation allowed for 100-storey buildings.

9 12.000 3. are not allowed to own real estate in Kuwait. and the government has come up with a 20-year strategic tourism plan.48 5.817. In 2007 Kuwait had 28 hotels with approximately 4500 rooms. After this point. with average room rates (ARRs) around $196 and RevPAR close to $140. there is still scope for greater expansion in this sector.000 3. upcoming supply is expected to meet the existing demand in the sector. Recently the InterContinental Hotels Group and Bukhamseen Holding Group announced the signing of an exclusive agreement towards developing InterContinental Kuwait Downtown. Tamdeen’s 360-degree Kuwait Mall will add another 75. with the 31. in its 2006 report.54 4. of which some 650.628 35. non-availability of large tracts of land has automatically placed a limit on the number of new mall developments.5 12.532 39.000 3.73bn by 2017. International Macroeconomic Data Set THE MARKET Real Estate 2008 . in 2005-06 the average occupancy rates were reported to be close to 70%. developers have started taking a keen interest in Kuwait’s retail sector. Two new malls by Tamdeen became operational in 2006.688. According to the council’s report in 2007.904 Growth rate (%) 12. the sector was projected to generate approximately $13.183. the region’s largest IKEA store and a 10-screen multiplex. the strict censorship regime currently does not allow for the types of public events that have the potential to induce greater retail spending. the government is keen to capture this local market as well. growing to $21. Occupancy rates reached 90% between 2002 and 2003. RETAIL: Present per capita gross leasable area in Kuwait is much lower than in most other Gulf states.0 11. also Kuwait’s average monthly salary was the highest in the Gulf region.527 49.363 31.000-sq-metre Mall of Kuwait will be operational by 2010.000 3. According to in-depth OBG research. forecasted a 3. growth in the hospitality sector slowed considerably. for the first time a licence was given to the first private commercial line.000 sq metres in this year and its 150.98 6.000 Household consumption expenditure ($m) 28.1 Inflation (%) 3.79bn of economic activity (total demand). the market will undoubtedly move towards oversupply. while 2006 witnessed the commencement of construction for at least 10 new hotels with more than 2100 rooms estimated to be completed by the end of 2007.000-sq-metre Marina Mall attracting over 9m customers in only its first year of operations. IMF. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 3.779 44. Despite this.09 4. there has been a steady stream of hotel guests into Kuwait. The hospitality sector’s dependence on the Iraqi market has prompted a large number of changes in order to promote tourism in the country.000 are expected to stay in hotels.000 3. HOSPITALITY: Following the Iraq war. the country’s first Carrefour.6% growth annually for the next 10 years. The World Travel and Tourism Council. Average retail rates have gone up drastically and are now approaching Dubai’s relatively high rates. at $3100.3 12. which will definitely have an impact on retailers like Virgin Records.48 SOURCE: World Bank. Hilton Olympia Kuwait. It is for this reason that the development of climate-controlled shopping centres in Kuwait is not recommended in the short term. Figures released by the Kuwait Hotel Owners Association estimate an additional 3000 rooms to be added by 2010 by major international chains including Golden Tulip Kuwait.563. The second phase of the project is the addition of another 60. Foreigners. aside from citizens of the GCC countries.KUWAIT 31 analysis and data modelling. However. which boosted the sector between 2002 and 2004. the Regent Messilah Beach Resort & Spa. visa regulations have been relaxed. indicating unmet demand. the sector faces a few setbacks due to rampant video and music piracy. InterContinental Kuwait Downtown and Four Seasons Hotel Kuwait.0 11.000 sq metres.310. The year 2007 saw the introduction of large malls such as Mabanee’s Avenues with a gross leasable area of 170.000 sq metres this year. Surveys conducted in 2006 reported an increase of approximately 17% in salaries for both expatriates and locals and were further projected to rise by another 19% over 2007.443.97 4. Kuwait: retail indicators. In addition. In spite of this growth. Some 79% of Kuwaitis travel abroad on holiday. although in 2005 the government hinted at a move towards allowing limited foreigners in specially designated areas. spending an estimated $3bn annually. the Monarch Luxury Hotel & Conference Centre. Even if only a fraction of these rooms are completed. The government is aiming to increase the number of tourists visiting Kuwait to 1m per year by 2010. indicating a strong retail market. However.

781 1.0 15.546. Projects released towards the end of 2007 and beginning of 2008 have sold out quickly. CONSTRUCTION AND REAL ESTATE: Given the amount of infrastructural development involved in the diversification of the economy. At the same time.000 2.0 SOURCE: IMF.32 OMAN Oman The country bounces back after a massive hurricane The years 2007 and 2008 will be etched forever in the memory of Omanis because of Gonu.95 0.570.92 0.743 31.95 GDP ($m at current prices) 35. However.94 0.897.000 2. The hydrocarbons sector accounted for 50% of GDP and 80% of government revenues in 2006. Costs in 2008 range from OR1000 ($2600) per sq metre in Madinat Sultan Qaboos (MSQ) to OR30 ($78) per sq metre in Al Amrat. In spite of new measures to increase oil exploration and the use of enhanced recovery processes.644.9bn in 2006 to $4.56 0. especially given the fact that oil production is on the decline and the fields are ageing. having grown at a compound average of 22% between 2001 and 2005. it is no surprise that the construction sector is the second-fastest growing sector.0 15. Oman: economic and demographic indicators. oil’s contribution to GDP should reduce to 9%.000 2. Under the Vision 2020 plan released in 1996. new rules banning development in the Wadis have been introduced and grants have been generously distributed for the redevelopment process. which was the first year the Sultanate was included since the study began in 1979. Roads have been repaired.0 15.85 7.839 Average household size 7.83 7.6%. World Bank Oxford Business Group .000 Population growth (%) 1.595.392 58. in a matter of hours in some cases. The World Economic Forum’s Global Competitiveness Index ranked Oman 42nd out of 130 countries in 2007.833 29.967 26. This sector’s contribution to the country’s GDP rose from $3.7bn in 2007.6bn barrels of oil will likely be depleted over the next two decades. with the share declining to 27% and 65% in 2007. such as Sohar and Salalah. These targets seem achievable. Being just hours away from the world’s main shipping lines and relatively close to Asian markets makes Oman and its re-emergent ports.958.84 7.152 23.000 2. with manufacturing and tourism also showing impressive performance.176 GDP per capita ($ at PPP) 22.0 15. natural sites for companies targeting markets in the East and West.841. supplies are not sustainable and the current reserves of 5.82 Labour force 1.059 50.023 27.86 7.000 2. Rising crude prices ensured that economic growth was strong at 11.87 7. with infrastructure upgrades being targeted in order to boost the manufacturing and tourism sectors. with fewer projects and low takeup rates.783 1. 2006-11 Population 2006 2007 2008 2009 2010 2011 2. the Sultanate has bounced back.0 15.782.897 Unemployment rate (%) 15. Though the signs of the destruction are still evident in most cities. a perceptible increase has been witnessed between 2007 and 2008 in the amount of investment activity. while that of manufacturing should increase from the current 13% to 29% by 2020. Oman was previously categorised as being slow in jumping on the Gulf Cooperation Council (GCC) real estate bandwagon. Diversification is being given the first priority in the country.541 2. a storm that killed more than 50 people and caused $4bn worth of damage.504 54.000 1. land prices have increased by close to 100% since 2006.102 1.729 40. accounting for nearly one-third of the country’s GDP.97 0.020.747.042 62.669.619.

732 Tourist arrivals growth (%) 18.572 1.9 1. parking problems and cramped offices of the CBD have encouraged tenants to look elsewhere in the city. where new office buildings and industrial parks are being developed. spending patterns have been conservative and the sector faced very stiff competition Oman: tourism and hospitality indicators. waterfront and beachfront villas.0 8. doubling between 2004 and 2007.5 4. However. and rising rents have made ownership an attractive alternative.107.978 3. Qurum City will have 35. where costs are skyrocketing.004.370 3. A stronger economy has increased the number of expatriates moving to the kingdom. Unsatisfied demand has resulted in prices doubling and at times even tripling in a period of one year. RETAIL: The retail sector in Oman remains underdeveloped in comparison to other GCC markets.3m in 2008 to 5m by 2025. Monthly rentals for a two-bedroom apartment range from OR700 ($1820) in MSQ to OR150 ($390) in Muthrah.1 16.390 SOURCE: Local statistical authorities. has resulted in a huge demand for office space in Muscat as well as in Sohar. from 3.000 expatriates are reportedly entering the Oman every month. and there will still remain scope for construction.9 1.721 1. These increases in population have resulted in a shortage of residential units throughout the kingdom. while Al Argan Tower will have 12.9 Total stay-nights 3.580. and more than 12. Salam Resort & Spa. Some of the major high-end residential developments coming into Muscat over the next two to three years include The Wave.450. which has forced the government to introduce a rental rise cap of 15% over the next two years. Despite the increase in demand.000 sq metres of office space is expected to be handed over in the next four to five years. Shangri La. Offices are generally located in the central business district (CBD) in the east of Muscat. Sale prices average OR500 ($1300) per sq metre. A number of companies are looking at Oman as a possible base in the GCC. rising at a compound annual growth rate of 2.5%.620 1. Yenkit. These developments are not expected to be able to satisfy the growing demand for luxury housing. now average OR1100 ($2860) per sq metre – the initial release price in 2005 was OR265 ($689).000 sq metres of office space. OFFICE: Growth in Oman’s domestic private sector. the latest development.660. and there is surely scope for more residential developments in Oman.590 2. with 4000 one. with new developments like The Wave demanding over OR1100 ($2860) per sq metre. combined with increased foreign investments and the entry of a number of international companies in the country.884.688 3. three. New companies and existing CBD tenants are considering moving to the west of Muscat. In Oman as well. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.9 1.459 4. upmarket retail facilities.772.and four-bedroom town houses with gardens. Tilal Residences and Al Qurum Gardens. Muscat is now one of the 35 most expensive commercial markets in the world. Muscat has yet to offer a definitive commercial centre. These new developments are not expected to satiate demand. Al Shmou.9 1. The government is increasing the number of land plots that it distributes and banks have responded to this rising demand for property by providing a better choice of mortgage options to customers. disposable income in the hands of Omanis has been low.155. Omagine. The country has a youthful population. from 13% in 2003 to less than 5% in 2008. Prices at Shining Shati.5 5.424. OBG Research THE MARKET Real Estate 2008 .505 2. Previously.& 5-star guests) 1.OMAN 33 RESIDENTIAL: Oman’s population is expected to double during the next two decades.985. Landlords have hiked rentals by more than 100% in 2007. An increase in demand for apartments in Oman has been augmented by a recent government decision to stop issuing permits beginning in October 2007. The $300m Azaiba Business Park will be completed by 2011 and will feature modern corporate offices.802.4 6. especially in cities like Sohar and Duqm. Vacancy rates have dropped substantially. a five-star hotel and serviced apartments.420 4. while a three-bedroom villa in PDO Heights would rent for up to OR1300 ($3380). instead of opting for Dubai or Qatar. rents have risen by over 50% every year since 2004. with 2008 witness- ing a 25% increase.9 1. There is a niche demand for small unit sizes and Western-styled units.3 Average stay length (days) 1. with 43% of Omanis aged under 14.656. Property prices have followed suit. with rents in some years even doubling. the congestion.000 sq metres. Over 200.and two-bedroom apartments. These developments are typically low rise and offer a number of state-of-the-art offices as well as adequate support services.

Ras Al Hadd. Tourism accounted for 0. Muriya. IMF. Oman: retail indicators.000 sq metres of retail space is in the pipeline to be completed by 2011. There are already many signs of success. Haima and Shaleem.000 sq metres.000 Household consumption expenditure ($m) 16. A number of retail spaces are also under construction in Sohar and Salalah.450 47. Musandam and Ras Al Hadd are also witnessing new developments with brands like Six Senses.6 20. interest-free loans. a 70% increase since 2006. The sector is poised for growth in the medium term. With the opening of resort projects in Oman. bringing total GLA to over 60.75 6. International Macroeconomic Data Set These developments will take the retail gross leasable area (GLA) to over 340. Infrastructural development has been beefed up with the 2008 budget announcement of plans for the construction of six regional airports in Sohar – Al Duqm. Existing malls are experiencing increasing traffic.20 5. and the hotel has enjoyed an average occupancy of 65% since its opening in February 2006.000 2.3 25. with places like City Centre and Markaz Al Bahja commanding much more.6) per sq metre to OR20 ($52) per sq metre. Sohar. and a number of new ones are planned.2 Inflation (%) 3. Tenants and the mall owners suffered immense damage as a result. Al Araimi Complex.000 2. Qurum is the retail centre of the city and has shopping centres like Capital Commercial Centre. the government aims for the sector’s contribution to rise to 3% over the next decade and to attract 2m foreign visitors by 2010 – double the figure of 2001.619. with demand rising by 19% in 2006. These prices represent a 100% rise from levels in 2006. while its break-even occupancy is 40%.3 24. increasing GLA by 17% and adding over 60 new retail stores. Salalah. The tourism sector’s room capacity is expected to double by 2012 and several mixed-use development tourism projects are in pipeline. This has given Oman the title of the strongest growing market in the Middle East. such as Shangri La Barr Al Jissah.086 24. Oxford Business Group .34 OMAN from Dubai. shopping centres.000 sq metres. average occupancy in Muscat was 70. have vacated their spaces. HOSPITALITY: Tourism has been growing steadily in Oman. while revenue per available room grew by 52.623 20.50 SOURCE: World Bank. Khamis Plaza and Sabco Centre.570. with two five-star hotels (Fairmont and Kempinski) and a four-star hotel. with their insurance plans covering only a part of their losses.00 6. golf courses and exhibition centres. which is part of the Tilal Al Khuwair Project. According to figures from Retail International.000 2. The Wave. with six hotels. In April 2008 the Ministry of Tourism announced a number of incentives to attract investments – tax and import duty exemptions. New projects will include hotels. Muscat City Centre completed an expansion in 2007. The government has accordingly increased its tourism promotion budget and has provided subsidised land for the development of tourism projects.7% of GDP in 2004 and 2% in 2006. Omagine. the country has made it to the top few on various international lists of must-see-destinations.8 23. Renovation works are almost complete and things have started to normalise. especially those on basement or lower levels. This area is low lying and was thus the worst-affected by Gonu. The Chedi and the newly renovated Al Bustan are the other premier hotels in the capital city. Upcoming projects include the Muscat Grand Mall.8%.546.175 38. A public company will be established to help implement projects as part of a fast track procedure.9 23.595.669. and by 9% in 2007. and Sama Dubai’s Salam Resort and Spa. with two hotels. though quite a number of tenants.762 31.000 2.50 6. Forthcoming hotel openings in Oman include Blue City Phase I. According to the 2007 HotelBenchmark Survey by Deloitte. approximately 75. with three hotels. with rates ranging from OR150 ($390) to OR350 ($910) for a standard room depending on the type of property. Rentals in most malls range between OR16 ($41. They have been promptly rented out to new tenants. as Omanis are slowly becoming more affluent and the youth is increasingly brand-conscious. The government has been forthcoming with compensations and in some cases mall management has even given rental breaks to the tenants. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 2. Muscat City Centre and Markaz Al Bahjaa are the two large retail centres in Muscat.644. no personal income tax and no foreign exchange controls.000 2. Barr Al Jissah represents the top end of the market. Adam.00 5. The Coral Al Nahda in Barka is also focusing on the luxury segment in Oman.6%. marinas. Jumeirah and Banyan Tree entering the market. The market is now looking more positive.744 Growth rate (%) 33.

000 1.000 Population growth (%) 5.7 0.000 1.486.3% of GDP. increased foreign direct investment. The latest estimates indicate that approximately 37% of the population is concentrated in Doha.000 1.476 93.029. namely Pearl Qatar. buildings and constructions in three designated projects.2bn in 2007 – growing at a CAGR of 38% from 2004. expanding gas sector.01 GDP ($m at current prices) 52. The hydrocarbons sector accounts for about 90% of export earnings and roughly 70% of budget revenues. The strong performance of the economy has attracted a growing number of expatriate workers – professional and otherwise. these units have been unable to meet the levels of demand in the country.000 1. while nearly 30% live in worker housing at industrial centres across the rest of the country. which has contributed to the rapid increase in the population from 2004 to 2007.421 133.50 5.5m by the end of 2008.50 5.000 881. World Bank THE MARKET Real Estate 2008 .97 11. at $7. Foreign workers account for an estimated 75% of the total population. Gas reserves stood at 904. There are 18 special investment zones in Qatar.350.662 Average household size 5.000 1.6 0.889 GDP per capita ($ at PPP) 76. with expectations of reaching $85.000 Unemployment rate (%) 0. major real estate projects and public infrastructure programmes have contributed to the GDP.05 10. 2006-11 Population 2006 2007 2008 2009 2010 2011 838.870 in 2007.QATAR 35 Qatar Increasing population spurs growth in all sectors With GDP reaching $65bn in 2007 and the oil-and-gas sector contributing up to 56% of the economy. the Philippines and other Arab countries.000 930.5 SOURCE: IMF. Foreign investments in the real estate sector commenced in 2004. REAL ESTATE: The oil boom.260 114.961 149. the building and construction sector contributed 6. Meanwhile.146. Supply side constraints have to contend with increasing shortage of materials and capacity issues.000 1.45m.412.99 11. Its proven oil reserves. The government has estimated that approximately $125bn worth of real estate developments is scheduled for completion by 2015.870 84.000 in 2008.032.196.1trn cu feet at the end of 2007. A second stimulant has been the growth in the mortgage market. growing at a CAGR of 32% from 2004. Qatar: economic and demographic indicators.50 5. The last census was carried out in 2004 when the population stood at 744. increasing by 10% from 2006 to 2007 and achieving a compound annual growth rate (CAGR) of 27% from 2004.98 10.722 67. Qatar is another Gulf country hoping to diversify away from the hydrocarbons sector.5 0. where ownership is in the form of a long lease.5 0. Up to 80% financing is available on residential property at interest rates of less than 10%.763 98. Oil and gas revenues have fuelled Qatar to the highest per capita GDP in the world – $80.044.3% of GDP at $4bn in 2007.000 1.035 92. insurance and real estate sectors made up 11.9 0. The finance.28 10.000 1.50 5. and the Planning Council expects the population to reach 1.50 5. POPULATION: In 2008 the Qatar Statistics Authority estimated the population to be 1. more than 2% of the world’s supply in 2007.537 80.272.000 residential apartments and villas were constructed from 2003 to 2005. Though over 50. with the majority of migrant labourers coming from South Asia. are expected to last over 60 years at current rates of production. West Bay Lagoon and Al Khor Resort developments.833 88.40 Labour force 746. when the foreign ownership of real estate law permitted non-Qataris to invest and own land.

8%.751 1.865 1.726. only to find that the country’s capacity to take in imports is limited. RESIDENTIAL: The Qatar Statistics Authority’s population estimate of 1. with a potential correction forecast for 2011-12. Qatari Diar Real Estate Investment Company leads the development stakes in the country with its $6bn Lusail development.376 863. This applies to all rental contracts signed since January 1. driven by the Qatari elite. managing the $2. while supply grew by a CAGR of 5% during the same period. Given the high levels of activity in the resale market.107.610. In its ongoing battle against rapid inflation. which automatically grants non-Qataris who own property a residency visa. subject to the regulations of the foreign ownership law.446 1.45m has posted rapid compound growth of 10.805 2. which expired on February 16. including the UK and France.215. with current sale prices at $2400-4500 per sq metre for apartments and $4500-$6500 per sq metre for villas. lay behind the jump in the consumer price index. 2008.8% year-on-year in the third quarter (after a record 33% rise in the first quarter).2 7. It replaces a 10% increase limit set in a previous law issued in 2006. although it picked up in 2005 to 8. B and C ring Qatar: tourism and hospitality indicators. New supply is expected to meet demand. while only around 5500 units per annum have been released into the market during 2000-06.000 when it is completed in 2016. and further in 2006 to 11. OBG Research roads.274 SOURCE: Local statistical authorities.984. with the rent. The demolition of degraded housing units has actually decreased the stock in the medium term. The first investors are expected to move into completed residences in December 2008. United Development Company is another important player in the Qatari market. Sharply rising household costs. 2008.502. Annual demand is estimated at 10. Demand for housing units increased by a CAGR of 8% between 2000 and 2006. can apply for and obtain a residency permit without a local Qatari sponsor (subject to normal residency visa conditions).223 805. original property prices have appreciated by as much as 100% in many cases. Therefore.8% since 2000. developers have tried to import from outside of Qatar.000 homes. Demolition of buildings was mainly to widen existing roads and for the beautification of different areas of Doha.& 5-star guests) 751. Construction remains geared towards the luxury market. The housing shortage in Qatar has been exacerbated due to the demolition of old buildings in the centre of Doha and around the main arterial roads such as the A.4%.348 1.637 Tourist arrivals growth (%) 7. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.8%.851. The law also lays down guidelines on how much a landlord can increase the rent after the expiry of the ban (February 14. According to figures released by the General Secretariat for Development Planning. while the entire development is expected to be completed in 2011. with a few areas commanding more than $2000 per month for a one-bedroom and over $4000 for a two-bedroom apartment.7% yearon-year in the third quarter of 2007. 2 of 2006. Growth in professional services and hydrocarbons has attracted a class of wealthy expatriates able to pay rents higher than those found in other Gulf Cooperation Council states. anyone who owns residential property. Covering an area of 35 sq km.5bn Pearl Qatar development.36 QATAR An added advantage in Qatar has been the enactment of Law No.674 992. From mid-2007 to 2008 rents have increased over 50% in some areas of Doha – especially in newly completed buildings. as the level of construction has not been able to keep up with the pace of demand. the rental market has still been able to sustain gross yields of 10%. expatriates and foreign buyers from the Gulf looking for a permanent or second home.432 925.403 1. while new buildings get approval and are constructed. fuel and energy category increasing by 28. Ports and roads are at critical mass. Lusail is expected to house a population of over 200.2 7.2 7. consumer prices rose by 13. Demand in the high-end market is also picking up. while border posts are understaffed. the government has imposed a two-year freeze on property rents. 2005 or after February 15. Qatari Diar is currently involved in over 50 active projects in 30 countries worldwide. With the tremendous pressure on the supply of construction materials. Appreciating land values coupled with rising construction costs are pushing up the prices of properties in Qatar.6 Average stay length (days) 2 2 2 2 2 2 Total stay-nights 1. in some instances up to 12%. while the majority of the expatriate demand is for middle-class housing. This has inevitably led to a shortage of units in the market. However. effective from February 15. Average inflation between 2000 and 2004 was only 2. Oxford Business Group .2 7. Land prices in areas such as West Bay are now as high as $7500 per sq metre.2 11. There have also been problems with bottlenecks in project completion. 2008. in the wake of a rapid influx of foreign workers. 2010).

753 15.086 34.032.4 32. with the release of 550. incentives. medical.000 sq metres of GLA.5 28. tourism demand is hampered by high prices as a result of capacity shortages and the willingness of corporate guests to pay higher prices. with rates of growth exceptional even by Gulf standards. The rapid economic growth has resulted in increasing rents across the sector. Revenue per available room (RevPAR) has increased by 18%.766 27.000 in 2012 at current estimates. RETAIL: Like Dubai.2 33.6 Inflation (%) 11.000 visitors.96 7.146. The national carrier. The government has earmarked tourism as a key area for development and has supported this by dedicating $18bn to the sector. Market pressure is reflected in high rents for offices.5 30. Delays experienced in the construction sector have delayed a potential market correction.831 Growth rate (%) 18. HOSPITALITY: From a current base of approximately 965.000 sq metres per annum until 2012. against 730. The demand that businesslinked tourism created has helped the hotel sector in Qatar to realise impressive growth over the past four years.886 in 2007. QTA has increased the stock of hotel rooms by 50%. Rotana and Grand Hyatt brands.674 20. however. The retail experience is increasingly being planned as more of a leisurely event than a shopping trip. In the hospitality sector.000 Household consumption expenditure ($m) 9. especially in West Bay.000 sq metres from the 80-storey commercial Dubai Towers. This trend is expected to continue until new supply arrives in the form of a 200. Despite efforts to increase leisure tourism. nearly 60% of the population is employed in some form of work. together with less high-profile developments.96 5. Office demand has dramatically outstripped supply. Including business visitors.96 9.000 930. QTA is also aggressively pushing to increase the average visitor stay length from one and a half days to four days by 2010 and is currently concentrating on niche markets such as sports. Current office stock is approximately 400. there are criticisms that shopping centres in Doha may be carrying this principle too far. The current stock of hotel rooms is expected to increase by a further 9500 by 2012. Currently. since occupancies have slid to 70% from the highs of the Asian Games in 2006. and the market could still face an oversupply due to a decline in occupancy rates. Marriott. The supply of grade A space will nearly treble. Qatar Airways.000-sq-metre retail space on Pearl Qatar in 2009. International Macroeconomic Data Set THE MARKET Real Estate 2008 . The average room rate (ARR) has increased by an impressive 27% annually. The year 2007 has been an exception to this rule. 24. which currently stands at 10% of all visitors. some of the new hotels planned in Doha include the Hilton. Qatar: retail indicators.5m tourists by 2010. With an economically active workforce of 831.412. from 3700 in 2004 to nearly 5500 by the end of 2007. 80.000 sq metres from Fox Hills Lusail. outperforming almost all other markets in the region. The limited availability of space in the retail sector has pushed rents up in shopping malls. demand will continue to outstrip supply in the short term. as evidenced by the gondoliers at Doha’s Villagio Mall. Though occupancy has slipped slightly in 2007. IMF.000 sq metres anticipated in Doha by the end of the year. education. with occupiers forced to settle for lower-grade space or build their own facilities. City Centre still sets the bar for size.000 1. rising from $115 in 2004 to $233 in 2007.000 1. has seen a 35% increase in passengers.000 1. The Qatar Tourism Agency (QTA) hopes to increase leisure tourism. The retail offering in Qatar is expanding dramatically in terms of scale and the diversity of offering.QATAR 37 COMMERCIAL: Economic growth in Qatar has resulted in expansion of the employment base. Qatar Airways aims to reach a fleet size of 110 aircraft by 2018. However.000 arrivals in 2004. Analysis indicates that hotel rooms are expected to reach 15. Four Seasons.76 11. reaching 965.4 28.272.700 sq metres at The Gate. with CAGR from $98 to $161 in the same period. with delivery of an additional 90. ARR and RevPAR. Qatar is also developing destination shopping malls. total arrivals increased by a CAGR of 10% from 2004 to 2007.000 in 2007. with 116. Qatar hopes to attract 1. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 838. where new office space is available from $65-$85 per sq metre per month. with the smaller centres diversifying their offerings to the extent that they attract patrons who may not actually intend to shop. flying over 8m passengers in 2007. ARRs have climbed by 8% from 2006 to 2007. conferences and exhibitions tourism. Occupancy rates have been over 80% since 2004.169 11.96 SOURCE: World Bank.83 13. Shangri-La. with rents ranging from $500-900 per sq metre per annum in 2007.000 sq metres of leasable area anchored by Carrefour. Vacancy rates for prime space are less than 1%.000 1. and meetings. the market is likely to remain business orientated. Demand for new offices space is estimated at over 90.

which is proving to be a sustainable model.428 26. World Bank Oxford Business Group .000 6. Saudi Arabia is now paying considerable attention to the task of sheltering the economy from fluctuations in the price of oil. ACC.2 8.8 8.50 2.000 Population growth (%) 2. OIL: Being a member of the World Trade Organisation since late 2005. Enelpower.138 376.441 506.7 SOURCE: IMF. AMEC. Each establishment will have a distinct identity and will contain a combination of commercial. The largest real estate developers in Saudi Arabia: economic and demographic indicators.000 6. In spite of the huge revenues generated by oil.50 2.697.000 Unemployment rate (%) 9. Such a strong expectation can clearly be achieved with the acceleration of foreign investment growth throughout the Kingdom. Overall.5 8. Rabigh. as well as being the prime oil exporter worldwide. with 50% of locals preferring to invest in real estate at the beginning of 2008. low interest rates and an increase in bank credit. according to a report by Kuwait-based Global Investment House. Bauer. BOUYGUES. Aker Kvaerner ASA.000 25.029 464. GAMA.172 599. Astaidi.563.46 5. with a potential of increasing total oil capacity to well over 10%.50 2.109.157.519.38 SAUDI ARABIA Saudi Arabia Looking beyond oil. Demand drivers for real estate include high levels of liquidity stemming from generous oil revenues.017 551.289.897. Real estate demand is based primarily on population growth and economic diversification associated with such large-scale projects as the King Abdullah Economic City (KAEC).57 5.240 25. Saudi Arabia has continued to surpass expectations.290 23. the real estate industry will achieve 6. owing to commercial and residential projects.5% in 2007.707 28.000 6.000 26. Chiyoda.69 5.000 7.556 GDP per capita ($ at PPP) 22.000 7. Bechtel. A related survey of developers and agents showed that 90% expected significant growth in the real estate sector over the next two years.922.50 GDP ($m at current prices) 349. residential and industrial businesses.384. Hail and Jizan.50 2.099 Average household size 5. Research in 2008 by the Saudi British Bank shows that real estate remained the preferred investment within the Kingdom. 2006-11 Population 2006 2007 2008 2009 2010 2011 23.301.000 24.000 24. REAL ESTATE: According to a report by the Council of Saudi Chambers of Commerce. KAEC is the first of six planned economic cities to be developed on the coast and in Medina.7% growth over the next five years. in addition to demand for land and houses. the economy of the Kingdom is presently in the midst of a persistent growth phase. Tabuk. the government has embarked on a policy of economic liberalisation and diversification.243 24.000 26.63 5. Major contractors working in Saudi Arabia include: ABB Lummus Global. which together are expected to contribute more than $140bn of the nation’s GDP. compared to 41% who expected to invest in equities.50 2. The country currently holds about 25% of the world’s confirmed oil reserves. real estate investments more than doubled by the end of 2007 to reach about $26bn following increasing prices and demand. Having witnessed one boom-and-bust cycle in the 1970s and 1980s. Grupo ACS and Impregilo. the economy offers more stable investments With GDP growth expected to reach over 5% in 2008 and a recorded increase in population of about 2.1 9. Consolidated Contractors.811.41 Labour force 6.52 5.0 8. a continued preference for investing in the local market.740.

Office space prices in prime locations such as King Fahd Road.000 to $50. along with an average annual growth rate of 2. Rents in Riyadh have increased by at least 25% over the past year. The eighth development plan envisages construction of 1m housing units over a span of five years. the housing sector makes up 75% of all real estate activity in the country. with up to 10% of new construction consisting of commercial units of the cumulative units built. RESIDENTIAL: With a recorded population of 24. OBG Research THE MARKET Real Estate 2008 . With a figure of 24% home ownership in Saudi Arabia. Currently.351. among a host of other projects.078.5%. Arriyadh Development and Tamniyat Group.5 3. supply and demand for office space is expected to balance out with the planned arrival of a host of projects in Jeddah and Riyadh over the next four years.0 2. and the overall shortage figure for the country could be as high as 1m. According to the housing demand allocation of the eighth development plan. the residential market remains undersupplied and there is significant room for future growth. due to a lack of real estate financing opportunities and the rather small amount of loans given by the state-owned Real Estate Development Fund. with the exception of the two holy cities.863.290 8.SAUDI ARABIA 39 the local area are Dar Al Arkan. have increased from about $180-$215 per sq metre to $350 in just the past year.0 2.346 5.750 per year.000 residential units. The July 2008 approval of the mortgage law by the Shura Council is being regarded as an important step forward.000 4. Average housing prices are increasing by 20% per annum.997 SOURCE: Local statistical authorities.964 4. compared to 95% in Dubai. the lack of office space in prime locations. For example. the population is projected to double by the year 2050 due to the continuous arrival of newcomers. Reports have surfaced in Jeddah that some real estate owners are increasing rents by 10-50%. especially that for grade A offices. In addition. alone faces an estimated shortage of 225. However.000. Olayan Group. about threefourths of the nation are under 30 years old. However.431.660.000 8.084. there is the Headquarters Business Park $213m.675.999 Tourist arrivals growth (%) 7. Riyadh. As a result. with sales prices in Riyadh now averaging SR2000. According to the Saudi American Bank (Samba). the main artery in Riyadh.4% out of the 8% mentioned were self-financed.830. Al Saedan.0 2.613 4.5 5.000 per annum. prices in Saudi Arabia are still relatively low compared to other countries in the Gulf region. The seventh development plan was completed in 2004 and resulted in an 8% increase in residential units constructed.529. This is expected to continue as the Saudi economy opens up and new investment laws lure in a greater number of foreign investments. The majority come from South-east Asia. which will offer about 280 units of office space. the new law is expected to prompt one of the largest housing booms in the Gulf Cooperation Council (GCC). is heating up due to the number of newly established companies and the continuing expansion of existing ones. a total of around 2.2500 ($544-680) per sq metre.692 10. A three-bedroom flat in central Dubai would cost anywhere from $27. COMMERCIAL: Demand for office space.225 9.1 Average stay length (days) 2. allowing an increase of more than 300% in housing units built in comparison to the 2000-04 period.264. About 6.0 Total stay-nights 8. has caused a hike in rent prices. adding that some $20bn per year will be required to meet the annual housing demand up to 2020.5 3.927 9. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. Growth in the residential sector of up to 7% is expected under the first phase of the government’s eighth five-year development plan. In terms of value.9 5.3m in 2007.0 2. forecasts project that Riyadh and Mecca alone will be home to almost 50% of the total units expected to be built. a 52-storey business tower to be constructed in Jeddah.3 5. in Saudi Arabia the price would be around $13.645 4. The Ministry of Economy and Planning estimates that home ownership dropped in the period 2000-05 from 65% to 55%.157.62m housing units need to be built between now and 2020 to meet demand. such as Riyadh and Jeddah. Units should be released at an average rate of 163. with a total of 250. Saudi Arabia’s Prince Khalid bin Al Waleed bin Talal Al Saud and the UAE-based real estate Saudi Arabia: tourism and hospitality indicators. residential price increases of 50% and more have been recorded in the year up to mid-2008. In some districts of the capital. while reports of 30% increases on lease renewals have become common. according to Samba.& 5-star guests) 4. The capital.0 2.042. In addition to this influx of new residents.000 units having been added to the market.

Fawaz Alhokair Group malls have a combined GLA of over 700.000 25. while Saudi Carrefour.00 4.055 161. To tackle this. Furthermore.3 13. which is solely responsible for giving all aspects of tourism relatively equal attention. compared to 65. Similar room rates to those in Jeddah are found in Mecca. Due to the shortage in the supply of rooms in Riyadh.000 24.913 184.248 143. By 2010 Saudi Arabia will supply close to 40% of total gross leasable area (GLA) in the GCC. International hotel chains.157. Recently. the expansion of regional festivals and the listing of the historic city as an international heritage site. The programme gives visitors an opportunity to tour around other cities in the Kingdom.8% in Muscat. International Macroeconomic Data Set year.289. Deloitte’s HotelBenchmark Survey reports that occupancy in Riyadh in 2007 was 72. and Mecca. a joint venture between the Olayan Group and the MAF Group. Promod.20 5. Massimo Dutti.31 4. with new outlets planned for Riyadh. Umrah Plus services have been introduced to help increase the average length of stay of visitors who are arriving for their yearly pilgrimage to Mecca by including leisure tourism as a purpose for those who are only visiting for worship. With these visions successfully being implemented. IMF. Meanwhile Savola Group. due to the difficulty that women have in entering the Kingdom.8% change from the previous year.9% change from 2006. On the other hand. and into smaller cities and outlying regions. Riyadh and Medina. tourism development plans in Jeddah have been approved by Prince Khalid Al Faisal.000 sq metres in a deal worth $133m.840 124. The group now has about 50 international brands in its portfolio including Zara. The tourism commission proposed a development project in the desert. HOSPITALITY: Increasing visitor arrivals each year have always been a challenge for the government because of its interest in maintaining the Kingdom’s unique cultural and social integrity. The hypermarkets will be located in Jeddah.000 new housing units within the next five years. plan to add to the supply in the Kingdom. such as Le Méridien Hotels and the Kempinski Group. RETAIL: As the largest retail market in the GCC region. the tourism sector is expected to reach a total value of over $25bn in the next decade.000 Household consumption expenditure ($m) 98. which already has two. Currently.000 26.519.1% in Luxor and 76. Oxford Business Group . Tourism and hospitality attractions that have been identified include diving at the Red Sea. Aldo and Monsoon. and leisure tourism in cooler climates close to the border with Yemen. Over the next six years.0 11. Taif.40 SAUDI ARABIA developer KM Properties have forged a joint venture.811.897. which is known as KMPK Properties. a 29.2 13. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 23. Saudi Arabia-based Al Sadhan Trading Company has said that it plans to open 20 hypermarkets in the Kingdom within the next three years. The aim of this venture is to create approximately 16.11 6. An increase in non-religious tourism has the potential to compromise the religious views of the Kingdom.8 Inflation (%) 2. with about a dozen tourist sites situated in mountainous locations. available retail space will nearly double. which represents a 34.694 109.7%. New initiatives under the Jeddah Tourism Development Plan include the establishment of a largescale tourism project in Jeddah. The Fawaz Alhokair Group controls one of the largest mall networks in the country. covering over 100. with a revenue per available room of $133.1 15.697. is aiming to establish an additional 20 stores across the Kingdom by 2015. which manages 14 shopping malls in Saudi Arabia.276 Growth rate (%) 21.000 sq metres – about 30% of the total mall GLA in Saudi Arabia – with plans to open 12 more malls by 2013. room prices are at peak rates throughout the Saudi Arabia: retail indicators.000 24. French supermarket chain Carrefour has said it will open four new outlets in Saudi Arabia before 2009. Medina and Khobar. the majority of revenues generated in Saudi Arabia within the hospitality sector come from business and local tourists. French retail chain Géant plans to double its existing representation in Saudi Arabia by opening five new stores in 2008. Average room rates were $183. Saudi Arabia has welcomed foreign investment from overseas. room rates in Jeddah tend to average about 60% of Riyadh prices.60 5.1 13. Adams.50 SOURCE: World Bank. has signed a memorandum of understanding for the first phase of a retail development at Medina’s Knowledge Economic City.000 26. making the rate of a single room at a five-star hotel about $160. and much of it will move out of Riyadh and Jeddah. the Kingdom established the Supreme Commission for Tourism.

41 Middle East Jordan Lebanon Syria Turkey Yemen .

any foreigner can purchase a house or land in Jordan. The town has seen the development of a series of coastal resorts. The growth has been the result of excess liquidity in the region due to high oil prices and the return of Arab funds back into the Middle East following the September 11.2bn).000 Population growth (%) 2. industrial. which will make it clear to investors where opportunities exist. representing a 23% rise when compared to the same period in 2006.000 5.78 4. Political unrest in the region has led to many wealthy Iraqi and Lebanese expats relocating to Jordan.96bn ($4. tourism. World Bank Oxford Business Group .0 SOURCE: IMF.30 2.3% and 6.859.354 GDP per capita ($ at PPP) 4606 4886 5140 5413 5712 6044 Average household size 5.2 13.062 25.615.12 5.3% respectively.7% in 2007 and an estimated 4.599.000 1.719.9 12.000 1.000 Unemployment rate (%) 13. Recent investments in the country are estimated to exceed $13bn.000 1.771. UN agencies and non-governmental organisations.8m ($106. Aqaba has seen dramatic growth and is an area marked for particular investment. The king has called for the implementation of a complete land-usage plan for the entire kingdom.994. the construction sector’s contribution to GDP increased to JD74. However.30 2.68 Labour force 1.0 12.0 11. the market has been showing signs of a correction since the beginning of 2008.667. 2001 terrorist attacks on New York.273.29 2.30 2.42 JORDAN Jordan Great potential for further development remains in certain areas Jordan’s economy experienced high growth rates in 2005 and 2006 – 7. Ayla Oasis. which is also being used as a gateway to Iraq by foreign firms. According to the Department of Land and Surveys. 2006-11 Population 2006 2007 2008 2009 2010 2011 5.101 16. During the first quarter of 2007. with land and property prices stabilising and. Aqaba and the Dead Sea. Royal Village and Jordan Gate are major upcoming projects in the kingdom. A number of mixed-use residential and tourism projects are under development in Amman. provided they wait five years before selling.5 13.728. the total value of real estate transactions in the first six months of 2007 was JD2. which grants tax exemptions and allows repatriation of capital and profits.01 4.512.011 18. Permission to buy generally does not take more than 10 days to obtain. like the Investment Promotion Law.2m) compared with JD69m ($98m) recorded for the same quarter in 2006.132. with a mix of residential. The correction has been anticipated ever since the beginning of 2007. A number of governmental measures.000 6.30 GDP ($m at current prices) 14. hotel and high-end leisure developments.000 1. including the $6bn project Saraya Aqaba.30 2.855 23. prices have even declined slightly. while planned investments over the next five years are reported to be around $15bn. in some areas such as the airport corridor. Tala Bay. are helping to create an investment friendly environment.563. especially in the residential and hospitality sectors.000 1. housing and urban development.000 5.000 6. There are few restrictions on foreigners owning property or investing in Jordan.508 20. it has designated areas for agricultural.90 4. Jordan is seeking further ways to stimulate and encourage investment and development in the country. as the increased prices Jordan: economic and demographic indicators.000 5.8% in 2008. with growth slowing only slightly in the last two years – 5. All these factors have resulted in a buoyant real estate sector.21 5.

OBG Modelling suggests that grade A supply is expected to grow by over 250% between 2008 and 2013.299 1. whereas between 19. The Abdali project alone will cater to more than half of the market demand.223 3. Though demand for these units will increase.1 Average stay length (days) 3 3 3 3 3 3 Total stay-nights 2.173 3.069. RESIDENTIAL: The residential market in Jordan is undersupplied and is saturated with middle-income housing units. with a median age of just 24 years and 32% are under the age of 15 years.232. Expectations for the long term are positive. demand is greatest at the highest and lowest deciles of the housing market. Upcoming projects are expected to contribute to a high-end supply in excess of 2000 units between 2008 and 2013.886 3.687. However.JORDAN 43 were not believed to be sustainable. Other upcoming commercial projects are the Jordan Gate. Selling prices for a high-end villa in Abdoun range between JD1700 ($2400) and JD2000 ($2800) per sq metre. A high proportion of current demand is driven by companies and non-governmental organisations operating in Iraq. Rents have risen by a compounded annual growth rate (CAGR) of 65% between 2004 and 2007.741 1.5 7. has resulted in a dramatic increase in the number of new companies being registered. but have started stabilising towards the end of 2007. real estate experts expect that the market has strong fundamentals and so demand and prices will start picking up towards the end of 2008. The population is currently growing at a rate of 2. The undersupplied position is expected to change in the next few years. Thus. which offered small office space lacking in market appeal. the rental costs for office space have increased. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. by an estimated 30-50% since 2003. The price increases since 2003 are not sustainable and further hikes should not be expected. many tenants opted instead to convert space in villas or apartments.000 and 24. as the massive pipeline supply and a downturn in the economic cycle could serve to dampen price growth. Commercial yields in Amman are estimated to range between 9% and 11%. with areas like Abdoun and Jabal Amman enjoying occupancy rates in excess of 90%. there was little grade A office space available in Amman. OBG Research THE MARKET Real Estate 2008 .7 7. Additionally. However.389 Tourist arrivals growth (%) -6.295 1. with Beitna City and Al Jiza being the only two significant developments targeting the group. while upscale.7 11. With demand increasing and a limited supply. while villa rentals as well as sale prices rose by over 90% in Dabuq. further increases are likely. which are delivered rapidly. which sees only half the demand being fulfilled with new supply every year. falling to 8-9% in 2007) and longer payment schedules have also boosted the sector. Office supply was instead concentrated in threeand four-storey buildings. while annual rentals range between JD80 ($110) and JD100 ($140) per sq metre.5% and 9. Annual demand for residential units in Amman varies from 20. Unsurprisingly. Changes to the landlord and tenant laws have led to the expectation of higher rents.002. until very recently. creating a surplus market. Rental yields are estimated to range between 7.7% in 1999. A number of factors are largely responsible for the high demand for housing.2 7.696. However.961. Jordanians are also very young.207. Apartment rentals in Jebel Amman rose by over 150% between 2004 and 2006.149.449.and low-income housing as developers ignore this sector.541 1. Attractive mortgage packages with low interest rates (12. free zones and incentives for foreign investors. well-serviced properties command yields of as much as 12%. returns are expected to be higher for middle.000 to 30. Up to 10% of this demand is derived from the high-end sector.168 SOURCE: Local statistical authorities.& 5-star guests) 895. rents have increased by as much as 56% between 2006 and 2007. COMMERCIAL: Jordan’s favourable legal environment. Occupancy rates for residential property range from 70-90%.5%. once the Abdali project reaches completion. the ban on Iraqis from owing properties in the country has negatively impacted demand. on average. as well as the stability of the economy. as people fearing significant rental increases have been opting to buy.3% and is expected to double in the next 25 years.724 1.007.9 6. which Jordan: tourism and hospitality indicators.000 units. the Grand Amman Financial Complex and the Mihrath project by the Kurdi Group. with Mecca Street reaching a potential of JD160 ($230) per sq metre in the next six months. in the short term.624 3. with numerous free trade agreements. Among the newer and higher quality grade A on Mecca Street.896 3.000 units are believed to be constructed every year.320.

They require hotels and the government has offered additional incentives to investors in these areas. International Macroeconomic Data Set Aqaba Saraya Hotels.0 Inflation (%) 6.132. Climate-controlled malls have sought to appeal to wealthy Jordanians who have traditionally travelled abroad for their shopping experiences. The development was a huge success and was later extended to 195. Annual rents in malls range between $500 and $1000. Amman Mall and Istiklal Mall. Aqaba has been experiencing renewed interest from tourists. the downtown area has been Amman’s principal shopping destination. though average stay lengths are typically short. indicating that the market might be moving towards an oversupply. allowing the shopping mall to accommodate a series of leading international brands. Occupancy rate in Aqaba are higher than in Amman. as well as a food court and a go-karting track on the top floor.796 24. Retail space per capita is modelled to reach 0.000 5. RETAIL: Traditionally. IMF. Jordan Mall and the Abdali Boulevard.461 21. Amman is the top destination for foreign visitors to Jordan and accounts for approximately 67% of the hotels in Jordan. places such as Ajloun. Abdoun Mall.599. although a large number of developments coming online over the next few years may change the situation. These new projects are estimated to double the total volume of organised retail space from 600. resulting in a decline in the average occupancy rate to just over 50% by 2013. Taj Mall.44 JORDAN is expected to dampen rents as the market moves towards a huge oversupply situation. Sanabel.728.000 6. Rents have reportedly risen at a CAGR of 36% between 2004 and 2007. which in 2003 opened Amman’s first grand mall.0 12.32 3. which is considered relatively high when compared to other regional markets. There is a high volume of indoor shopping space under development in Amman: Al Baraka Mall.000 Household consumption expenditure ($m) 13. While Amman’s shoppers have embraced mall and supermarket shopping. while a number of international developers are working towards building room infrastructure to accommodate the increased demand. which opened in 2001. Nevertheless.000 sq metres. Other local shopping malls include the Zara Centre. Karak and Umm Qais are virtually untouched. it is worth noting that the north of the country still remains largely underdeveloped in terms of sizeable projects. The first mall that opened its doors in 1999 was the relatively small Amman Mall.87 6. Crowne Plaza. is part of Jordan’s Kurdi Group.and five-star rooms enjoying an average occupancy of 62%. Kempinski Hotel and Holiday Inn are some of the upcoming hotels. Approximately 2000 rooms are expected to enter the high-end segment between 2008 and 2013. Jordan: retail indicators. Aqaba and the Dead Sea.852 15. Ayla Hotels. with approximately 75 shops. high footfalls do not necessarily translate into high per-capita spending.51 4. which are limited to Qatar’s “The Wall”. Jerash.000-sq-metre Mecca Mall.994. with the number of foreign arrivals increasing by 8% in 2006 to reach 3.000 5. the high-end retail market has followed the residential development of the city westwards and a number of malls have been built to cater to the needs of the western suburbs. Other locations are also gaining prominence. Opportunities still exist in the north of the country. Holiday Inn. Further expansion within the sector is expected and OBG forecasts capacity to exceed 7000 rooms by 2013 with hotels such as Hilton. According to information provided by the Jordan Tourism Board.412 Growth rate (%) 13.514 17.5 12. The market is concentrated on the luxury hotel and spa experience. Rotana and W coming into the market.859.376 19. HOSPITALITY: Jordan has continued to see a healthy flow of foreign visitors entering the country. which is a tourist resort in Ajloun. the number of tourist arrivals in Jordan is expected to grow at an annual rate of 7% by 2010. the 65. But forthcoming supply (Sun Days. Oxford Business Group . Belavista and Crystal Citi) will make the hospitality market in the Dead Sea highly competitive. The Abdoun Mall.26 5.0 12.0 12. Nevertheless. Beitna Mall.46 sq metres in 2013. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 5. Iberotel. The rising cost of living is one of the major reasons for the slowing in retail spending.000 6. Amman has a total of over 5000 four. these new projects are expected to come close to saturation of the hospitality market in Amman. with the most expensive commercial spaces to be found in Abdoun Mall and the least expensive in Amman Mall.39 10.2m-sq-metres by 2013.273.72 SOURCE: World Bank.2m. The Dead Sea is becoming a popular stop on upmarket group tours of Jordan. Together.000 5. SAS Radisson.000 in 2008 to over 1.0 12. Irbid. Hilton International.

shopping malls and hotels.31 GDP ($m at current prices) 22. to continuing troubles over redevelopment of wartime damage elsewhere.340 2.640 26. BREI.31 1. Kingdom Holding and Kempinski Hotels. Foreign trade exports have remained relatively stable over the past four years. CARE Group. South and Mount Lebanon. KEY DEVELOPERS: A substantial number of local developers have been taking part in projects in the residential and commercial sectors recently. The most popular destinations for the majority of foreigners are Beirut and Beqaa. inflation has risen to at least 7% during 2008.4 1.775 29. developments in the capital and neighbouring districts have not slowed down. Local developers have also been introducing a higher standard of commercial and residential space. Beqaa.09 4. Jacques Matta.000 sq metres and has future plans to transform it into residential units.LEBANON 45 Lebanon Things have turned around for the real estate sector The real estate sector in Lebanon is currently considered more stable than it has been in recent years.950.507.30 1.899.32 1.961 13. North. Imports dropped off significantly in July 2006.19 4. including the Dream Bay and Sky Homes developments.719 Average household size 4.4 1. including Solidere.540.000 3. with around 40-45% of the population living in the capital. Lebanon has six governorates: Beirut.751. This trend is being pioneered by local developer.4 1.340 2.4 SOURCE: IMF. Mouawad Projects.04 3.443.28 1. from rocketing land and property prices Lebanon: economic and demographic indicators. Lebanon’s population this year is estimated to be around 3. Jamil Ibrahim.660 2. Up until the time of writing.000 3.849.000 3.277 12. Foreign developers that have entered the market and established themselves in Lebanon include Abu Dhabi Investment House.573.270 11.14 4. Despite all the recent political sensitivities. SAYFCO.703. Most of the projects are financed heavily by companies and investors that originate in the GCC and the tremendous amount of investments made in the central district has facilitated the successful completion of the majority of projects.607. An increase of over 8% in GDP and 6% in inward remittances was recorded in 2007.799.980 2. imports of goods have increased by 50% in 2008 compared to four years ago.000 Population growth (%) 1. 2006-11 Population 2006 2007 2008 2009 2010 2011 3. leading to a number of events that have traumatised the nation.4 1.4 1. RESIDENTIAL: The Lebanese real estate sector is one of contrasts: from the brilliant success story of the development of the downtown area.340 2.692 11. Beirut.475. DAMAC has purchased a total area of 500.7m.745 34. It is accepted wisdom that cash has been flowing in the country since the early 1990s as a result of interest from buyers from Gulf Cooperation Council (GCC) countries. World Bank THE MARKET Real Estate 2008 . but other than that decline.000 3. Nevertheless. Interest rates on deposits have generally been stable following the substantial increase that took place in early 2005. Horizon Development and Ven Invest Holding.98 3.000 3.759 24. Nabatiyeh. Political stability has been extremely fragile over the years.93 Labour force 2.690 12.365 GDP per capita ($ at PPP) 10. construction activity does not appear to have been affected in the capital.000 Unemployment rate (%) 1.103 31. who has been developing several of the most luxurious residential buildings in the centre and outskirts of Beirut.30 1.

Office supply in 2007 in Lebanon was estimated to be approximately 320.29 4.048 20. which saves money for tenants.000 3. Rental prices on the city’s outskirts could be as low as 60% in comparison to those in the centre of the capital. In rural areas too.06 5.799.to 50-metre office could cost anything from $500 per month to around $900.751. yachts.382 22. There are also several prime locations around Beirut that are highly populated with luxurious villas and apartments. However.76 SOURCE: World Bank.1 in 2007 and an estimated supply of over 160.922 Growth rate (%) 3. Construction for retail.7 3. increasing by over 25%.000 3. This has forced several firms leasing space to relocate mainly to the south and north of Beirut. in the east and north of Lebanon ownership of traditional houses is very popular.849. residential and commercial purposes has been moving towards the centre of Beirut because of its prime location. which is making it harder for residents to buy homes. Many international firms expect to set up branches in Beirut in what they consider to be quality premises in 2008. International Macroeconomic Data Set ple from the Gulf. to underinvestment in the isolated villages of the north and south.190 20. peaking in 1974 with 1. Prices in prime locations in Beirut start at around $1300 per sq metre and can reach as much as $3500 per sq metre.000 3. With an average annual population increase of almost 2%. Another widely popular way of setting up an office in Beirut is renting out apartments and fitting them with office facilities. which could affect the profits of small businesses in the long run. Not only do prices tend to fall outside Beirut. Buying prices now could reach as much as $5000 per sq metre in central Beirut. Getting a license and setting up a real estate office or workstation in one’s own home is also popular in the more mountainous areas around Beirut. Citizens in the capital prefer to rent homes rather than own them. The shortage of quality in office buildings has been the main reason that rents for commercial spaces rose by 20% in 2007. International standard space remains concentrated in the central business district. although they are still close enough for their clients to reach them. On the other hand. Achrafieh and Adma. Renting out a 30. This relocation has not been a serious problem for banks and larger tenants. The increase in the price of steel and several other materials has affected construction costs worldwide.703.2 4.5 3. since prices for office space are noticeably higher.650 21. They have a huge potential of becoming the most sought-after spots in the capital after the central district.50 5. including Al Rabieh.000 3.000 3. Lebanon was a Mediterranean playground for rich Western Europeans who jetted in for beaches.57 4.167 22. COMMERCIAL: The lack of high-end office space in Lebanon has been building up over recent years and many potential tenants have been left in great need of new premises.5 3. Nevertheless.950. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 3.87 3. a decrease in average household size from 4. These businesses are now outside the city centre.000 Household consumption expenditure ($m) 19. HOSPITALITY: Before 1975.4m arrivals.000 residential units in the city alone.4 Inflation (%) 5. villas and apartments in prime locations are mostly second homes for peo- Lebanon: retail indicators. where high-end office space is available. Occupancy of studios and one-bedroom apartments around university campuses is over 95% throughout most of the year — a popular alternative for students to residing outside Beirut and having to commute every day to university. the contrasts can be stark: between investment in high-end mountain villas and resorts.2 to 4. IMF.0 3. at the zenith of the industry’s success. a few areas have shown great promise and high demand. such as Verdun and Ashrafieh. but also many families have owned the houses they do today for more than 30 years.000. Rental and buying prices throughout Lebanon have been affected significantly over the past eight months. although rising costs and the rehabilitation of buildings in central areas is now forcing some occupiers from central Beirut to move to outlying areas.899. and that the tradition of living with the family until marriage is slowly becoming less popular. tourism contributed around 20% of GDP. depending mainly on the location. to a flat-at-best housing market in other towns and cities. Prices have doubled in these areas on account of their strategic locations. which still occupy vast office spaces and entire floors in many downtown areas. world- Oxford Business Group .46 LEBANON in the capital. it appears that the number of single people renting out studios and one-bedroom apartments is increasing.

which significantly lowered footfall in 2006. There are tourist sites that receive thousands of visitors yearly. which makes it easy for international brands to enter the market and establish themselves in retail outlets. the developers hope that the high-end souks will become a destination shopping centre. Despite the movement away from the capital by retail outlets.2 12. The continuous success of ABC group has allowed it to open yet another branch in Amman. Most are not considered five-star hotels. It is located in the central district. it is estimated to soon account for over 10% of the total GDP. However. In the mountains. But since the war ended in 1990. The retail industry in Beirut has always been recognised in Lebanon for the sophisticated international brands it is able to offer customers. with Beirut traditionally one of the Middle East’s first destinations for high-end shopping. City Mall.313 267. The retail sector was heavily affected by the July 2006 war. This change shifted the spotlight to other neighbouring areas. The war halted this trade and reduced both the industry and the country to rubble.5 2.5 2. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.000 sq metres of rental space. including the famous six-column temple ruins that were constructed from the Roman period. The residents of Beirut have always been very fashion-conscious and the latest trends are closely watched by young Lebanese in most urban centres.8 12. OBG Research THE MARKET Real Estate 2008 .000 sq metres. another successful establishment. the potential of the hospitality sector has looked promising. covering 70.2 12.5 2. RETAIL: The gross leasable area for retail in Lebanon is estimated to be in excess of 340.500 944.782 668. the situation in Lebanon has become far more stable and tourists are feeling far more secure.& 5-star guests) 212. hotels tend to combine with resorts. Tourism was still down by the end of 2006 because visitors were advised not to travel to Lebanon and they remained uncertain about the future stability of the country. Lebanon: tourism and hospitality indicators. These are just some of the attractions that have given Lebanon a unique reputation as a place where people of all ages and interests can enjoy historical sites or leisure tourism. The hospitality sector was affected greatly in the July 2006 war when thousands of tourists fled back to their countries and thousands of other reservations were cancelled. which has opened in Ashrafieh.467 750. The tourist visitor count has been increasing since the beginning of the year.5 2. After the recent presidential elections. covering over 100.2 Average stay length (days) 2.000 sq metres of land. The Ministry of Tourism has pointed out that tourism has gone up by approximately 75% with an evaluation of year-to-date comparison.665 Tourist arrivals growth (%) -6.387 300. is located in north-east Beirut.400 238. With the economy regaining its strength from the tourism sector. and Bab Idris in downtown Beirut. many of which use Lebanon as a springboard into the Gulf. but they fill the gap and meet visitor expectations. The Great Court and Jeita Grotto. Research shows that incoming tourists often set a separate budget for buying clothes. total arrivals are projected to reach 1. visitor arrivals have picked up significantly in 2008 and with tourism this year considered stable.000 595. Hotels are currently working to regain the occupancy levels they once had. but did not expect profits. They have been reducing prices and offering room rates at about 80% of the price of the Middle Eastern average. rents in the central district are still higher than in most other areas. The fashion-conscious pop- ulation welcomes international brands. With the election of President Michel Suleiman.5 Total stay-nights 531.5 2. One of the latest possible developments planned for completion in early 2009 is the Beirut Souks. A number of popular malls in Beirut have established and developed a well recognised name for themselves throughout the country. A few recognised brands were forced out of the capital. including the ABC group.2 12.5m. a 30% yearon-year decrease on Lebanese room rates. With occupancy rates in 2007 still low. With the opening of Beirut Souks. Jupiter Temple. the industry has steadily rebuilt itself.600 377.000 841.2 12. With the political situation becoming more stable in 2008 and tourism taking off once again. Dbayeh.LEBANON 47 class historical sites and a seductive mingling of East and West. with more than 30% of the arrivals coming from neighbouring Arab countries and most of the rest coming from Asia and Europe. hotels could just cover their costs. justifying its high rents.163 SOURCE: Local statistical authorities. it is expected that the market will return to its previous conditions.000 336.

well below the government’s own projections of more than 5%.867.791 6. Contractors regard 2006 and 2007 as the beginning of a phase of real growth. CONSTRUCTION: The government has traditionally dominated the country’s construction sector.5 12.003. The recently approved five-year plan has reinforced reform.30 Labour force 5. World Bank Oxford Business Group .919 37.767.368.45 2. the highest growth rate recorded by the country over the past few years. which represented a compound annual growth rate (CAGR) of 55% since 2002.941. 2006-11 Population 2006 2007 2008 2009 2010 2011 18.45 GDP ($m at current prices) 34. While it still holds the lion’s share of development.48bn ($28m). stressing the importance of further trade liberalisation. As a result of these goals. engagement with the outside world. more international companies are now looking to establish a presence in Syria.7% and 4. Nominal GDP grew by 18% in 2005 to reach S£1.30 5.000 20. in addition to the problem of declining oil revenues. Many reforms are aimed at improving financial intermediation. the government aims to accelerate growth to an annual rate of 7% by 2010.316.000 5.6% for 2007 and 2008.40 5.000 19.033 46. A number of economic reforms have been introduced to counter these challenges. but the sector remains crucial to the economy. Syria is not a major oil producer in the region or on the world stage. Through these reforms. These years were marked by the entry of a significant number of high-profile Gulf investors funding major development projects around the country. This reflects the very serious attention that is being paid to Syria by other Arab and foreign investors who are looking for new investment opportunities. unifying the exchange rate. The IMF also predicts a real GDP growth rate of 3.760 41.462.000 5. enhancing the business environment in the non-oil sector.5 12.4m sq metres.405.369 45.612.000 20.865 Unemployment rate (%) 12.000 Population growth (%) 3. Syria’s foreign direct investment as a percentage of gross fixed capital formation climbed to 10.923 43. In 2005 the total amount of construction area in Syria stood at 16.676 GDP per capita ($ at PPP) 1844 1946 2109 2129 2158 2183 Average household size 5. Syria: economic and demographic indicators.000 19.772.5 12.45 2. with growth in the textiles sector being the most significant. which accounts for approximately 26% of GDP and employs around 18% of the labour force.000 21. CHALLENGES: The country faces a number of fiscal challenges. contributing 50-60% of total export earnings and up to 25% of GDP.5 12. it has decreased its control in the past few years and has worked to encourage the development of private sector investment. the freer flow of goods and the need to attract foreign investment.45 2.000 5.48 SYRIA Syria Gradual and steady growth Economic growth in Syria has been consistent for the past five years at an average rate of 5%.378.6% in 2006 from just 3.5 SOURCE: IMF.000 5.40 5.880. and strengthening the monetary policy framework as a means to reinforce market mechanisms in the pricing of financial assets and ensure the most efficient allocation of private sector savings.40 5. accounting for 35% of the total Syrian industrial sector.40 5. The economy is also heavily reliant on the agricultural sector. Industry and manufacturing account for 18% of GDP. lower the unemployment rate to 8% by 2010 and reduce the number of people living in poverty.19 2.6% in 2003.5 12.45 2.

059 1. such as wireless or broadband internet. As estimated by OBG. parking is inadequate and there is no provision of amenities. while floor area in square metres has gone up from 35m in 1970 to 212m in 2006. Due to a serious lack of office spaces with good infrastructure facilities. such as Malki. many offices are moving to residential areas.197.SYRIA 49 Opening up the private sector is part of an overall government strategy to counteract the effect of falling oil revenues by encouraging investment in other sectors.0 10. Grade B and C office spaces are available in Jameliah and Aziziah. while rentals have increased by up by 40%.0 11. while Aleppo too has been witnessing considerable increases in rental and sales rates.625.414 3.to middle-income areas tend to cost $1000 per square metre and up. Construction and real estate have been targeted as two essential areas that are ripe for development.204 Tourist arrivals growth (%) 10. a result of the propensity to purchase homes rather than rent. but saw interest from over 16.0 10. Residential prices in the prime suburbs of Damascus. Most such activity has so far been concentrated in Damascus. In Aleppo there is no current availability of grade A office spaces although it is expected that the Tariq bin Ziyad area would accommodate office spaces in this category. Hamdanieh and Shahba have been witnessing a construction surge with luxury villas and apartments in high demand. Damascus.221.24% of total expenditure. situated next to Martyrs’ Square in the heart of the capital.254. Housing prices in the capital. but also the right size. OFFICE SECTOR: The structure of the Syrian economy limits private sector participation.925.8 1. with increasing activity being seen in Aleppo and other secondary cities. both for renting and buying. Major companies have had difficulty in finding not only the right type of office space.000 in 1970 to over 2m in 2006 at a CAGR of 4.0 10.110. Residential supply has gone up from 2m sq metres in 2001 to over 15m sq metres in 2007.659.477. Also once the two Awqaf buildings are complete there will be a flow of affordable office and retail spaces in the market.482 1. The bottom 20% of Syrians account for only 7. The Iskan Al Askari Housing Association announced an apartment development near Bab Jnien in Aleppo with a mere 186 units. Damascus Tower. the building is in serious need of renovation. Many companies in Syria choose to rent residential space and use it as an office.000 individuals.998.25%.230 1.6%.165 1.8 1. The residential market reflects the recent changes to both the Syrian economy and demography. whereas the top 20% account for 45. It is reported that over 170. Shell was originally housed in the Cham Palace Hotel for a number of years until the government constructed office space for the company outside of Damascus.097 2. OBG Research THE MARKET Real Estate 2008 .3 Average stay length (days) 1. RETAIL SECTOR: Syria is classified as a mid-income country by the World Bank.417. showing a CAGR of 5.8 1.1%.907 2. The Areeba mobile phone company sought to obtain 20.8 1. with regional authorities working on the planning documentation and strategy that are needed as development activity across the country.767 SOURCE: Local statistical authorities. with striking disparities between the various components of society. New Aleppo.8 Total stay-nights 1. illustrating the shortage of lower income housing. are between $3000 and $4000 per sq metre. Mezzeh and Kaffersusse. although 2007 Syria: tourism and hospitality indicators.054 1.343.467 2. with a resulting lack of prime office space across the country.8 1. while prices in low. The 24-storey tower offers some 550 offices and has an occupancy rate of over 90%.0 10. The large youthful population is in need of lowto middle-income housing.000 people are on the waiting lists of housing associations in Aleppo alone. Public sector salaries are low. Residential prices in secondary cities are reported to have risen by over 20% in the last two years. even in the capital city.& 5-star guests) 1. RESIDENTIAL MARKET: Data from the Syrian Bureau of Statistics has shown that the number of residential units has risen from around 400.698 2. is regarded as prime space. rival those in European capitals. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. Planning has also taken a step forward.808. at 4-5%. the current vacancy rates in existing building in both Aziziah and Jameliah are 10%.000 sq metres for its business and has only managed to satisfy this partially by spreading itself across some 20 different locations. despite the fact that the building is hopelessly outdated – offices measure a mere 35 to 40 sq metres. Rents per sq metre begin at $100 per sq metre per year and climb to close to $400 per sq metre in Abu Roumani. Average rental yields sampled across Syrian cities are still relatively low.

Town Mall.576 36.000 sq metres. Currently the country has 17 five-star hotels.5 13. 37 four-star and 54 three-star. RETAIL: Retail in both Aleppo and Damascus was.867. Cairo Mall and Royal Mall are among the projects under construction. suggesting that many visitors are happy to pay a premium for luxury.533 41. Per-capita space in Aleppo is expected to rise from 0.00 6. supply of retail space will witness a tenfold increase to 200.405. With the influx of business and leisure tourists to the country.00 5. The highest standard rate is posted by the Four Seasons Hotel in Damascus.368. Only a few foreign brands operate in the country at present – Sheraton. over 2006. supply is often limited during peak seasons.000 sq metres by 2012. which are in the pipeline. Apart from these.395 24. Manar Mall.0009 sq metres to 0. IMF.941. At present. A number of malls are currently under development in the city and if all these projects are completed.880. the 3500-sq-metre Town Centre. HOSPITALITY: With less than 40.000 20.000 sq metres. Occupancy may however further drop in the near future as a result of 500 new rooms being released over 2008. the average standard rate for a five-star room is $158 per day and $117 per day for a fourstar room. between 400. and a smaller Semiramis chain of four. Further on there will be a steady increase in the number of available rooms until 2010. the 10. Rotana and Sofitel.50 SYRIA did see the minimum wage being raised from S£4800 ($100) to S£5880 ($123) per month. street trading and local markets.039 sq metres in 2012. Oxford Business Group . fashion outlets and higher-class retail in high-end residential areas like Mogambo in Aleppo and Malki in Damascus. with the addition of the Shams Centre and Town Centre’s 20. Retail centres now open in Damascus are all under 20.033 sq metres in 2010 and 0. There are no internationally operated retail centres in Syria but the pipeline indicates a number of Gulf and Arab joint ventures with Syrian government bodies.00 7. which includes two hotels in Damascus. average revenue per available room across the market was just $86.000-sqmetre extension the most sizeable project. PAYING A PRICE: Hotel rates are comparatively steep for the existing quality of facilities and services.500 sq metres that currently exist.064 27. centred on its historical souks. Lebanon and Turkey. respectively.000-sqmetre Shams Centre and the 6000-sq-metres at Skiland were released in 2007.0 15. and often still is. The average hotel occupancy throughout the year in Aleppo is 60%. up 22% on 2006. with OBG estimating supply to be less than 20. The $50m Shahba Mall. out of which the major share would be at the Rotana and Riga Palace.000 sq metres of leasable area will be delivered to the market by 2012.000 19. However. New Mall. Damascus has seen a rapid growth of retail supply. Shopping City and Aziziyah Centre are the primary shopping centres in Aleppo. while New Town and Safeway are its first hypermarkets. In addition. the hotel sector is significantly underdeveloped in Syria. High Education Mall. International Macroeconomic Data Set extension building supplying a huge increase In Damascus. Mounchieh Mall.00 SOURCE: World Bank.09 sq metres. including both international chains and boutique hotels.005 sq metres to 0.7 14.5 18. almost 50% to 65% above what other similar establishments charge.000-sq-metre Syria: retail indicators. In the last few years. Both cities do have a few boutiques. investments in hotels are flourishing with over four new high-end hotels that will be integrated into mixed-use developments being planned in Damascus.9 Inflation (%) 10.6 15.000 Household consumption expenditure ($m) 20. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 18. Many of these investment projects are incorporating a retail component.000 beds nationwide.000 and 440. but these are more the exception than the rule. despite the current economic downturn in Lebanon following continuous political tension in Beirut. Four Seasons. The extension opened in 2006 and the 9000-sq-metre City Centre. which charges up to $255 per day. the city lacks formal retail space. many of poor quality.989 Growth rate (%) 7. and contributing to an increase in the city’s space per capita from 0. Le Meridien.000 21. with four five-star and 11 four-star hotel establishments totaling just over 2500 rooms. as there are many new hotels.58 7.378.and five-star properties.000 20. In view of further growth. Syria is still quite undeveloped in Western retail terms when compared with its neighbours in Jordan. there is a local Cham Palace chain of five-star hotels.00 7. More than half of Syria’s hospitality supply is located in Damascus. adding to the 41.784 31.000 19. Martini Mall. a record 20% to 40% rise. with Town Centre’s 20.

Homebuyers have held back.301 758.689. But developers still believe that the real estate market will be one of the most successful industries in Turkey in a decade and development is continuing Turkey: economic and demographic indicators. waiting for interest rates to drop and for house prices to fall.2 10. But with the constitutional court’s August 2008 decision not to ban the ruling government party. Foreign investors are relieved by the fact that the IMF is examining the Turkish economy and risk while it is in technical negotiations for a standby arrangement for a $10bn loan. its recent political unrest is threatening economic stability as well.000 23.000 24.2 10.133.2m during the same period in 2007.754 11.419 748. with high interest rates persisting.700. with more than 65% of the population living in urban centres and with a rate of urbanisation that stands at 2.000 Population growth (%) 0.300. however.000 Unemployment rate (%) 10. although growth slowed down considerably to 4.149 853.30 Labour force 24. expected to finance the relatively large current account deficit and enable Turkey to meet its external debt payments. The inflows are.12 1.30 4.5% in 2007 and is expected to grow at this rate through 2008 and 2009.34 1.15 1. subsidising interest rates on housing loans to entice home-seekers into acquiring property at a time when interest rates would ordinarily be considered too high.010 GDP per capita ($ at PPP) 7760 9629 10. The demographics of the country are favourable to the real estate sector.37bn from $9.530.2 10. there are many couples looking for new homes.000 72. With 400.740. The construction sector grew by an estimated 17% in 2007.000 68.2 10.000 24. World Bank THE MARKET Real Estate 2008 . real estate companies continue to take measures to increase sales.301.738 10.000 to 500.15 1. The progress of the country’s EU membership bid is slower than ever with the negative impact of the political situation. Since 2003 GDP has grown by an average of 6. Higher interest rate payments cost the treasury $16bn from March to July in 2008.2 10. and also to export earnings.30 4. This is despite the low margins earned from such sales.30 4.30 4.TURKEY 51 Turkey A growing economy and population offer great opportunities Although Turkey has come a long way in terms of its economic recovery and financial markets. the stock market index has responded favourably and risen by 2%. slowing down from 2021% in the previous two years.827 Average household size 4. while the average household size is declining.2 SOURCE: IMF.880.121. 2006-11 Population 2006 2007 2008 2009 2010 2011 68. Meanwhile. Construction and real estate are very important contributors to GDP.686 663. The total FDI in 2007 amounted to $22bn. About 70% of the population is under the age of 30.025 807.9% annually.000 70.000 23.15 GDP ($m at current prices) 528.491.15 1.30 4.897. while economic forecasts have improved.000 marriages a year. but it has not yet had a sizeable impact on the market. Total foreign direct investment (FDI) decreased sharply in the first quarter of 2008 to $4.000 23.000 71.399. Sluggish GDP growth and the subprime crisis have negatively affected the real estate sector.320 11. with Turkish contractors realising development planning from North Africa to Asia.000 69. Real estate transactions reduced drastically in the first quarter of 2008.7%. In February 2007 the government introduced a new mortgage law. The govenment are not expected to be start following all of the EU conditions for at least the next five years.

760. Currently the construction sector is experiencing some delays. with Etiler and Maslak also emerging as important business centres. TML Construction Co. Office towers for Oxford Business Group . with public spending being curbed by restraints placed on government expenditure by IMF Turkey: tourism and hospitality indicators. and Sama Dubai. This supply should be readily absorbed. Baytur Construction & Contracting Co. with just over 160.000 2. Until now supply has been keeping pace with demand.000 4. indicating high demand in the market. Levent is considered to be the most important central business district of Istanbul.13 people.928 8. With high population growth and urbanisation rates. the recent downturn notwithstanding.702 SOURCE: Local statistical authorities. Summa Turizm Yatirimciligi AS. creating an average household size of 6.000 2. especially in infrastructure projects.448. three on the Asian side and another six on the European side. resulting in increases in rents and a decline in vacancy rates. where an ever-increasing number of multinational firms are establishing themselves. More than 50% of all construction activities in Turkey are in the residential sector. Prime office space is scarce in Istanbul.5m. The grade A office market is spread across nine separate business districts. and will go some way to meeting demand.700. Annual rents for offices have risen sharply to $350 per sq metre at the higher end of the market. and are priced between $1200 per sq metre and $2000 per sq metre. Tekfen Construction & Installation Co Inc. with apartments measuring between 85 sq metres and 250 sq metres.640. They target high-income individuals rather than families and cost between $3000 and $4500 per sq metre. Hazinedaroglu Construction Group. Nurol Construction Co. STFA Group Co. Emaar. Istanbul currently has almost 1.000 5.7 28. GAMA Endustri Tesisleri Imalat ve Montaj. The main types of residential property can be distinguished as villas.6m registered residential units in Turkey. residential high-rises and mass housing. According to the State Institute of Statistics. Limak Construction Industry & Trade Inc. but recent reforms in the mortgage systems have made this sector more attractive.3% per year is estimated to require the construction of at least 300.850. Offices range in size from between 200 sq metres and 1000 sq metres around Istanbul. KEY DEVELOPERS: Leading contractors operating in Turkey include ENKA Construction & Industry Co Inc. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.7m sq metres of office space.175.537 6.52 TURKEY at a good pace.000 homes annually.000 houses in an attempt to meet rising demand. prices continued to rise in 2007-08.280.3 Average stay length (days) 2 2 2 2 2 2 Total stay-nights 3.851 Tourist arrivals growth (%) -12. measure some 300 sq metres and cost some $750.866 3.000 houses are obtained each year.& 5-star guests) 1. The Turkish residential sector has traditionally suffered due to the underdeveloped mortgage market. Residential high-rises are generally located in the downtown areas of major cities and apartments measure 90 sq metres to 800 sq metres. there are 11. Construction permits for a further 350. The Housing Development Administration has been establishing mass-housing schemes designed to cater to low-income families. Provision of B grade office space is increasing.351. Villas are generally located in the suburbs of metropolitan cities.724. OBG Research programme targets and EU ambitions.731 7.6 14.6 12. Foreign real estate developers are still interested in the market as well. Construction is largely being driven by private developers. given negligible vacancy rates across the city. RESIDENTIAL: The current population growth rate of 1. but the government is still under pressure to provide lowcost housing.5 16. with Gulf and European companies entering into joint ventures with Turkish developers through 2007-08. particularly on the Asian side.464 4.000 to $1.269 3.380. the demand for residential units is climbing. Alarko Contracting Group. A total of 6848 houses with affordable repayment plans have been put up for sale under the a current programme COMMERCIAL: Turkey’s formidable economic performance between 2001 and 2006. On the European side. It is estimated that Turkey will need some 7m new houses in the coming decade.6 14. but remains circumscribed by income. is reflected in a growing demand for grade A office space in Istanbul. Dogus Construction and Trading Co.177.000 sq metres in the pipeline. Current plans are to build some 800. Yapi Merkezi Construction & Industry Inc.088. Economical housing projects are generally located in the city suburbs. Soyak Co. As a result of the limited supply of garde A offices.

Indeed.000 71.897.9% increase on 2006.058 345.689. with the aim of encouraging large-scale tourism projects. Louis Vuitton and the UKbased luxury boutique Harvey Nichols are all operating in main shopping streets and upmarket shopping centres in Istanbul in order to tap the spending power of wealthy urban consumers. The government is now aggressively promoting tourism with the March 2007 release of its Turkish Tourism Strategy plan. with 16% in Ankara and 8% in Izmir. taking the market total to just under 2m sq metres. 10. a joint venture between Netherlands-based Multi Development and Turkey’s Turkmall. with Turkish partner Krea Real Estate. According to the 2007 results of Deloitte and Touche’s HotelBenchmark Study. are currently being constructed in Istanbul and 30 more are in other cities around the country. Although the majority of leisure tourists head to the resorts. The government also plans to exploit the potential of the Black Sea region. Average annual rents in climate-controlled shopping centres are about $540 per sq metre. As of February 2008 there were 188 shopping centres in Turkey.158 402.000 68. Luxury designer brands such as Armani. two of the largest retail projects in the country.76 7. This is reflected in government targets to increase hotel bed capacity by 50. with the Turkish government aiming for seven fivestar hotels to be built in the area.34m and have been growing at a healthy rate. Antalya has become particularly popular. particularly on its European side. The southern and western coasts of Turkey are more attractive for foreign investors than the coasts of Spain.9 8. Turkey also has a thriving domestic tourism market. with an average room rate of $230.914 296.5m sq metres. Italy and Greece.6m inhabitants are under 25 years of age. With the market so heavily focused on the nation’s largest city. Realising market potential.121. Turkey: retail indicators.000 Household consumption expenditure ($m) 273. along with the resort’s status as the preferred tourism destination in Turkey for locals and foreigners alike.6 8. Even though political uncertainty and market volatility slowed demand for consumer goods in 2007-08.000 72.00 4. an 8. having increased by 21% from 2007. distributed between business districts in Istanbul and the resort areas of Belek. RETAIL: More than half of Turkey’s approximately 70.000 69.00 SOURCE: World Bank. Upcoming projects include four new hotels planned by the Spanish hotel group Barceló.54 4.TURKEY 53 rental purposes have become popular over the last decade and are generally located in downtown areas. Shopping centre space has been increasing. About 35 new shopping centres.491. with approximately 40% of stay nights attributable to tourists. with more than 7. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 68. with 70% of this total likely to be located in the urban centres of Antalya and Istanbul. holds a 50% state in Eskisehir’s $35m Neo Shopping Mall and is looking to take control. due to supply and lower land prices for hotel development. which is developing Forum Istanbul and Forum TEM. International Macroeconomic Data Set THE MARKET Real Estate 2008 . IMF.3m tourist arrivals in 2008 by May. with hotel development accelerating.000 rooms. adding more than 1m sq metres. with 10% being added in 2005 alone. average occupancy improved to 73.0 8. among others.133.0 7. the city is increasingly on the international tourism circuit.000 70.54 4. This averages out at a monthly rent of $30-80 per sq metre for medium-size units in Istanbul shopping centres and $40 to $100 sq metres for food court outlets.411 320. Antalya and Izmir. Around 42% of climate-controlled GLA is located in Istanbul. Gucci. set to run between 2007 and 2013.301. the sector is expected to improve and is retaining the interest of international players. Istanbul has the highest gross leasable area (GLA) per capita in the country with a total GLA of 1.400 373. Great things are expected from leading mall development company Multi Turkmall. Turkey’s malls are expected to become all the more packed.2 8.0 Inflation (%) 9. At present there are 28 five-star hotels in Istanbul. The US’s Merrill Lynch. international investors have shown considerable appetite for Turkish acquisitions. especially around Antalya. an estimated 25% of tourists spent hotel nights in Istanbul. with a 15% increase in tourist numbers in the first five months of 2008 as compared to the same period in 2007. such as renovations and upgrades. As percapita income continues to rise.60 8.8%.926 Growth rate (%) 7. Foreign investors are initiating investments in hotels in southern Turkey. HOSPITALITY: Tourist arrivals by the end of 2007 reached 23. untapped opportunity for retail development will expand throughout the rest of the country.000 of which will be created through expansion of existing space.

Such an increase would undoubtedly put severe pressure on the country’s already overstretched resources. As indicated by the difference between this value and the GDP per capita in neighbouring Oman ($15. KEY DEVELOPERS: A number of international investors are now interested in the country. economic growth in Yemen was estimated to be approximately 4. with developers from the GCC having Yemen: economic and demographic indicators. Yemen’s estimated population of more than 20m is projected to grow to 70m by 2050.1 SOURCE: IMF.10 7.7 26. including water scarcity.863 31.855 8.3 27. 2006-11 Population 2006 2007 2008 2009 2010 2011 21.000 25.10 7.54 YEMEN Yemen Immense potential waiting to be tapped Yemen is the poorest country in the Middle East.253 8.578.1 27.036 Unemployment rate (%) 26. Despite these negative indicators.08 3.453 Average household size 7. residential and – until recently – hospitality sectors.000 23. which represents no change from 2006 and continues to fall short of the target set by the government. Water is a critical issue.09 3.000 24. Yemen also suffers from severe development challenges. suggesting a need for more comprehensive economic reforms aimed at increasing competitiveness and at further diversification of the economy.09 3. There is also a serious lack of grade A facilities in the retail.511 GDP per capita ($ at PPP) 884 972 1.212 7. such as the real estate market.687. The report highlights the Yemeni economy’s attractiveness to foreign investors.398.500) and Saudi Arabia ($15.10 Labour force 7.9 27. making Yemen one of the fastest-growing countries in the region.612. with foreign cash inflows thus far having been directed almost exclusively at the oil and gas sector. high unemployment and underdeveloped infrastructure.978. Primarily a rural country.3% for 2007. as well as a large segment of the population living and working outside the country. with fears that supplies for the capital.400).000 22.349.881.261 36. However. all of which are currently experiencing increasing demand.333 1. Yemen also has a significant number of high-income residents.2 27.130. Sanaa.290. World Bank Oxford Business Group .5%. important measures directed by the government in building infrastructure have made a considerable difference. According to a recent report released by the Economic and Social Commission for Western Asia (ESCWA). Yemen continues to be one of the least developed real estate markets in the Middle East and North Africa.197. Yemen also has the greatest income disparity with its neighbours in the world.000 22.106 21.00 3.10 7.126 1. The largest foreign investments to date have been in real estate. They remain the key investors and buyers in terms of real estate and construction. Population growth remains close to 3.577 34.10 7. minerals and transportation sectors.287.000 10.593 7. especially in the energy.622. Many of these are now keen to invest in tangible assets.09 3.664 25. as has a pledge of $4. with an estimated 40% of the population living below the poverty line and a per-capita GDP of just $972 in 2007.000 Population growth (%) 3. office.7bn from Gulf Cooperation Council (GCC) countries to help develop the country’s infrastructure.00 GDP ($m at current prices) 19. may run out within the next 10 years. The lack of advanced infrastructure has been the major deterrent to international investment. with 75% of the populace residing outside urban areas.404 1.10 7.

constructed privately.3 – Average stay length (days) 6 6 6 6 6 – Total stay-nights 1. which is reflected by the occupancy levels in the limited compound and grade A apartment supply.9 13. with Al Qudra. Traditionally. COMMERCIAL: Office space is arguably the most underdeveloped segment of the real estate market in Yemen. a mixed-use residential complex in the city centre. Property in Sanaa does not yet operate in a developed market.642 388. RESIDENTIAL: Yemen’s growing population has created an increased demand for housing. which is expected to receive an investment of $10bn. which gives higher purchasing power to foreign currency holders. Licensing information indicates that residential starts equal about 0.0 14. and one which could prove central to the country’s further development.209. Important Yemeni companies tend to be very large diversified groups and Yemen: tourism and hospitality indicators. The majority of new residential developments are self-built villas. which is purchasing land on which to build villas in the south of Sanaa. in which areas can effectively be grouped together into specific price categories according to district. The largest of these is Ferdosa. and is the main factor affecting housing prices. Al Qudra. Diar. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.642 321. Foreigners are currently not allowed to purchase property in Yemen. Another factor encouraging expatriate investment is the weakening Yemeni riyal.5 10. indicates a market opportunity that only a limited number of international developers have recognised. several large mixed-use developments are planned. despite the fact that uptake rates have been very fast.569. Emaar and Majid Al Futtaim all planning developments in the capital. In Aden. The quality of these is generally not very high. but is now being stimulated by Yemen’s potential for liquid natural gas (LNG) production. Demand for upmarket residential properties is mostly for villas.6% of the total stock in Sanaa. Of total sales. In March 2008 the Emirates Investment Group (EIG) announced Sanaa Terraces and Sanaa East as its flagship projects in Yemen.929. meaning that land is the most sought-after commodity in real estate. which roughly equals 44 sq metres.852 1. The projects in Sanaa include Majid Al Futtaim’s Bab al Yemen. Large regional real estate investors are eyeing the Yemeni market. Salalah and some of the country’s islands will be open to foreign purchasers.0 11. with most developments having been completed in the 1980s.YEMEN 55 announced plans for Sanaa and Aden. mixed-use real estate projects which are planned in Sanaa. The number of building licenses issued indicates that around 1613 residential buildings were cleared for construction during 2005. Yemen has a particularly large expatriate community resulting from the large gap between its GDP and that of its GCC neighbours. although the large. Each property is still judged on its own merits. 50% were to local Yemenis and 50% to Yemeni expatriates as second homes or investments. The unit most often used when dealing with real estate in Yemen is the lubna.& 5-star guests) 201. The $500m developments are part of a series of signature projects that EIG intends to establish in the country. Residential construction is broken down into 35% contractor activity.852 1.852 1. On the other hand. With an economy which remains dependent on agriculture and international companies establishing a substantial presence in the country.852 SOURCE: Local statistical authorities. OBG Research THE MARKET Real Estate 2008 . residential compounds are rare despite being the most popular housing option for foreigners. Emaar and Tameer are all expected to nurture a presence in the capital.642 261. which most people choose to have built themselves. combined with the significant development of Yemen’s economic situation as it becomes friendlier to foreign direct investment.852 1. None of these developments is of significantly high quality. office buildings have been owner-occupied.389. Quality housing built efficiently and fast will find a ready market in Sanaa. Location does play a key factor in the pricing of land.642 231. This supply gap.311 Tourist arrivals growth (%) 20. There is an obvious gap in the market for furnished apartments in Yemen. The biggest driver behind the residential property market in Yemen is the expatriate community. high-end office space has been low. and Qatari Diar’s $500m Al Rayyan Hills in the new suburb of Fajj Attan.642 291. demand for formal. based on a range of criteria. 35% self-constructed for residence and 30% business investments. The market is at a nascent stage with a limited number of large-scale housing projects having universal selling prices.749.

Rents in the shopping centres range from $4 to $6 per sq metre in Al Kumaim.000 in 2005. Occupancy rates are not high. International tenants are largely from the oil and gas sector and also choose to construct their own space. They are typically integrated into four. Occupancy in five-star hotels is still low. standing at around 50% in 2007.130. which is planning to expand in 2009 given the success of its operations. to $15 per sq metre in the STC. Most tenants are international companies.235 12. which opened its doors in September 2006. visitors from Saudi Arabia made up the largest group of tourists from the Arab world in 2007.000 22. who are attracted to Sanaa and Aden. the government is also trying hard to improve the tourism sector.3 10.687. There are three shopping centres in Sanaa where rental prices range between $4 and $15 per sq metre.3 12. tourist arrivals in 2004 numbered 270. According to figures released by the tourism ministry.56 YEMEN build their own offices. RETAIL: The most prevalent form of retail in Sanaa is small street-facing retail outlets. Rates are varied. Oxford Business Group . embassies.000 23. The EMKE Group also established the 60. the mall had to be closed due to crowds fighting to get in. which is now known as the Aden Hotel. but even these still typically concentrate on a single product.290.000-sq-metre Aden Mall. On its first day of business.000. with new stock rising more quickly than in any other sector.6 11. a very small amount in comparison to the GCC average of 0.28 11.or five-storey mixed-use towers with residences on the upper floors. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 21. standing at an estimated 50%. The only grade A office facility in the capital is found in the Sanaa Trade Centre (STC). growing to 335. Earnings from retail remain very limited in Yemen. with an average unit size of 25 sq metres. International Macroeconomic Data Set In its recent report. so far focusing mainly on visitors from GCC countries. on Hadda Street. Tourist arrivals have been increasing but is still very low.00 12. which will include participation in international travel trade exhibitions and implementation of an investment promotion programme. the number of five-star rooms almost doubled from 445 rooms in 2005 to 780 in 2006. Most of the mixed-use developments announced in Sanaa include commercial space. but are consistently rising. Tourist revenues increased from $214m to $265m during the same period. With the arrival of the Mövenpick.646 14. OBG estimates that air-conditioned mall space is around 0.35 sq metres. which is widely regarded as the city’s most attractive location. According to the Ministry of Tourism. Yemen’s Tourism Promotion Council has set up its budget for 2009. are bound to increase the number of business visitors. Hudda Supermarket.622. Based on gross leasable area. accounting for over 80% of stays.114 Growth rate (%) 6. the Mövenpick is the only fivestar hotel in Sanaa that conforms to international standards.000 22. pledged by neighbouring countries in 2006. HOSPITALITY: Hospitality and leisure development has been limited by a perceived danger to tourists from disaffected parts of Yemeni society. The government is now making serious efforts to entice tourists to Yemen. Larger stores are a more recent introduction.50 SOURCE: World Bank. The disparity in income means that Sanaa and Aden are home to very wealthy individuals whose demand for luxury goods is thriving. However.3 10.9 Inflation (%) 18. The situation is now changing. There is one food retail chain in the capital. The investments in infrastructure. with prices at around $5 per sq metre in the STC and $4 to $10 per sq metre in converted residential villas. although the proportion to be allotted for offices has yet to be established. the tourism ministry announced a decline in tourist numbers for the first quarter of 2008 against the same period in 2007.48 10.488 17.25 12.074 15.000 25. Opening in 2006.000 24.000 Household consumption expenditure ($m) 11. the Sheraton. Other international chains in Aden include a Golden Tulip and a Mercure.1 11. IMF.398. international organisations and non-governmental organisations. The first international retail player in Yemen was EMKE Group’s Lulu Centre in Aden. This is a telling reflection of the country’s lower per-capita income. which has an expanding waiting list. The five-star market is dominated by business travellers.0072 sq metres per capita. and formerly had a Mövenpick. Many of the villas in the newly developed residential areas are also being rented as office space. Aden has one five-star international hotel.239 19. Yemen: retail indicators. as well as its plan for the next tourism season. but has been increasing at a relatively rapid pace.978. with the best estimates showing an average annual income of $800 to $1000.00 11.

57 Africa Algeria Egypt Libya Morocco Tunisia Nigeria .

5 1. With the help of the International Monetary Fund the fiscal situation has improved significantly over the past 10 years.916. Algeria is seeking alternative ways to expand and improve its economy.6 12. The government is trying to establish a clear legal system and boost the country’s capital.800.72 1.1 10. but with the significant expansion of the real estate market and construction sector.1 6. Housing finance has been significant in this regard and close to 12. With a decline of oil reserves and a possible drought over the next 50 years. This growth rate is expected to be sustainable in the medium term.000 35. World Bank Oxford Business Group .000 9.680.343. Employment rates are projected to go up by 3-4% over the next few years.000 9.000 9.9 Labour force 9.5 GDP ($m at current prices) 114. Globally.000 35.000 34.971. With a population of about 34. Algeria’s hydrocarbons provide 60% of budget revenues and 30% of GDP. 2006-11 Population 2006 2007 2008 2009 2010 2011 33. Over the past six years the construction sector has grown by 8% and most of the major construction projects are mainly financed by the government. holding just under 12bn barrels. including its trading performance.831 131. Interest rates have been mostly stable over the past years without any significant indicators hinting at change in the forseeable future.95 5.568 158.78 1.000 mortgages are expected to be Algeria: economic and demographic indicators. The government has allocated over $50bn towards realising its objectives. The demand in real estate has increased since the development of the economy began.2m projected for 2008.6 9.400.000 36. The government is determined to increase and improve several aspects of the economy. supply is increasing. the government is providing incentives to the private sector and supporting companies that are willing to invest in different sectors of the economy.511. Economic expansion has been increasing as the security situation has improved following a significant decrease in violence and terrorism attacks that had shaken the economy and jeopardised the tourism industry.380.15 6.5 1. Unemployment is estimated to drop 2-3% annually if all factors remain stable. Algeria does not currently have a threatening sovereign risk due to the large cash flow coming in from the hydrocarbons it offers. Algeria ranks number eight for natural gas reserves and number 14 for petroleum reserves.05 6 5.000 34.000 9.510. With enough oil to last Algeria for at least another 50. with 30% of the population under 15 years of age. the annual growth rate stands at just over 1%. An annual increase in GDP of over 6% was recorded in 2007.712 180. Algeria is more secure than many other countries with political risks.187 171.440.699 165. The housing requirement stood at over 1m in 2006.000 Population growth (%) 2.3 7 SOURCE: IMF. To support this expansion.4 13.5 1. which will help to reduce unemployment and increase the pool of skilled labourers. This new demand will attract an expanded supply of housing units to the market. predictions show there are still regions available for the development of resources.440.000 9. The educational system is also improving.590.031 GDP per capita ($ at PPP) 3397 3825 4545 4661 4774 4931 Average household size 6.000 Unemployment rate (%) 15.58 ALGERIA Algeria Employment rates are rising along with tourism investments The Algerian economy has been reliant on hydrocarbons for the past 50 years.

businesses are also expected to sign long-term leases.6 3. In contrast. A number of Algeria: tourism and hospitality indicators. there is a new source of demand for workspace. Residential land prices start at just over $100 per sq metre. RESIDENTIAL: The severity of Algeria’s housing shortfall is indicated by the statistics. despite the gap between supply and demand. Algeria has a housing stock of over 5.230 972. the prize assets of which include beaches.0 11.0 11.000 units are supplied to the market each year.000 new offices to keep up with the increase in demand.428 3. which has dominated the residential segment since the nationalisation of housing following the end of French occupation. and historic and cultural attractions. but it is thought that this target is well beyond capacity.079. Demand for low.841. A subway is also being constructed and will extend all the way from Tafourah to Hai El Badr. In line with the increase in development activity. mainly due to heavy migration from the south of the country towards the north.886. Approximately 9m people are now economically active with an annual growth of 9% in the workforce.6 3.000 are constructed privately. and Emaats’s master-planned projects.501. Strict tenancy laws have impeded market development and helped to keep prices historically stable.to middle-income housing is high. with Emaar projects to deliver luxury hotels.0 11.205 2.692 711. Emaar’s has been the most visible commitment to the market. Several international developers have decided to enter the country in order to play a role in developing and improving the tourism sector. unemployment rates have fallen from 30% in 2000 to 19% in 2007. As a measure of success. Projects in the pipeline include Accor’s tourism infrastructure projects.572 SOURCE: Local statistical authorities.5m with an estimated shortage of about 1m units. construction and hydrocarbons sectors are setting up bases in the country. The government hopes to meet demand by 2009. The government has devoted $12m to addressing the shortage of housing units and aims to deliver 200. of which only 40.6 Total stay-nights 2.491 2. 130. Some international companies in the real estate.6 3. The government is planning to construct approximately 150. Colonel Abbes development.0 11.to upper-end segments. Gare D’Aghaproject and Cite Technologique de Sidi Abdulla. which include Algiers Bay.154.6 3.000 households are added annually. In addition. resorts and retail establishments with a total investment of more than $20bn. Property prices can exceed $2000 per sq metre for apartments and $4000 per sq metre for villas in mid.603 Tourist arrivals growth (%) 11. As such. Saudi group Sidar’s holiday villages in Algiers and Boumerdes. rents have increased for tenants.0 Average stay length (days) 3. deserts. COMMERCIAL: The government is working to increase employment through a dual strategy of encouraging small and medium-sized enterprises and attracting international firms. Some 250. national and international builders are now looking at the commercial segment and have several plans to set up and develop grade A offices. particularly for middleand upper-middle-class housing. OBG Research THE MARKET Real Estate 2008 . Limited grade A space has forced many companies to establish offices in residential villas or apartments in upper-class areas.829 3.0 11.616 1.306.397 876. Housing prices and rents are heavily influenced by the government. Emaar’s projects are distributed across Algeria. Vacancy rates in some parts of Algeria are at approximately 20-30%. particularly from foreigners seeking office facilities that live up to international standards. There are several opportunities across the country for apartments.& 5-star guests) 640. With a lack of housing supply. and include sea-front development and the creation of a new town in Algiers. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.418 3. Rental yields are 5-7% and are expected to rise moderately in the future. which will help individuals and families own homes in their own country.560. Mehri Group’s plan to open 36 Hotels.ALGERIA 59 approved annually. There is also a new U-city in Buinan which is expected to be completed in 2011. The country had a population growth rate of over 1% between 1995 and 2006 and about 70% of the population is between the ages of 15 and 64. Currently the supply available is still thought to be insufficient to fill the nation’s growing demand. as well as for villas in all segments. the capital Algiers and the western coastline. The rest are built through the state housing programme.000 low-cost housing units annually until 2009 to fill the supply gap.6 3. thanks to the encouragement from the government.168 789.

000 34. IMF. and a rich historical and cultural heritage. The volume of traded goods is reported to be rising by over 5% annually. especially for those working in the public sector. will boost the sector and create room for more hospitality projects.1 5. Emaars development in Algiers Bay will deliver significant space in the market.70 3. which have established operations in the retail market. particularly in the commercial centres of Algiers and Oran. along with reduced civil conflict and violence.400. This construction will alleviate concerns over the lack of quality office space and encourage international companies to open their branch offices in Algeria. Climate-controlled space is planned in the Gulffunded. Among pioneer brands France is well represented by Yves Rocher.440. including the spectacular Mount Chrea.511. Algeria: retail indicators. Credit card usage has increased with over 250. Occupancy rates within the country remain low but have climbed following growth in visitor numbers and a comparatively long average stay length of three to four days.0 7. a good climate.05 3. Carrefour is planning to expand into Algeria. Further government intervention. heavy taxes and barriers to foreign investment.70 4. The average room rate stands at just under $250 per night. with plans to add an additional 130. reaching close to 1.800.311 35. In 2007 the state approved a 25-35% increase in public service salaries. an increasing number of developments are being announced in the hospitality sector. Franchising is not common. the famous Zighout Yousef street and the Roman ruins in Timgad. high plateaus. Saudi group Sidar is developing two holiday villages in Algiers and Boumerdes. mixed-use projects.768 44. Roman.505 40. Several historical attractions have helped to increase the number of visitors coming to the country.8 7.000 36. especially from French companies.5m visitors in 2005 from 866. Algeria’s tourism industry is also assisted by its proximity to its European customers. HOSPITALITY: Algeria has 1200 km of coastline that includes mountains. which has a joint venture with the local private group Mehri to develop a chain of mid-market hotels throughout the country. with average income still remaining low. Opportunity exists to develop more retail facilities in Algeria to cater to both the high-end as well as the middle-income groups.139 41. as it is not yet governed by any legislative measure. however. RETAIL: Purchasing power has been rising for Algerian citizens.30 4.000 35. The attractions. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 33.908 38.000 rooms to the nation’s supply between 2004 and the end of 2007. the retail market remains largely underdeveloped with several procedures a customer has to go through. During 2000-05. Income disparity is severe. The high-end niche markets are being targeted by the new developers.000 clients reported to be holding bank cards that are acceptable at 1700 retail outlets. However. with a class of wealthy families estimated at less than 3% of the total population.25 SOURCE: World Bank. This has ultimately boosted the retail sector and increased consumer spending. Several luxury retail establishments integrated with master-planned projects are now under way and are expected to modernise and improve the retail sector. there are doubts about the stability of the market and economic feasibility of large hypermarkets opening up in the country. which has benefitted thousands of civil employees.000 Household consumption expenditure ($m) 33.000 35. The privatisation process has attracted foreign distributors.2 4. with vestiges of Phoenician. especially to promote Algeria as a tourist destination.000 34.60 ALGERIA integrated business centres are being developed in the greater Algiers region. International Macroeconomic Data Set Developments in the private sector were intended to add more than 50. as will the Gare D’Agha retail development. Oxford Business Group . The World Bank calculates average income in Algeria to stand at $7600 with 9% growth in real income since 2003. varied desert landscapes with dunes and oases. Hotels currently in the planning phase include projects by Accor’s Sofitel and Mercute Hotels.50 3.000 in 2000.971. These barriers make it difficult for foreign companies to enter the country and establish developments and investments.916.8 Inflation (%) 2.2 4.000 beds between 2008 and 2013. Carre Blanc and Celio. Algeria witnessed a compound annual growth rate of over 10% in tourism traffic.204 Growth rate (%) -3. while trade liberalisation has reduced public sector domination of distribution. As the market improves. There are approximately 300 midsized government projects reported to be under way. have boosted the number of tourists visiting the country. Arab and Ottoman architecture.

15 4.500.09 4.452 194.874 6.25 4.850.5% to approximately 9%.094 5.100.709 7.375 127.3 10.78% 2. Economist Intelligence Unit forecasts suggest that this will accelerate to 7. which has fallen from 10. Problems remain.100. continuing a programme of tax reform and cutting subsidies.000 25. This has caused a corresponding decline in unemployment.000 24. Population growth may also further accelerate.650. This has resulted in Egypt being recognised as the leading reformer in 2007 by the World Bank.EGYPT 61 Egypt Construction and real estate scramble to keep up with demand With a population of more than 80m. with 20% of the people concentrated in Cairo. The IMF also warns that sustaining growth will be dependent on reducing the size of the public sector.4% in 2007-08. however. continue to run a budget deficit.480.90% 1.520. A stringent privatisation program means that.06% 1.000 77. The real estate market in Egypt is regarded as healthy. at close to 7.323 GDP per capita ($ at PPP) 5.000 22. an important target. construction and telecommunications. Egypt has the second-largest population in Africa. as 38% of the population is aged under 15 and the potential exists for Egypt’s population to reach almost unmanageable levels far beyond the 100m mark. More than 95% of the country’s numbers are concentrated in less than 5% of its land.86% GDP ($m at current prices) 107. concluding in February 2008 that economic liberalisation is directly linked to growth and that the positive effects have expanded from new sectors. such as energy. Egypt: economic and demographic indicators. with continuing high levels of demand from population and GDP growth.279 6.20 4.258 175.000 79.000.3 SOURCE: IMF.3 10.000 82.930 151. before easing slightly to 6.600. with the UN expecting this proportion to rise to 54% by 2030.000 22.100. Population density is also notable. to labour-intensive sectors. Population expansion has been a matter of serious concern to the government. with 7.000 Population growth (%) 1. more than half of the banking system is now privately held.99 Labour force 21. Initial results from the 2006 census suggest that it has increased 22% in the past 10 years alone. privatisation of public holdings and legal changes designed to promote economic diversification. About 42% of the population is classed as urban.5% of GDP in 2007.97% 2. Egypt does.3 10. and foreign investment.04 3. however. Since 2004 the Nazif government has instituted a series of fundamental economic reforms. Per capita GDP was estimated at $5400 in 2007 and is growing at rates above global and North African averages.200. as close to 20% of Egyptians already live on less an $1 per day.208 Average household size 4. which has been the cause of some concern. World Bank THE MARKET Real Estate 2008 .000 76.2% growth in 2007.600. which have included reductions in tariffs and taxes.208 213.43% 1.000 23. Growth has been predicated based on increased investment and a surge in exports. among other asset sales. Heavy industry is also broadly state-controlled and accounts for the largest proportion of GDP at 17%.3 10. 2006-11 Population 2006 2007 2008 2009 2010 2011 74. By 2050 the UN forecasts total population will reach 126m. primarily in the fertile band on either side of the Nile.3 10. such as agriculture and manufacturing. IMF observers have also been highly complimentary about progress.000 Unemployment rate (%) 10.000 80. Government targets are to stabilise the population at 100m.9% in 2008-09.491 5. as the economy is still subject to government manipulation.

5% 5.753. costs for high-end properties in certain areas have climbed as high as $1800 per sq metre.5% 5. Also.5%. According to Global Finance House.000. there has been no rationalisation of prices yet.3% to 3. Whereas previously. with demand concentrated in the capital. Housing construction has risen by 6-7% in 2007. as opposed to 4.880 650.000 bracket.62 EGYPT More than $50bn of foreign funds has been committed to large-scale developments in Egypt.4% during the period between 2006-07. or occasionally in colonial-period buildings in the Downtown area. The government calculates production will need to be increased to 820.000 housing units.507 2. Under the National Housing Project announced in 2005. Local developers suggest that demand is concentrated in the $75. creating an unsatisfied demand for 270.863 1. The building and construction sector rose by 27% and its contribution to GDP moved upward to reach 4.5% 5. which estimates suggest have Egypt: tourism and hospitality indicators.5% Average stay length (days) 3 3 3 3 3 3 Total stay-nights 1. Although it grew by 9. However. with production at 300.000 units annually. with land continuing to rise significantly in 2007.2% increase in rents and a 20% increase in the initial asking price for residential units. with a 5.734 Tourist arrivals growth (%) 5. the trend towards purposebuilt. RESIDENTIAL: The rate of population growth has placed a large burden on housing provision. A mortgage finance law was introduced in 2001. Oxford Business Group .147 1. The most popular high-end areas for buying and renting have traditionally been Zamalek and Mohandiseen on the west bank of the Nile.919 686. Since 2003 significant measures to redress the balance have been made through developments such as City Stars and the Smart Village. including resort projects and the opening of new urban townships in line with the government plan to distribute the population more equally. There is a wide disparity in residential pricing.639 1.800 to $13.662. Contractors operating in the market say that unofficially.1%. in the new developments with strong marketing. However.1% in the previous year. Large-scale developments that are in the $2.5% 5. as its contribution to the percentage of GDP between 2006 and 2007 slid from 3. In New Cairo. the price can be four times higher.& 5-star guests) 554.000 housing units by 2011. compared to $16.850. The annual additional requirement for housing is estimated at 570. and Maadi on the east bank of the Nile in the south of the city.000 bracket are still in great demand by as many as 300. with warnings that the market may be reaching saturation point for such housing. the total value of mortgage finance doubled from $187m to $375m between 2006 and 2007. According to some estimates.9% during the same period. foreign direct investment into real estate increased by 136% between 2005 and 2008.000 units per year. Appetite for prime residential housing and living quarters remains concentrated in Cairo.621 616.000 to $170. for example. the share of the real estate sector’s foreign direct investment inflows reached $39m in 2006. This price inflation has been concentrated in high-end developments.000 housing units per annum. OFFICE: Egypt has long been characterised by a lack of international-standard office space. 50% of which will be in new cities. The real estate sector declined. As a result of the improving environment.952. the government has pledged to construct 500. the rate for steel has climbed to as high as $1800 per tonne. which climbed from $565 per tonne in December 2007 to $1400 per tonne according to official estimates. but there have been technical barriers impeding implementation. The main threat to the market is posed by rising construction costs. especially in the new districts.203 SOURCE: Local statistical authorities.756 2. The newly prosperous middle class are creating additional demand that has not yet been met by developers.5m in 2005.5% 5. and is expected to climb to $936m by the end of 2008.174. 6th of October City and New Cairo. which still remains considerably outside the means of most buyers. despite the introduction of tax exemptions and tax holidays. high-technology offices in new communities on the periphery of the city is emerging in Egypt. OBG Research increased by close to 40% since the beginning of 2008 primarily due to the price of steel. now standing at $39m per annum.060. a surge of 136%.836 724. it is possible to get a villa for as little as $650 per sq metre.049 584. Between 2001 and 2007 the real estate sector grew at a compound annual growth rate of 8. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. local or international firms would be headquartered in residential villas for which commercial licences had been obtained.

In 2007 average footfall increased to 1.000 sq metres planned for Cairo. as well as a drastic reduction in tariffs. Even as investments in office space have declined. The main investors for such projects have come from the Gulf. The hospitality market has stable and consistent occupancy rates at 70%. most hotels reported a drop in their crucial summer season. indications point to continued high demand for grade A office space through 2013. which is traditionally the busiest time of year for the tourism hospitality segment.3 16.70 6.047 129.24 8. with the Marriot.70 SOURCE: World Bank. leading to fears that the historical centre of the city is being abandoned to decay by international and local businesses and investors.4 Inflation (%) 7. with a long average stay length of 9.192 149.983 111. Dokki. Occupancy during the period between July and August.8 nights. However. The country’s premier shopping centre is currently the Citystars complex.000 80.100. Tourist arrivals have performed strongly.000 79.5% of GDP and 12. This is a 10% decrease on the figures for August 2006.4 14.80 7. it is worth noting that all of the country’s top-ten financial institutions remain headquartered in traditional office areas in Mohandiseen.600.9m per month. outliving perhaps the high points of the high-end residential segment.55 9.500. Important international retailers are currently moving into the market and they need space to do business. standing at approximately 80%. The occupancy rate in the greater Cairo area for the first six months of 2007 was 75. Currently. HOSPITALITY: Tourism is an important contributor to the Egyptian economy.0 16. IMF. Industry experts believe that Egypt will need a rapid expansion of retail space to support the resulting retail surge. Average overall rents are currently in the $600-750 per sq metre range. In the first phase. The priority for the Ministry of Tourism is to upgrade Egypt’s infrastructure. which was completed in 2004 and encompasses 150.795 94. Although these figures suggest healthy growth in the hospitality sector. Egypt: retail indicators.6%.852 174.6m per month. International Macroeconomic Data Set THE MARKET Real Estate 2008 .EGYPT 63 In the period between 2000 and 2006.41 7. Such investments have primarily been in the areas around Cairo.6% increase over 2006 statistics. is down in 2008.9 16. The government now targets a further increase to 14m foreign arrivals by 2011-12 and has embarked on a corresponding expansion of tourism infrastructure.000m sq metres of retail space with some 400 retail units. Citystars works on a revenue-sharing basis and takes 12% of the retailer’s revenues. with the market driven by visitors from the Gulf region.000 82. RETAIL SECTOR: In recent years the Egyptian retail sector has undergone a period of radical change that has seen an end to the import substitution policies of the past.100. The expansion of the tourism sector has encouraged a number of international hotel chains into the market. In 2006 the average footfall was 1. It is recognised as the preeminent market leader and has performed very strongly. The catalyst for the explosion of demand for retail space has been the dramatic reduction of tariffs on many imported goods since 2004. The shopping centre has proved extremely profitable making close to $400 per sq metre per annum.200.000 76. however. Mövenpick and the budget Easy Hotel chains pursuing expansion plans. Zamalek and Downtown Cairo.6% in 2006-07 and contributing a total of $8bn. creating another 15. a 4.000 rooms every year to accommodate an extra 1m visitors.6% of employment. spurring the growth of climate-controlled retail centres and shopping complexes. In 2006-07 total stay lengths reached 96. with five more malls of more than 20. Occupancy rates in the capital rise to 95% in five-star hotels during the summer months. providing 3. the average rents for women’s fashion brands and casual wear will range from $800-1400 per sq metre.000. although room rates in Cairo continue to climb from a city average of $120 per night. Many are banking on the belief that demand will continue to rise at the periphery in the medium term. increasing by 11. The competition is increasing.000 77.449 Growth rate (%) 17. Citystars is the only modern shopping mall in Cairo.4m nights.7 16.000 Household consumption expenditure ($m) 82. rents were averaging $350 per sq metre per annum according to Citystars’ management. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 74. In phase two. approximately 900.000 sq metres of grade A office space were added to the Cairo market. The periphery of Cairo and Alexandria will increase in commercial significance and the demand for quality accommodation is expected to continue to rise at approximately 10-15% per annum.

and often have ambitions limited to construction of single hotels or residential towers. World Bank Oxford Business Group .703 13. Built under government tender. but developers who have launched projects in Libya have not always found the endeavour easy. the government is now seeking ways to entice foreign investment into the country.000 6.99 1. which is likely to prevail in the near future.98 GDP ($m at current prices) 49.000 1.952 15. A number of major real estate developers have entered the Libyan market over the last few years.718 57.1 30. are built on speculation by landowners.014.99 1.064 78.752.3 SOURCE: IMF. with construction dating to the 1970s and 1980s. as local authorities test how far Gulf and international investors will go for market entry. Corinthia).000 1. With outside interest in the market a new concept to Libya.50 4. with 17 new projects in 2000 and 84 in 2005. Emaar).970.111.64 LIBYA Libya Real estate tops the list of lucrative investment opportunities Libya has the ninth-largest oil reserves in the world and the economy remains heavily dependent on oil wealth.886 88.000 Unemployment rate (%) 28. The majority have formed a joint stock company with Libyan agencies in order to benefit from local company status. CONSTRUCTION AND REAL ESTATE: The construction and real estate sector presents some of the best opportunities for investors seeking to take advantage of Libya’s new economic wealth since both are current government priorities. Flush with this money. with increasing numbers of international Libya: economic and demographic indicators.917.4 30.260 16. as well as a number of tourism projects planned in the capital or near popular sites (Beroko. Local developers have proven reluctant to take on projects of any scale. the quality of design and construction is not of the highest standards. and plans can be subject to sudden and arbitrary change. The majority of buildings represent old stock.98 1. Prices paid for land by foreign investors have recently doubled. 2006-11 Population 2006 2007 2008 2009 2010 2011 5. Hydrocarbons account for more than 95% of export earnings.40 4.000 2. including hotels. The demand is widespread across all sectors. with an emphasis on functionality rather than aesthetics.459. The growing number of construction projects in the country reflect the increasing market interest. The key factor keeping projects small has been a lack of funding and access to lending.6 30.1 31. Earnings from oil were estimated at 50% of total GDP and 75% of government revenues in 2007.000 2.98 1.000 6. International banks are reluctant to lend in the Libyan market.000 6.40 Labour force 1.089.40 4. Politically.523 GDP per capita ($ at PPP) 8327 9372 12. pricing can be irrational.000 2. Hydra Properties) to larger townships and self-contained ventures (Tameer. residential towers and restaurants.587.333.564 107.40 4.99 1.000 Population growth (%) 1.359 98. and the majority of smaller projects.5 30. The market structure is now changing.830.000 6.40 4. Libya remains heavily controlled.323 Average household size 4.210. The process of acquiring permission is opaque. Sale prices for neighbouring buildings of almost identical design and footprint in prime areas can vary hugely according to the date of construction and the quality of maintenance.209.000 6. Projects range from mixed-use towers in the central business district (Daewoo. International developers with projects now in the planning stages are typically second-tier firms with interests in other economic fields.

000 new homes has seen a wave of residential construction projects across the capital. they report they receive more than 100 applications in each major town monthly. while the current population estimates are in the range of 6. International developers such as Magna and Hashoo Group are building units targeted specifically towards the luxury market. Despite interest rates being high and development lending hindering new construction. The monthly cost of buying has been kept artificially low and. The rentals and lease terms in villas are similar to that of the residential villas and apartments. considering that a number of tenants have signed 10-year leases. the residential market is undersupplied and in a period of rising construction. Sale prices at the higher end of the residential spectrum were at an average cost of $1333 sq metre. prices are between $36.2m. COMMERCIAL: Libya is beginning to attract foreign investment. which will be offered for more realistic prices and rental agreements.745 325. translating to over 5500 new offices per annum. A large number of new villas are being constructed as old buildings are being demolished. of which 5% should be prime. The provision of adequate housing for all Libyans has been a top priority for the government. creating demand for office property.5 2. even though the government is now subsidising less.5 2. OBG calculates that Tripoli requires over 1.0 10. Although local costs are significantly lower than international company prices.& 5-star guests) 228. Demand is expected to remain at the present high levels and increase in the foreseeable future.5 2. construction costs are bound to increase as international developers are recruited to satisfy demand. and newer suburbs on the extremities of cities are where the bulk of residential construction is now taking place. The Corinthia Business Centre is the only genuinely grade A office space available. The presence of big-name developers such as Emaar. although there are still very few of that are of significant size or extent that could have an effect on the current demand for office space. RESIDENTIAL: The 2006 census recorded the Libyan population at 5. The average size of a registered business concern in Libya is still small.5 Total stay-nights 572.0 10. It is unlike- Libya: tourism and hospitality indicators. and apartment buildings in the city are almost all state-owned. While the chambers of commerce do not release figures.5 2.147 739. Partnerships with international construction companies have introduced realistic tenders and quality government housing stock to the country. so apartments are common only in the downtown areas.0 -3. Villa conversions account for the majority of the office supply in Libya.362 813. ranging from state-owned multi-storey towers.319 Tourist arrivals growth (%) 7. Rents in other office buildings have remained stable at $30 per sq metre per month compared to $80 per sq metre per month in the Corinthia. Most Libyans prefer living in independent houses and villas.417 268. It is 100% occupied and likely to remain so. with a number of government offices and embassies using this as a solution.LIBYA 65 developers acquiring land.494 611.0 10. and new company registrations are rising.0 10.3m and growing at an annual average of 3-4%. Local Libyan companies are unable to deal with the demand for large grade A construction projects spanning all sectors. There are properties that are being developed in this sector.9m sq metres of office space. OBG Research THE MARKET Real Estate 2008 . Major projects include the Zowara-Abu Kemash megaproject city development. Multi-storey buildings account for just over 3% of the total stock in Libya.000 for a two-bedroom apartment. All prime supply is currently leased.5 2. The Tripoli office market is highly diversified. causing takeup rates on residential compounds to slow.000 and $48. to villas and apartments that have been turned into offices.980 222. privately owned low-rise commercial buildings. Tameer and Majid Al Futtaim is a new development over the past few years. a $240m project in Tripoli.859 295. The price gap is more likely a function of poor management in government centres than the market refusing to climb above $30 per sq metre per month. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. Ghazala Towers. and Tameer’s $20bn planned residential city of Wadi Al Sharqui. with monthly payments of $160 to $320.197 244. Building stock in the central areas is dilapidated.450 555.0 Average stay length (days) 2. International corporations are tending to build compounds for staff. A recent decision by the government to supply 500.298 SOURCE: Local statistical authorities. Owned office space is rare.043 672. together with the majority of secondary and converted villa offices. much of it in the form of villa construction. but the commercial class is growing rapidly.

000 6. To this end. International Macroeconomic Data Set The average room rate (ARR) is relatively low.66 LIBYA ly that future office supply will have a marked impact on the market.087 11. if using a population of greater Tripoli of 1. leisure tourism is a government priority. Zakher Al Yamama and the Andalus Gate. not only in Tripoli but also in Benghazi and other cities. Preliminary studies by developers looking at opening dedicated malls suggest that they hope to achieve monthly rentals of around LD30-50 ($24-40) per sq metre. Growth in the Libyan economy. Souk al Juma. Libya has a wide range of untapped potential in terms of sites. Upcoming retail centre developers would be wise to take cultural norms into account by including leisure and play areas for children. as estimated by the 2006 census. In spite of these hindrances. Shopping centres have been successful. However. set to become the new air traffic centre for the country. Sabratha and Sebha is hoping to boost visitor arrivals. as well as a resort hotel on the coastline close to archaeological sites. Opportunities exist for a quality internationally branded five-star hotel targeting business visitors in Tripoli. with the exception of the Corinthia. a total of 0.638 rooms across 268 hotels in Libya. a government-focused tourist development project in key areas such as Leptis Magna. and the lack of popular brands makes it almost impossible to collect sufficient rent to support the cost of shopping centre construction. the total number of retail units increased from 69.09 sq metres.65 8. When new luxury supply enters the market in 2009. due to levels of latent demand. spend an average of two nights in Tripoli.013m sq metres per capita.7 5. with annual additional take-up being just around 2% of total demand.00 7.3 4. OBG calculates that 28.1 5. IMF. According to February 2008 statistics from the General Authority of Tourism.50 SOURCE: World Bank. ARR should standardise at $250 to $300. There is demand for both four. Some of the demand drivers include high disposable incomes. and by inference in the office market.1 6. history and landscape. there are 13. in line with surrounding markets.970. as well as new retail space inside upcoming mixed-use developments. However. Vinci of France and Turkey-based TAV are the main contractors.1m.845 to 122. A growing tourism market will also create demand for new hotels. By 2010 this will have increased to 0.7 5. and occupiers will pay above the odds for large units with an international standard of fit-out and security. RETAIL: The retail market in Libya is poised to react to the new market conditions being encouraged by government incentives. poorly furnished and lack the style and service comparable with international standards. Souk al Thalatha and Souk Ain Zara. However. factoring in the compound annual population growth and the reopening of three of the former government cooperatives. in high-income areas.190 Growth rate (%) 9. Most visitors.000 sq metres of climate-controlled space exists in Tripoli. but is likely to operate on a steep curve.459.000 6.000 6. The government targets a threefold increase in tourist arrivals by 2010. Most high-end hotels are state-run and are often old.38 6. distinct café areas for men and women and locating their shopping developments centrally. of which only 10-20% are suitable to be offered to the international market. whether on organised tours or travelling independently.000 6. Oxford Business Group .333. The demand for hotel accommodation is certain to increase on the back of the growing oil industry. Construction began in August 2007 on Tripoli’s second international airport.0 Inflation (%) 3. with 100% occupancies in the new Oasis Centre. they still enjoy high occupancy rates and guests are often turned away because of the lack of vacancy. existing laws make it difficult to introduce international brands to the market.00 6.000 Household consumption expenditure ($m) 9389 9922 10. Any new hotel which is managed by an international brand and is of a five-star standard can command an average rack rate of $400 per night for a standard room. HOSPITALITY: The main source of demand for the hospitality market is business visitors who are associated with oil companies and who account for 70% of the overnight visits country-wide.607 12. whose current monopoly allows it to charge four-times the average highend hotel room rate. Libya: retail indicators. Rents for new luxury space will be set at more than $100 per sq metre per month.50 7.429 11.000 6. with the capacity to house 100 planes.210.821 between 1995 and 2006. will not be exponential. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 5.and five-star hotels.089. with occupancy rates in the range of 85-90%.587. demand for foreign brands by higherincome groups and a lack of other leisure activities.

however. There is no doubt that future investment success is certainly available in Morocco. services and outsourcing.1% in the second quarter of 2008.97 0.053.436.429 84.000 Population growth (%) 0. Future expansion and growth of the sector is currently constrained by a dearth of well-trained human resources.000 11. down from 9. urban unemployment was as high as 33% among urban youths. Quality construction and renovation could easily transform a town with potential.97 0. is likely to continue at least until 2010. the GDP growth rate slowed to 2. and an inflow of funds from Moroccans working abroad have all contributed. such as Fez or the ancient northern area Chefchaouen. World Bank THE MARKET Real Estate 2008 . nationally produced cement is among the cheapest in the world and will continue to provide a solid foundation for future growth in the construction industry. Mogador (Essaouira).97 0.420.8 9. Due to the drought that severely reduced agricultural output. Despite structural adjustment programmes supported by the IMF.4% in the same period in 2007.985 5. Lixus (Larache).332 Average household size 5.000 Unemployment rate (%) 9. While overall unemployment stood at 7. El Jadida).97 GDP ($m at current prices) 65.000 11. Morocco’s unemployment rate fell to 9.000 11.000 31.000 30.2bn in 2007 – and new laws permitting property ownership by foreign nationals. In 2000 Morocco entered an Association Agreement with the EU and in 2006 entered a free trade agreement with the US. the World Bank.336 99.000 31.076 4.7 10. the Moroccan dirham is only fully convertible for current account transactions. as have increased levels of foreign direct investment – from $2.000 11. growing at a much faster rate in Morocco than in the EU. Moroccan authorities are implementing reform efforts to open the economy to international investors.30 5. liberalisation of the economy.000 31. 2006-11 Population 2006 2007 2008 2009 2010 2011 30.5 9. which initially covered 56.791.635.30 Labour force 11.079 107.000 31. Continued dependence on foreign energy and Morocco’s inability to develop small and mediumsized enterprises also contributed to the slowdown.30 5. including the 6000-ha Morocco: economic and demographic indicators.3% in 2006.2 9.405 73.000 ha. into a success story.30 5. Strong ties with the US.MOROCCO 67 Morocco Seeking more stable growth sources through diversification The Moroccan government’s ongoing efforts to diversify the economy paid off.942.273.30 5.7% in 2005. One of the major challenges that Morocco faces is high unemployment and underemployment. Morocco is a low-income country trying to restructure its economy away from an agricultural base and towards more stable sources of growth.30 5.7% in 2007. Mazagan (El Haouzia. REAL ESTATE: The real estate boom.385 4.674 4.586.030.922 4.331.5 9. up from 1.5bn in 2005 to $5. There are numerous highend mixed-use developments.732. Programmes such as private training plans are necessary to ensure ongoing development.402 91.1% in 2007.744 GDP per capita ($ at PPP) 3.3 SOURCE: IMF. with GDP growth of 7. Despite high manufacturing costs.000 11.97 0. and the Paris Club.218. The Plan Azur to create resorts in Saidia (Berkane).97 0. construction. Taghazout (Agadir) and Plage Blanche (Guelmim) has resulted in concessions being awarded to four international developers. Sectors targeted for growth include industrial development. Foreign developers have been attracted by the privatisation and public offering of state-owned land.

72bn into Moroccan developments over the next 10 years.800.825 5.365 6.000. The rental market is fragmented Morocco: tourism and hospitality indicators. placing increasing pressure on housing in urban centres. The nascent opportunities in real estate. a 330-ha development. again at reduced prices. scheduled for 2015. Also planned are the Emaar and ONA Group Bahia Bay golf community. Falling interest rates have also helped – in 2004 they were up 10-12%. and the Al Omrane development. no rent rise” system. with 3000 high-end apartments and villas to be completed by 2013. and Al Houra Resort. which sells the land.000 middleincome housing units and some 1400 low-income units. Tasmena. a luxury resort project in Tangiers.4 3. Upcoming supply is insufficient to meet a decadesold shortfall. Among the industry’s recent success stories is the entrance of Al Qudra Holding.000 units are unoccupied.4 3. scheduled for 2011.735. as Morocco has only recently opened up its economy.68 MOROCCO Bab Al Bahr development in Bouregreg Valley. and additional demand has.347. As a glut of upmarket homes appear on the market. the situation is gradually changing.7m people. The demand for housing stock breaks down into 10% for luxury homes.0 11.566 7. The industry is intent on convincing foreigners to purchase second homes and investors to buy into the market on a large scale. with some new tax incentives and the entry of fully fledged property consultancies.4 3.000 7. More than 10% of the nation’s housing is considered unhealthy. As a result. RESIDENTIAL: Morocco is home to some 33. manufacturing. However. composed of individually built units.4 Total stay-nights 15.& 5-star guests) 4.325.278.301. a gap in the middle is also opening up.656.5 Average stay length (days) 3.124 23. and many people do not have faith in the protections offered to renters by a relatively weak legal framework.590. Nearly 500. The country is increasingly seen as a regional centre for transportation. Emaar’s $3bn Saphira development.000 26. The urbanisation of the population is also continuing apace. Major projects include the Saidia coastal project.832 17.5 10.821 Tourist arrivals growth (%) 12. Nationwide. prices have more than doubled over the past five years. prices are still below prevailing rates in other Middle East and North Africa countries.2 11. to a series of private developers. finance. in particular via tax breaks offered for those in the social housing sector.4 3. the $1bn Marrakech Reem Investments development. but now developers can finance a real estate development for between 5% and 7%. Rental yields range between 7% and 9%.0 11. particularly due to public policy that supports low-income housing. Low interest rates hinder the rental market. 12% of lodgings are empty. A rent control policy in the form of a “no improvement work. As such. The real estate sector is in the midst of the largest influx of investment ever seen in Morocco. the $2bn Amwaj project. However. the Spanish Fedesa project in Ayamonte. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. which restricts movement. Despite a huge housing deficit that has spurred real estate deals nationwide. 60% for moderate housing and 30% for low-cost housing. the Emaar Saphira project. a UAE-based company that plans to pump some $2. transit and business.53%.805 19.0 11. rising by an estimated 30% annually in prime locations. Strong government support is steadily building the supply for the low-cost segment on the market.095.791 SOURCE: Local statistical authorities. Developers keen to buy land at knockdown prices can do so as long as they guarantee that 20% of the units will be low-cost housing.608.833 5. and as the government concentrates on encouraging low-cost housing developments. which will include 48.4 3. Al Qudra’s $44m Loukos City. and Qatari Diar’s recently launched $600m Al Houra Resort. The government sells the land at reduced prices to public corporation Al Omrane. owners occupy 64% of properties in Morocco and renters live in only 29% of units. Public-private partnerships (PPPs) are also stimulating the real estate market. OBG Research and inefficient. have Oxford Business Group . mostly non-contract-based.231. Real estate credit provided by banks has grown by an average of 15% over the past three years. the residential segment is bullish and is anticipated to leap ahead. most of which are new and of moderately high standards. and the current emerging offshore outsourcing businesses. High-end units cost $1000-1500 per sq metre. COMMERCIAL: The commercial sector is in the initial stages of development. and the population is growing at a compound annual growth rate (CAGR) of 1. scheduled to be completed in 2015. worsened the situation.641 21. of course. and tax policies have somewhat disenchanted large private investors in the rental market.

Tourism’s growth was 15% in February 2008.000 will be located on the coast.7m in 2007. but they are not getting the support they need from urban planning authorities.000 ha.95% interest up to seven years. foreign tourist arrivals – predominantly leisure travelers – grew at CAGR of 10%. However. TangierShore and MarrakechShore. the sector is still undeveloped. with retail spaces in Casablanca and Rabat commanding between $2500 and $5500 per sq metre. Commercial yields are published at 8-9%. and the remaining inland at cultural destinations.000 31. the Moroccan retail property market offers sizable opportunities. Among these are Casablanca’s Casanearshore.5% over five years (2001-05) stems from the emergence of a middle class with higher disposable incomes and new patterns of consumption.04 2.000 31.000 beds. Banks now offer franchising loans at 6. and the market remains dominated by street-front shops. from 3.6bn.139 64. The government intends to invest $12bn in order to achieve these goals. administrative and marketing services. property prices are on the rise. Overall.9 Inflation (%) 3. which aims to attract 10m tourists to the country by 2010. Casablanca hosts the traditional central business district and has quality office space. Meetings. despite brand awareness spreading in the population. Retailing is concentrated in Casablanca and Rabat.6m. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 30.000 ha but needs 26.732. the large share is currently occupied by the informal economy and the competition from counterfeit and contraband products poses a structural challenge to the industry. which is expected to boost the multi-chain system. and the demand for new offices will depend on the growth of the outsourcing industry in the kingdom. Rates range between $20 and $30 per sq metre for grade A space. Over the past five years.788 49. Mega Mall in Rabat offers space for rent in return for management. incentives conventions and exhibitions tourism is being developed with the establishment of huge convention facilities in the area.00 2.000 Household consumption expenditure ($m) 39.00 2. Casablanca is facing a huge space deficit. Several projects are under way and are expected to spark the evolution of a competitive office sector. projects in the pipeline include a five-star hotel in Amwaj. influenced by the appeal of the onestop shop concept. and several other developments.000 will be located in hotels.000 hotel rooms. Facilities are improving. Visitor numbers hit a record high of 7. of which 70.937 57.MOROCCO 69 created an inflow of foreign companies to Morocco and an expanded employment base. As demand grows for high-end retail space. most of which are small in size. with six seaside resorts already licensed by the Tourism Ministry. A part of the strategy is the promotion of new beach destinations.000 31.030.29 2. creating potential for new retail space. HOSPITALITY: Tourist development is a part of the government’s “Vision 2010” plan. Provisional statistics also showed a jump of 12% in tourism revenues to $7.000 30.8 12. all targeting information and communications technology firms.4 12.331. with only a few shopping malls. and therefore the market has great investment potential. Upcoming supply is not expected to be enough to cater for demand.1m in 2005.942. which will deliver a total of 250.6 12.989 44. Many developers want to build vertically. However. RETAIL: The retail market is building a strong foundation in Morocco. a 13% increase from 2006. The growth of the office sector is directly proportional to the growth of the offshore sector.000 sq metres by 2010 to be followed by Rabat Technopolis. it spreads over 18.000 31. hotels in Marina Casablanca. and is only expanding at a rate of 1000 ha per year. These will increase capacity by 111. Vision 2010 aims to create 80.00 SOURCE: World Bank. Market growth of 22. to reach 3. Morocco: retail indicators. International Macroeconomic Data Set THE MARKET Real Estate 2008 .635. The popularity of hypermarkets and supermarkets is increasing. IMF. such as the Casablanca Twin Centre. Several hotel establishments have already committed to build in the country. Vacancy rates have been falling and rents rising in several locations.633 Growth rate (%) 19. given its population. of which 65. The arrival of clothing and shoe franchises has expanded the market to 308 chains operating within nearly 2000 outlets. and will cover up to 70% of the total investment. Large real estate development investments from within the Middle East will also have a huge impact on Moroccan tourism.5 14.0 11.00 2.436. The government is trying to ensure a higher standard of tourism facilities by encouraging renovation of existing hotels and reclassifying hotels to conform to international standards. and 2006 witnessed a dramatic increase of 17%.361 72.

The Tunisian economy is open to foreign direct investment (FDI).5bn coastal resort Al Qoussour. which includes agriculture. and the Tunisian dinar weakening against the euro. Tunisia’s population increased from 8. Tunisia has a diversified economic base. contributing to lower unemployment.000 10. though industrial production represents about 28% of GDP.304. The largest project coming up outside Tunis is from Emaar Properties. EU countries currently remain the leading provider of FDI to Tunisia and the country has signed an association agreement with the EU.48 4.000 10. Lac Nord has been one of the main areas of development for more than a decade.128 51. World Bank Oxford Business Group .4m in 2008 and the current population growth rate has been estimated to be 0. FDI in Tunisia reached a record $1.000 3.851.98%.000 3.9 SOURCE: IMF.31 GDP ($m at current prices) 30.000 10.1% in 2009. which went into effect on January 1. Despite the rising price of construction materials.000 10.50 4. Thus there is a high demand from buyers for higher standard of building and community design.9m in 1994 to around 10.3 1.010 39.000 Population growth (%) 1.3 1. tourism and services. The workers’ unions have a strong influence on the market.503.3%.9 13.3 1. Damac and the Gulf Finance House have also expressed an interest in investing in Tunisia.299 GDP per capita ($ at PPP) 3044 3398 3760 4112 4400 4728 Average household size 4.764. which was an increase of 36% over the previous year’s figure. 2006-11 Population 2006 2007 2008 2009 2010 2011 10.172. including Sama Dubai’s Century City in the capital’s centre and Bukhatir’s Tunis Sports City.44 4. Urbanisation is one of the major drivers for real estate development.711.47 4. such as Sidi Bou Said and La Marsa.70 TUNISIA Tunisia High demand and an expanding economy drive growth In 2007 growth in real GDP accelerated to 6.000 10.45 4. With food and oil costs rising sharply.8bn in 2007.851.000 Unemployment rate (%) 13.8% per year. Tunisian construction firms stand to profit from all these developments and investments. The agreement eliminates Customs tariffs and other trade barriers on a wide range of goods and services.244 43. Manufacturing industries. as foreign investors are likely to outsource part of their projects. Out of the 1206 registered private developers in Tunisia: economic and demographic indicators. producing largely for export. Average annual income per capita in Tunisia is approaching $3000. certain sectors and the employment market.000 3. The key development area in Tunis is the northeast between the downtown and the coastal areas.438. 2008. In 2007 other Arab property developers. REAL ESTATE AND CONSTRUCTION: Several new large projects are under way. easing to 4. which announced the building of the $4. such as Al Maabar.476 47.574. manufacturing.29 1. which have been rising due to industry wages being set by the unions. inflation is expected to reach an average of 5.42 Labour force 3.593.962 35. One of the main issues in the construction sector is the rising cost of materials as well as labour costs. also makes a positive and significant contribution.9 13. about 1m.3 1.000 3. although it screens potential investors to reduce the impact on domestic competitors.9 13.5% in 2008.676. are a major source of foreign currency revenue along with tourism. the urban population is growing at an annual rate of 2.9 13.000 3.935. Tunisia’s large expatriate population.9 13.

5 3. The state builds 15% of homes. especially from foreign companies. New offices under construction in Montplaisir. OFFICE SECTOR: There is a broad consensus that buy-to-let or construct-to-let office space is the most lucrative real estate niche in Greater Tunis. a popular region for both Tunisians and foreigners seeking a second home. Tunis’s top residential areas have traditionally been the coastal suburbs.060 292. With the completion of Lac projects and new Emirati developers coming into the market. According to the Ministry of Tourism. one. only around 100 are currently active on ongoing projects.5 3.210 1.5 4.5 Total stay-nights 938.000 Algerian visitors to Tunisia per annum.595 335. Prices in Tunis depend primarily on location. with state-owned developers making up 3% of construction. 10% medical and legal professions and 10% other.5 4.261 Tourist arrivals growth (%) 4. particularly for the retirement market. Half of these homes will be for social housing. It is estimated that only 20% of households rent their houses in Tunisia. 15% media and communications. with an estimated 45.5 3.414 1.5 3. A potential market also exists in people from neighbouring countries.319 1. for instance the Century City by Dubai Holding and Emaar in Hergla. most top residential properties are located between Nabeul and Sousse.024. 40% for middle-class dwellings.5 4. The market for foreign investment is thus underdeveloped. The newest and most burgeoning office area within Tunis proper is located northeast of the city centre. Gammarth and Sidi bou Said. Tunisia: tourism and hospitality indicators.412 SOURCE: Local statistical authorities.323 homes for a cost of $7. Embassies.5 3. Purchase of property for foreigners in Tunisia is possible but difficult. banks.663 305. signed major deals to join the real estate market. Bukhatir and Emaar. Under the 11th development plan (2007-11).79bn. In Central Tunis pricing is relatively low at $16 and $30 per sq metre per month. Population growth and a decline in household size have fostered growth in demand.173.5 4. Demand is considerably high. Outside Tunis. requiring permission from a district governor. and the gradually growing number of multinationals setting up in Tunis. Tenants in grade A office spaces comprised 50% information and communications technology firms. but are generally between 20% and 30% lower than similar property found in and around Tunis. But the legal framework to invest in second homes is becoming gradually easier. such as Dubai Holding. several new prime suburbs have been created.118.9m for villas on plots of 1000 sq metres.000 280.5 4. 80% of new houses are built by individual house-owners. Les Berge Du Lac and 2500 office spaces announced in Dubai Holding’s Century city are likely to meet demand in future. such as call centres and IT firms. Following the rehabilitation of Lac du Nord. some major Arab developers. Nationwide. oil companies and other sectors are moving their headquarters here. For renting the most popular demand is studios. which can arbitrarily take two months or seven months. and this intervention has been successful and has led to a decrease in slum housing. The current supply of luxury accommodation is not meeting current needs. the supply is predicted to increase. Office space in Les Berge Du Lac is in greatest demand. intervening in the market to help enable families to own housing suiting their needs and budget. With an emerging trend for wealthy families to move to apartments in central Tunis to avoid long commutes. OBG Research THE MARKET Real Estate 2008 .9 Average stay length (days) 3. there is a demand for luxury apartments. the government aims to build a further 300. with the introduction in May 2005 of a new land law.TUNISIA 71 the country.833 319.582 1. there are 1m Libyan and 700. while the remainder is reserved for luxury apartments and villas.070. Though there will be considerable demand new construction may lead to oversupply. Private developers account for the remaining 12-15% of construction. Recent sales have seen prices rise as high as $1. particularly in the small and medium-sized enterprises bracket of local companies.and two-floor apartments.000 980. along with 15% financial services.000 new households being created each year. The area houses a variety of multinational companies. such as Carthage. Problems with traffic circulation and a lack of parking have encouraged companies to move to the emerging office district of Les Berges du Lac. Recently. RESIDENTIAL MARKET: The government takes a keen interest in the housing sector in Tunisia. Rental prices are some $30-$50 per sq metre per month. most of which are social housing. Prices depend on location. Construction of high-end villas can cost $680 to $850 per sq metre without the land. yet shows good potential.& 5-star guests) 268. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.

000 10.5 3.000 10. One noteworthy shopping phenomenon in Tunis itself is the continued popularity of the traditional medina for Tunisia: retail indicators. there has been criticism of a market characterised by mass tourism and low occupancy rates. and yields are between 3% and 4%. The Tunisian hotel sector is dominated by low-cost seaside hotels often managed by integrated tour operators.030 22. the market in the capital is orientated towards business visits.4 Inflation (%) 4.000 Household consumption expenditure ($m) 19. sophisticated in their shopping choices and in general terms are spending more money on non-essential items. El Mouradi. and some international brands. Around 90% of the country’s hotels are managed either individually or by Tunisian chains. Chief amongst these are Abou Nawas. jewellers. Small. HOSPITALITY: Tunisia is the leading tourist destination in North Africa. International Macroeconomic Data Set everyday goods. an oversupply of rooms. IBM.711.72 TUNISIA including LG. Office space rents average out at $95-105 per sq metre per month. While Tunisia’s hospitality sector leans heavily on seasonal leisure tourism. IMF. Only two of the existing facilities– Tunis City and Carrefour – are on the scale of malls elsewhere. Pricing range for retail varies widely according to precise location but for a prime spot in central Tunis. Many of the medina shops are family-run and have been passed down through several generations.1 SOURCE: World Bank.000 Tunisians. with major players such as a Accor.5 3. However. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 10. the sector is estimated to employ some 450. Marhaba. and as low as 22% out of season.229 23.000 10. with occupancy rates of 90% in summer in some hotels. Small-scale commerce from these individual outlets still accounts for between 85% to 90% of the turnover of the retail sector.304. and it is still limited to the Greater Tunis area.918 Growth rate (%) 7. With spending per visitor at just over $300. and even they are based around the dominant presence of a hypermarket.0 7. The retail labour force is at least 95% of Tunisian nationality and there is no shortage of a workforce.5 5. second-hand clothes and hardware. deep financial debt.000 10. at $40-$60 per sq metre per year and the tenant profile is individually-owned boutiques. An estimated 80% of rented office space in the Lake I are foreign companies and the remaining 20% are Tunisian companies that deal with foreigners.851.307 26.000 10. These licences or franchises are very difficult to obtain because of the government’s protectionist policies. Despite the developed infrastructure and copious capacity. Most foreign hotel companies active in Tunisia do not own their hotels outright but rather sign management contracts with the local owners. mixed customer service standards and a low rate of return visits.15 4.7 6. Arab Banking Corporation. International brand penetration in Tunisia is high. Tunisia has an over-capacity of rooms and beds. Nationwide. Oxford Business Group . Only recently large-scale retail distribution appeared.7 6. Roughly a quarter of the country’s hotels are in the Djerba-Zarzis zone on the eastern seaboard and another quarter can be found in the Nabeul-Hammamet resort area. Tunisian chains El Mouradi and Abou Nawaz own fivestar hotels in Tunis.438. RETAIL SECTOR: Tunisia’s commercial sector lags well behind more developed countries in the building of Westernised shopping patterns and facilities. International retail brands are brought to Tunisia under licences which are generally awarded to a small number of politically-privileged groups. Xerox. authorities have been working to the broaden the country’s appeal to higher-income segments.7 3. The government aims to attract some 10m tourists by 2010. The sector is restricted both by an unwillingness on the part of the government to allow competition from supermarkets and also by political patronage networks which are able to retain key new developments in the hands of a very small number of politically favoured groups.574. Tunis has a high volume of five-star hotels in comparison to the rest of the country. and there is a high volume of independent hotels. Marriot and Best Western owning and operating properties in the city and its outer suburbs. Sheraton. the sector faces a number of serious challenges including massive seasonal dependence. Miramar.172. often family-owned. shops still dominate the Tunisian retail sector. Les Orangers. In Les Berges Du Lac pricing is more expensive than in central Tunis.3 3. Malls are a relatively new phenomenon in Tunisia. according to government figures. British Gas. Golden Yasmin. Tunisians as consumers are becoming increasingly aware of brands.556 21.727 25. Ericsson and petroleum companies.7 6. $20-$50 per sq metre per month is normal.

Canada and Korea by 2050.43 Labour force 49. Government capital spending more than doubled over the same period and $1bn of debt relief was allocated to a virtual poverty fund in both 2006 and 2007.6bn) Naira to N809bn ($6.0 SOURCE: IMF. Oil has made Nigeria rich.75 2. World Bank THE MARKET Real Estate 2008 .75 2. respectively.418. mainly from petroleum.937 250.16 5.000 50.000 143.000 53. overtaking Italy. while foreign direct investment in the oil sector should remain above $2bn in2008. Abuja is dotted with many of these estates. and the surplus is expected to grow during 2008-12 due to exceptionally high export earnings.621.36 5. from 1998 to 2005. even if oil funds have been unequally distributed.75 2.000 151. since it accounts for more than 90% of foreign exchange earnings. The current account balance has seen some particulary healthy improvement from -2. As such.2bn in 2005 to $6bn in 2007. According to the central bank’s housing construction index.004.000 52. 2006-11 Population 2006 2007 2008 2009 2010 2011 140.NIGERIA 73 Nigeria A diversifying economy spells a bright future The Nigerian economy.4%.810. Total external debt fell steeply from more than $22.23 5.51bn) from 2000 to 2006. as are Lagos and Port Harcourt. Buildings under construction exhibit a similar upward pattern with residential construction climbing 145%.778 219.118 292.7% in 2007.874. Forecasts for the Nigerian economy by most international agencies are positive. the value of real estate and business activities grew by a 30% compound annual growth rate from N167bn ($1. Non-oil sector growth has been increasing steadily. commercial and industrial segments have increased by an average of 29%. approved projects in residential.626 273. is moving towards diversification.129.051. with an increase in oil production and economic reforms encouraging the non-oil sector.889 166. overdependence on hydrocarbons has led to problems in the Niger Delta. 15% and 27%.000 54. The development of the real estate market has been triggered by an increase in the number of projects approved and under construction in Nigeria.0 11.29 5. Despite the healthy rate of growth.854.000 51. Corruption is a key problem. REAL ESTATE AND CONSTRUCTION: The real estate sector has seen sustained growth since the beginning of 2000. A contraction in actual construction activities from 1997 (the HCI base year) occurred and is Nigeria: economic and demographic indicators. reflecting substantial debt relief as well as the accelerated repayment of debt by the Nigerian authorities themselves.000 160. and one that the government is working to address.000 Unemployment rate (%) 11.0 10.596.000 147.75 GDP ($m at current prices) 146.7% of GDP in 2003 to 9.000 156. The World Bank estimates that due to corruption.299. Forecasts of GDP growth in 2008 are at 7. commercial up 46% and industrial up 47% over the same period.342. oil-dependent for over two decades.10 5. which has been operational since 2005. declining rates of production and the low rate of employment.75 2.0 10. Nigeria is expected to make the list of the 20 largest economies by 2025.0 10.326 GDP per capita ($ at PPP) 1049 1159 1488 1650 1750 1823 Average household size 5. Oil and non-oil growth are both expected to grow in 2008. a number of problematic economic issues have yet to be resolved. allowing the economy to consistently outstrip targets established under the IMF’s Policy Support Instrument programme. However.000 Population growth (%) 2.75 2. with developers beginning to build homes for affluent Nigerians. approximately 80% of all oil revenues benefit only 1% of the total population.0 10.581.

is currently suspended during Customs investigations.000 each on travel expenses and shopping. Oxford Business Group .34 5. while official estimates place the requirements at 1. International firms frequently choose to construct their own space.5 SOURCE: World Bank.180 Growth rate (%) 15. Infrastructure provision has also lagged behind. Most villa conversions are located in high-end residential areas occupied by international firms or embassies and high commissions. although up to 20 projects of similar size are under planning.654 150.59 8.47 8. especially in Lagos and. The retail market is in the early stage of its evolution.1 Inflation (%) 8. or $600 per sq metre. as developers were reluctant to build in view of political and economic crises at that time. With formal retail supply new to the market. growth in the retail sector has been disrupted by inconsistent governmental policy. which is five times higher than the average rent in dedicated commercial buildings.000 151.000 160. The Federal Housing Authority calculates that there is a deficit of 12m homes in Nigeria.4 14. Port Harcourt and Abuja. with the Federal Capital Territory having been selected as the capital and government employees moved to the new city before an adequate supply of housing could be assured. Cross River) in 2007 and the 6000-sq-metre Ceddi Plaza (Abuja) in 2004. Commercial rents in residential areas are higher than those payable in central business districts.7 12 13. the 23. RETAIL SECTOR: Despite a sizeable natural consumer base. with the first categorically branded regional mall.000-sq-metre The Palms (Lagos).000 156. which includes importation bans on some consumer products and the disruption of retail projects in free zones. despite high-profile difficulties.051.854.5 8.3 13 16. IMF.000 per year. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 140.000 143. International Macroeconomic Data Set moved to Abuja almost 30 years ago.387 101. but some leases extend up to five years.810. Minimum lease periods in the rental market are two years.265 114. there is significant disparity in housing. OFFICE SECTOR: Lagos remains the commercial capital of Nigeria. spending anywhere up to $10. Over 120.000 per year. This structural deficiency ensures that an estimated $5m leaves Nigeria every day as affluent locals travel to shop in Dubai and the EU. with unreliable infrastructure and a lack of proper fitting. International brand penetration is minimal. despite being named as a government pioneer project. with approximately 80% of oil wealth going to just 1% of the population.004. for instance.5m houses annually to attain the goal of “housing for all” as spelt out in the federal government’s housing policy. rising disposable incomes and stable growth in consumption pattern. Abuja. Costs per sq metre can reach up to $1700. The 40. A new generation of dedicated office buildings are under construction in Lagos.874. The lack of housing is most apparent in Abuja. Mall space is typically absorbed during early phases of construction and even the Tinapa project is 50% leased by a mix of local. though some international tenants prefer to use villas rather than the low-quality space available in commercial buildings. This means that sales of office space are rare. with free zone status. with rent paid in advance for the entire period of lease. The lack of dedicated historic supply means that residential to office conversions are common. more recently. Most large private sector national and international companies still have their head offices in Lagos. regional and international retailers.000-sq-metre Tinapa Shopping Mall (Calabar.926 172. villas usually rent on the residential market for $40.342.74 NIGERIA attributable to a preparatory period for democratic transition when political tensions affected the real estate market. Industry players estimate that around 500 Nigerians travel to Dubai every day. as Abuja has no retail space acceptable to international retailers. Office space in Nigeria is often of a poor standard.000-sq-metre Tinapa Shopping Mall Project. In the capital commercial rents have been rising steadily with the average rent in the CBD more than doubling since 2001 and increasing 20% since 2006. the 40. even though the political capital was Nigeria: retail indicators.000sq-metre Palms in Lagos remains the only enclosed shopping centre of any size. but very few reach international standard.5 8.3%) has placed pressure on the number of available housing units in the country. The 23. RESIDENTIAL MARKET: Massive urban migration (5.000 housing units per annum are needed to meet the immediate needs of those who seek to buy their own house in Nigeria.000 Household consumption expenditure ($m) 90.784 129.000 147. Nigeria retail remains concentrated on street trading and local markets. with the result that apartment rentals are increasing more than 10% and villa rates more than 17% annually. established in 2006. while commercial tenants have to pay $120. just as oil funds are inequitably distributed. and restricted only to Lagos. In the capital. At present.

75 Asia & Far East India Sri Lanka Pakistan Indonesia Malaysia The Philippines Singapore Thailand .

credit growth with generous domestic savings (34.490.148.8 7. World Bank Oxford Business Group .129. India ranks amongst the top economies on most indices maintained by international consultants.000 2007 1. 2006-11 Population 2006 1. In addition.224 1. foreign direct investment has increased by 47% from around $22bn in 2006-07 to $32bn in 2007-08. retail and hospitality space will continue to grow.76 INDIA India A very large market continues to expand In 2007-08 the Indian economy continued to expand at a robust pace for the fifth consecutive year.619. Firstly.53 1. including those maintained by OBG.164.000 2009 1.910. reflecting the impact of higher international crude oil prices and strong demand for commodities.8 7. under which it finances commercial banks. returns are forecast to fall to 12% to 20% in future years. With the economy reasonably open to foreign investors. hotels. however. The overall growth of the service sector has been largely driven by the performance of the trade.75% during April-July 2008 in five stages of 25 basis points each. grew by 10.430. and is set to continue increasing substantially. demand for residential.135 1. commercial.50 1. Income is also rising. Secondly.946 1. transport and communication services sub-sectors. although there were signs of moderation in the growth momentum.146. With 1.8 2008 1. India: economic and demographic indicators.000 525.9% in July 2008 compared to 5. down from past yields as high as 30%.098.936.357.5%.2m households now having an annual income of over $5400.30 5. respectively.199.50 1. compared to 9. the financial services sector registered year-on-year growth rates of 13.112. which have registered double-digit year-on-year growth rates over the last four years. which accounts for nearly 63% of GDP.945 1. There are signs.000 547.288 GDP per capita ($ at PPP) 2406 2659 2886 3129 3396 3694 Average household size 5.30 Labour force 506. A report by Goldman Sachs has suggested that rates of growth over 5% annually could persist in India for an extraordinary 50 years. Government statistics suggest that in the year up to May 2008. Against this backdrop. as well as strong fiscal consolidation.940.495 2010 1.978.000 Population growth (%) 1.9% and 11. Economic performance has been accelerated by high rates of investment.304 2011 1.352.8 7.000 516.30 5.30 5.1% and the services sector.305 SOURCE: IMF. It hiked up the cash reserve ratio by 125 basis points to 8. while housing credit increased by less than 14%. the Reserve Bank of India (RBI) was forced to reduce the liquidity within the economy. with an estimated 6. The repo rate. GDP grew by 9% in 2007 to reach $1099bn.8% of GDP).260.000 Unemployment rate (%) 7.4% in 2006.8% in years 2006-07 and 2007-08. was raised twice during the same period by 75 basis points to 8.14bn consumers and a middle class estimated at close to 250m people.55 1.920.7%.8 7. credit to commercial real estate rose by just under 32% year-on-year. the monetary interventions by the RBI have had a direct impact on the real estate industry. Inflation based on the wholesale price index increased to 11.50 GDP ($m at current prices) 877.181.232 1.30 5.000 558.30 5.996.000 535. The sheer size of the market remains a key source of strength. The industrial sector grew by 8. as indicated by the lending figures.654. that a greater attention to market realities may be creeping into the Indian dream.499.77% in 2007.50 1.232.8 7. robust export earnings.

However.239.5 10. However.7m units. Akruti Nirman with Limitless and Oberoi Constructions with Shimao Group. the middle. Defined as households with an annual income of over $2250. despite the line-up of substantial funds.796. excluding CBD and off-CBD micro-markets. major developers are acting on a regional rather than national basis. India is facing a housing shortage of around 24.309.716 9.019 4. Demand for housing in the middle. recent reports suggest that rising interest rates have slowed down the off-take of residential units and developers have been forced to reduce prices or hold on to them. respectively.4 3.& 5-star guests) 3. Chennai and Bangalore.761 23.731. with vacancy rates remaining low at between 5% and 8%. such as CapitaLand. This shortage has led to an additional annual housing requirement currently estimated at 360. Despite increasing land prices.233 31. resulting in a number of deals.790 4. The development of a number of special economic zones (SEZs) around the country should make surplus office space available at competitive rates in the future. Prices and capital values have appreciated by rates as high as 50% to 150%.988 6.852.4 Total stay-nights 12. Earlier commitments are now being downsized.000 units by the end of 2012. while some funds have tied up with local developers in the redevelopment of the Dharavi slum area.4 3. rental rates and capital values in micro-markets have remained relatively stable. These developers. which has been stabilising from the end of 2007 onwards.887 16. HDIL.and upper-income population showed a 14% and 21% compound annual growth rate (CAGR). have had to rely on regional tie-ups to get projects moving.8 42. Delhi. as well as cheaper rents and tax benefits. The global market slowdown has also had an effect on the local real estate market with tenants deferring or re-evaluating their long-term plans. There is a substantial likelihood of a marginal correction in some micro-markets on account of the upcoming supply in the second half of 2008 and beginning of 2009.to upper-income sector is expected to hold at around 1m units annually until 2012. a major Chinese developer.761 26.835. growing at an annual rate of 1.263 13. Partnerships include HDIL with Lehman Brothers. RESIDENTIAL: India has the second-largest population in the world. a handful of developers. and property prices currently range between $1500 per sq metre and $6400 per sq metre in prime locations.4 3. According to the government’s 11th five-year plan. which expires in 2012. especially in major cities like Mumbai. in 2007 the sector saw sustained interest from a growing number of foreign investment firms. while strong in their own home markets. Rents have risen by 50100% and now range between $45 per sq metre to $190 per sq metre per month for prime apartment units in primary cities. Sobha and Unitech have listed their companies on Indian share markets in a bid to raise funds for expansion across India. a number of the deals by foreign funds were made during a period when the real estate sector in India was on a high-growth trajectory. India Bulls. in 2008.4 3.038.7 18. COMMERCIAL: Both rental values and capital values for office spaces in the CBD and surrounding areas have showed an appreciation of approximately 45-50% in 2007.7 Average stay length (days) 3. with 32% of the population below 14 years of age. DLF.403. Some are even financing riskier projects involving land parcels with existing tenants who need to be resettled. This has sparked a plethora of apartment projects.648.INDIA 77 down considerably from 2007. which has directly affected the demand situation in some micro-locations. between 1996 and 2006 and is forecast to increase further by 15% and 22% CAGR by 2012.684 SOURCE: Local statistical authorities. Thus. highcost entry barriers are prompting some firms to not deploy all of their resources.5 16. At present the government estimates that $84bn worth of investment will be needed to reach targets for housing the growing population. Deutsche Bank.5 15.4 3. OBG Research THE MARKET Real Estate 2008 .897. Parsvnath. which showed growth in lending to the real estate sector to be just under 90% and over 30% for housing alone. KEY DEVELOPERS: Given the size of the country and its regional variations. Nevertheless.6%. Goldman Sachs and Merrill Lynch.217. In 2007 the total stock of residential units was estimated at around 58. But in the last couple of years.8m. such as Ansals. India: tourism and hospitality indicators. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.339. It is expected that the focus of office activities may shift from the CBDs to SEZs on the outskirts of cities due to the availability of better infrastructure and quality of construction.224 7.554 Tourist arrivals growth (%) 1.

304 1.361 840. there is concern that income and spending simply may not be able to sustain this level of development.78 INDIA Sales prices now range between $10. Shopping patterns will also need to change. The average rentals in investment-grade retail ventures has been increasing since 2005. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 1.5 10. Retail analysts have called for the development of 600 shopping centres in India over the next decade.199.146. However. primarily because of limited supply and improvement in terms of tenant profile.90 3.000 people.000 and $13. HOSPITALITY: Approximately 5m foreign visitors travelled to India in 2007.and five-star hotels in primary cities is around $230.4 10. The total number of hotel rooms was reported to be around 110.1 10. so Walmart joined with AV Birla Group in 2007 and Tesco with the TATA group in 2008.40 5. This supply will again be concentrated in India’s commercial centres and room rates.000 1. Wal-Mart and Tesco has increased. organised retail supply is increasing at a rate of more than 25% annually and is in step with population growth.611 625. However. which sees 20m to 25m people enter the middle class each year.90 SOURCE: World Bank. the number of foreign arrivals remains comparatively low. In 2007 hotel rates in Mumbai climbed by 30% over a six-month period. having topped AT Kearney’s Global Retail Development Index for the past three years.20 6.20 4.8 10. Compared to developed leisure markets such as Malaysia (20. International Macroeconomic Data Set centrated in Bangalore.129. up from 4. With an undersupply and comparatively low operating costs.996. interest among international retailers such as Carrefour.936. coupled with the anticipated increase in the total retail mall space. and very little formal retail space in the 784 towns with populations of more than 50. having increased by 33. Delhi and other cities making it cost-effective for businesses to transfer events and conferences to surrounding countries. mall management and facilities offered.267 567.8% to reach almost $12bn. This part of the market is now being exported. are expected to stabilise. RETAIL: India is regularly ranked as the most appealing market for retail development. Yields remain comparatively stable at 10-12%. connected to the IT sector.000 in 2007.500 per sq metre for prime locations. Throughout India total mall space remains less than 6m sq metres. these figures do not take into account domestic tourism. Chennai. where slowing hospitality demand. regulations demand a joint-venture with a local partner.3 10.000 new hotel rooms are expected to be released onto the market by 2010. modelled demand suggests that this supply may be absorbed depending on the performance of the IT and outsourcing industries during the period. of which over one-third are in the four.4 Inflation (%) 6. New supply will also be concentrated in these cities. up from the $8. This reaction has already been observed in Bangalore.352. Tourism revenues in 2007 showed a substantial rise.495 1.148.93bn recorded in 2006. Average rents in the malls in prime locations in the largest cities are in the range of $1050 to $1500 per sq metre. but are over 90% in commercial cities. ending at more than $300 and placing India’s commercial capital on the list of global cities where room rates are growing most quickly. Mumbai and Delhi. However. However.97m in 2007) or Thailand (14.46m).978. According to the Ministry of Commerce and Industry. IMF. Primary cities studied by OBG anticipate a doubling or tripling of high-end stock by 2011-12. there could be a rise in vacancies and a stabilisation in rentals in the near future. rising by 25-30% in 2007 alone. Given the current economic scenario.181.112. of which at least 200 are planned or already under development. Following the liberalisation of investment laws.003 690. Occupancy rates in the high-end hotel segment averaged 73% in 2007. The average room rate for four. 1m sq metres of which is con- India: retail indicators.164. Oxford Business Group . with high room rates in Mumbai.320 Growth rate (%) 9.4m in 2006. rents are also increasing and reached $1100 to $1500 per sq metre in CBDs. with land availability and a comparatively low incidence of car ownership impacting appetite for large out-of-town centres.000 1.305 Household consumption expenditure ($m) 512.619. Bangalore. caused average room rates to decline by as much as 10% during 2007.and five-star categories. which accounts for more than 75% of hotel stays and business visits account for around 60-80% of demand. with expected supply close to tripling by 2010. With costs rising. which have increased by 8% annually since 2002.00 3. the hotel sector has attracted a large number of developers and as many as 100.000 1.362 761.

10 4. which have increased by more than 30% per year. with 9% growth recorded since 2004.750 8. Sector growth has begun to pick up only over the past three years.4% in 2006.1%. which continues to be above 25% per year. Many new condominium properties in Colombo are being marketed aggressively.188 9.78 0. few foreigners purchase property and expatriates tend to restrict themselves to leased property. which averaged $282.00 4. World Bank THE MARKET Real Estate 2008 . particularly in the post tsunami reconstruction phase. which include a 100% property tax for foreign buyers of freehold real estate. Housing developments.6% in the fourth quarter of 2007.79 0. Outlying suburbs. Therefore. The capital is now seeing a trend away from the central city areas as land there has become too scarce and expensive. as the result of prohibitive real estate investment regulations. the number of tourist arrivals has remained steady since 2003 at about 550.875.6 7.00 4.000 8.053 46. Recently the government allocated 18% of its Rs925bn ($8.69 GDP ($m at current prices) 26.500.4% to 6. 2008 witnessed a slowdown in which expansion fell back by 1.682.268 GDP per capita ($ at PPP) 1364 1506 1732 1893 2061 2253 Average household size 4. have become increasingly Sri Lanka: economic and demographic indicators. however.401.78 0. the second-home market is largely driven by expatriate Sri Lankans looking to invest in their country and planning for their future return.000 7.000 20.085.268.928. Over 46% of Sri Lankans are under 25 years old.10 4.000 20.342.00 Labour force 8.000 7. after quitting an internationally brokered ceasefire and pledging to destroy the LTTE in January 2008. Against this backdrop. remain the major concerns for the government.6 7. the country’s economy continues to witness a growth rate of above 6%. The UK is a key market for these potential buyers.3m (2007) and an annual growth rate of 1. The biggest driver of the real estate sector is the tourism and second-home market. However.773. have also been hampered by spiralling construction costs.787 38. such as Nawala and Rajigiria.59bn) budget to defence spending. 2006-11 Population 2006 2007 2008 2009 2010 2011 19. RESIDENTIAL: Sri Lanka has a population of 20.541.2m per annum in 2002-06 and is estimated to be equivalent to 14% of GDP in 2007. The industry has lost out on investment. Construction has consistently accounted for 6% of the Sri Lankan economy since 2003.00 4.318 42.78 0.6 7.000 visitors per year.963 30.034 Unemployment rate (%) 7. A contributing element to the country’s fairly good growth rate is the unexpectedly strong increase in foreign direct investment (FDI).000 20.330 residential units was exacerbated when more than 78. which reached 7.000 Population growth (%) 0. A supply gap of approximately 284.6 7. Social instability and rising inflation.6 7. indicating high levels of future demand. However. the country has experienced strong economic growth.080.000 19.SRI LANKA 79 Sri Lanka Despite considerable challenges. with approximately 10% of demand for residential property in Sri Lanka coming from Britain. Real estate and construction remain comparatively stable.000 20.6 SOURCE: IMF.000 homes were destroyed across the country as a result of the 2004 tsunami.2% in the first quarter compared with 7.242.79 0.012 34. Despite the 2004 tsunami and the prospect of renewed civil war. real estate continues to grow steadily In spite of the fractured peace process between the Sri Lankan government and the Liberation Tigers of Tamil Eelam (LTTE).

As a result.1 Total stay-nights 2. the industry is currently going through a testing time. there Oxford Business Group .1 10. The number of tourism nights increased by 21. has 90% occupancy. growth in the country’s workforce was 9% from 2001 to 2006 and averaged around 5% from 2005 to 2007. However.948 2. export-oriented industries. Cinnamon Gardens and Kolluptiya are the most exclusive residential addresses.80 SRI LANKA important residential and commercial centres.3% 2. Sri Lanka is lacking in grade A office space. although condominiums with four floors or more are excluded from taxation. with 65. Tourism is the country’s fourth-largest foreign-exchange earner.375 246. a minimal number of foreigners are now purchasing property. with the Access Towers and Hatton National Bank (HNB) towers.9% and tourism receipts by 11.1 10. making it the smallest recipient of FDI in South Asia.0% 2. with many of the non-Sri Lankan offices belonging to Indian affiliates.171 256. its Fort area has now become a high-security zone.1 10. There will be limited supply in the market within the next three to four years. are earmarked for development to complement the strong supply of residential property being constructed in these areas.591. Foreign interest has also declined since the introduction of a 2007 law that set the land tax at 100% for foreign acquisition. The Sri Lankan economy remains dominated by productive.351.023 240. as a result of the security issues affecting the capital. thereby involving local communities in the development. Nevertheless. Suburban areas. Foreign purchases accounted for less than 5% of the market in 2008.735 2.& 5-star guests) 223. HOSPITALITY: The hospitality sector is particularly important for the Sri Lankan economy. especially after the breakdown of a ceasefire between the government and the LTTE in January 2008.486.9% 4.373.000 sq metres of grade A space.330 2. The government is focusing on providing low. the Ceylinco high-rise and the Bank of Ceylon building. and land acquisitions are now controlled by government restrictions.784 235.122 SOURCE: Local statistical authorities.427.2% Average stay length (days) 10. the construction of the second Access Tower is the only confirmed large grade A commercial development in the pipeline. providing the only other high-end purpose-built space. OBG Research COMMERCIAL: Demand for office space in Colombo is limited. In total.7% in 2006.327. Land prices in the city can reach up to $1600 to $2600 per sq metre. the Cinnamon Gardens area in Colombo 7 has some residential converted office space used by a number of local companies.000 housing units clustered in villages. Sri Lanka: tourism and hospitality indicators. community planning. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.1 10. compared with 15-20% three or four years earlier. In addition to this. Occupancy in the grade A space segment is extremely high. However. the government pledged to build 10. The option of taking out a 99-year lease to evade property taxes is unpopular due to the bureaucracy and length of time required for the administrative procedure of gaining exemption.4% 4.0% 1. with many buildings in a poor state of repair. provision of infrastructure facilities and a per-household financial package of $573. with HNB and Access towers turning away potential customers.841 232.120 2.and middle-income housing. However. In the central districts. The relatively small size of the services industry also affects demand for office space. In Colombo the Fort area has traditionally been considered the central business district as it is home to the WTC. The 2004 tsunami caused the price of coastal land to plummet.547 Tourist arrivals growth (%) 1. the largest commercial space in Sri Lanka. Sri Lanka’s tourism industry has remained resilient in the face of political instability and natural disasters. both located in the Colombo 2 district.4 10. such as agriculture and textiles. the package features an awareness programme. The WTC. Alternatively. However.000 sq metres. The government has also suggested providing 2000 serviced land plots by 2009. with the exception of the aforementioned three. It is estimated that Sri Lanka attracted $300m in FDI in 2007. the central districts of Colombo have less than 150. such as Nawala. and the Liberty Plaza and Majestic City shopping malls have commercial space above them.787 2. this could be drastically affected in the near future if civil unrest continues to dominate the nation’s politics. Rajigiria and Battramulla. This is reflected in the limited presence of international offices in the capital. The capital has limited alternative office space. and the number of foreign visitors to the island nation has been consistent over the last five years. with most demand for prime space absorbed by the World Trade Centre (WTC) towers. As part of the 2006 housing programme.

however.000 20. such as Cinnamon Gardens and Kolluptiya.1 13. The average length of stay is relatively high at 10. the assistance may include policy development. Indeed.000 19.00 8. All hotels in the capital are heavily reliant on business guests. boasting a large variety of leisure hotels and resorts. Sri Lanka’s hotel occupancy rates dropped despite the fact that the tsunami had caused hotels to reduce their prices and rates. many tourists bypass the capital altogether. The World Bank estimates real annual per-capita income to be $1355.000 20. a fact the Sri Lankan Tourism Board reinforces with an aggressive marketing campaign in India.965 Growth rate (%) 15. compliance and regulatory mechanisms. an increase of 22. which was down from a high of 59. The majority of visitors to Sri Lanka are leisure tourists who are attracted to the range of pictureperfect beaches. Sri Lanka: retail indicators. Occupancy rates across the country averaged 47. Hotel supply is increasing slowly but steadily.8% in 2006.8 13. the country had 248 hotels with a total room capacity of 14.511. The government forecast of total room stock of 25. The south-west coast below the capital of Colombo is heavily developed. With corporate rates rising in India’s commercial cities.773. as well as marketing and promotion strategies for positioning Sri Lanka's tourism offerings in key markets. Also.000 rooms by 2010.70 11.and middle-class population exists.401. However. Although a number of shopping malls are currently under development.000 Household consumption expenditure ($m) 19.50 8.000 20.50 9. choosing instead to go directly to the resorts in the south.4 nights in 2006.9 14. incentives.7 nights in 2005. income disparity is considerable and a wealthy upper. Colombo is dominated by street-facing retail activity and organised retail is fairly underdeveloped. and highend retail is restricted to high-profile districts.242. According to the Sri Lankan Tourism Board.50 19. The city has five major shopping centres.6 12. Climate-controlled space is limited.SRI LANKA 81 have been highlights in the industry. including a recent agreement between the World Bank and the Sri Lanka Tourism Board.261 21. Sri Lanka has become an attractive alternative.666 24. mixed-use development that incorporates a 30-storey luxury residential tower. Liberty Plaza and Majestic City target the luxury market. conventions and exhibitions segment is becoming increasingly important. as a result of the heightened security that surrounded the capital following an escalation in violence between the LTTE and the government. up from 8. IMF. which at certain times of the year exceeds room revenue. market forecasts suggest that retail space will remain in undersupply in the short to medium term.3 Inflation (%) 9. Majestic City is the largest shopping centre in the country and Crescat Boulevard is part of a large. Indian shopping tourism plays a key role in the retail economy. RETAIL: Despite having a comparatively high percapita income in relation to India. Colombo has two international hotels. These resort hotels garner as much as 60% of their business from package tours. The city also has a large number of local and regional operators. The Galle road has emerged as the prime retail destination with many upmarket stores opening in recent times. particularly in the capital.928. The city centre hotels in particular have suffered to some degree or another.3% in 2004.742 35. the Crescat Boulevard. with the government registering 12 new hotels and 48 guesthouses in 2006.901 31.5 12.00 SOURCE: World Bank. The majority of hotels in the Colombo area also report strong revenue from banqueting. Among the larger malls. a five-star hotel and the luxury mall. Sri Lanka is still classified as a lowincome country. The funding will make use of private sector expertise and resources wherever possible in private-public partnerships as well as community-based initiatives to empower local communities and small businesses. temples and hill districts that the country offers. the Hilton and the Holiday Inn. According to this agreement the World Bank has agreed to provide funds to the Sri Lankan government for a tourism initiative among small entrepreneurs and rural communities. This trend continued in 2007 with most of the hotels reporting their occupancies at just about 50%. with hotels attracting corporate guests and reporting occupancy rates that are considerably above the market average.5% on 2005. all of which are locally managed.000 20. Pakistan or Bangladesh.541. bringing in an estimated 100. The meetings. International Macroeconomic Data Set THE MARKET Real Estate 2008 . as there are few tourism-related activities in Colombo itself.459 27.085. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 19. The agreement also aims to cover human resource capacity building in government tourism institutions.000 tourists in 2006.

Yet. There are already signs that momentum has returned to the real estate market.05 Labour force 47.75 1. with GDP growth falling to 4. yet it is not enough to meet the demands of the sector. Pakistan: economic and demographic indicators.17 6. Pakistan’s real estate sector is now seeing a number of large-scale projects from Gulf investors.351 GDP per capita ($ at PPP) 817 909 995 1072 1155 1249 Average household size 6.452 192. RESIDENTIAL: While Pakistan has seen a flurry of construction activity in the high end of the market.002 143. the urban market began to turn in mid-2005.07 6.000 50.400.5bn to $4bn in 2002. Real estate and construction in Pakistan has been a direct beneficiary of the return of capital. The largest investments include Nakheel’s $68bn Sugarlands City.485. For instance.10 6.66 GDP ($m at current prices) 127.000 49.2 10.5% per year during the preceding four years.0 9. 2006-11 Population 2006 2007 2008 2009 2010 2011 155. resulting in greater use of credit and financing options. The Central Bank also took a role in promoting real estate investment.580. with property prices in prime areas of Islamabad and Karachi beginning to climb back. Emaar’s Crescent Bay in Karachi. At that time.840.150. The increased political tensions have had a considerable negative impact on the economy – making Pakistan a high-risk investment destination at the moment.000 Population growth (%) 1.350 211. The Economist Intelligence Unit is forecasting growth at more than 5% and stronger macroeconomic fundamentals in 2008-09.410.180.8 SOURCE: IMF. World Bank Oxford Business Group .000 housing units per year. The remainder of the housing requirement is met by building semiofficial housing.2 10. Until recently the property surge has mainly been confined to the major cities and. property prices and rentals have been increasing steadily for the past year. is experiencing an annual shortfall of 80. Increased liquidity helped real estate prices to rise consistently from 2002 to 2005.12 6.000 units.700 new housing units are produced each year in the formal sector in Karachi.000 54. Overseas remittances jumped from $1. which is usually built on agricultural lands that are bordering the city limits or in the consolidation of land in low-income inner-city areas.152 175. Undeveloped plots were the worst affected portion of the market. Karachi. investors from the Gulf and the Pakistani diaspora pulled billions of dollars out of Western markets. as a result of high-risk activities there. Institutional investors moved out of property investment.3 10. the Highlands and Canyon Views projects in Islamabad.766 160.15 6.8 10. the Karachi Waterfront development by Limitless.72 1. 2001. as interest rates declined to historic lows of 3-4% from as high as 22%. Around 26. Although interest rates have been raised to contain inflation. with prices in certain areas declining by 40–50% across key cities.253. Pakistan’s fastest-growing city.6% from an average of 7.69 1.000 169.82 PAKISTAN Pakistan Momentum returns to the market The Pakistani economy slowed down in 2007-08. opting to wait for conditions to stabilise.000 166.000 51.88 1.78 1.000 53. political instability in 2007 has prompted developers and buyers to hold back on making investments.000 163.000 160.170. there remains a significant national shortage of housing – an estimated deficit of 500.942.000 158. looks brighter.920.714. however. causing a decline in prices by as much as 40% between 2004 and 2006. Pakistan’s real estate market underwent an intense period of growth post-September 11. and the Bundal and Buddo Islands project worth $43bn. The future.000 Unemployment rate (%) 9.

128 484. but a growing number of companies are looking to set up offices in the city. making it the world’s sixth-most-populous nation.7 -6.PAKISTAN 83 The low.061 Tourist arrivals growth (%) 4.2m in 1981 to 130.000 per sq metre in new developments. with a yearly requirement for 570. 2001. In Lahore. OBG modelling estimates the total number of residential units across Pakistan at 19.000 sq metres set for completion by 2013. both at home and abroad. 2. Clear demand remains for housing by low. This is a significantly high growth rate comparable only to that of Nigeria. The interest from overseas investors in property across Pakistan is varied but huge in some sectors. This situation has essentially created a housing crisis in Pakistan. Areas such as that of the Defence Housing Authority development in Lahore have seen huge interest in their properties.2 1. The average occupancy rate in commercial towers in Islamabad is 96%.181 497. Islamabad also has a high volume of office space under development. see cities like Islamabad. have become increasingly security conscious.000 additional houses. Iran and Ethiopia. Gated communities and master-planned developments have become an extremely important trend in the Pakistani real estate market over the past decade. Annual production was 300. Lahore and Karachi as a potential second home market. Home buyers. Wealthy Pakistanis.3m. despite the projected requirements of economic growth in several sectors such as IT and telecoms.and middle-income segments of the sector remain short-supplied. where demand for low-cost housing far outstrips supply. According to OBG modelling.0 9.018 597. and up to $10. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. Pakistan: tourism and hospitality indicators. and it is not believed to have risen significantly since that time. particularly in Karachi. The UN Populations Fund estimates that the population of the country will increase by around 80% between 2002 and 2025. The values of plots have rocketed up to more than 20 times their worth pre-September 11.and middle-income groups. Unofficial settlements or “katchi abadis” account for up to 35% of all of Pakistan’s urban housing stock and are a particular problem in Karachi. Average occupancy rate in Lahore’s existing commercial stock is 79%.633 525. The markets in Lahore and Islamabad may become oversupplied when all the new units arrive.2 Total stay-nights 515. However. and the lack of supply has forced many companies to estab- lish their offices in villa conversions in residential areas of the city. which should result in a drop in rental prices. There is a marked shortage of grade A office space in Pakistan’s major cities.2 1.1 5. such as Lake City Lahore (a golf development) and Bahria Town cater exclusively to high-income groups. Blue Area in Islamabad. Rental prices in these areas range from $100-$400 per sq metre with new developments asking for rent up to $750 per sq metre. It is estimated that in Karachi the gap between supply and demand in this market will be largely reduced by the year 2010. especially in Islamabad. even with all the largescale projects under construction or in development.7m sq metres of commercial space is being developed.161 563.4m units.374 531.000 units emerged.273 403. an annual unsupplied demand of 270. reaching more than 260m and potentially 318m by 2050.7 6.074 SOURCE: Local statistical authorities.& 5-star guests) 429.6m in 1998 – an increase of 55%. telecoms and textiles sectors. COMMERCIAL: Pakistan’s strong economic growth is driving the demand for office space. The government believes the current housing crisis in Pakistan dates back to a population surge in the 1980s and 1990s when the total population in Pakistan increased from 84.5 Average stay length (days) 1.160 630. where demand is so high that rentals have risen to levels comparable to prices paid in New York and London.2 1. often due to the presence of relatives in these cities and the opportunity to make good investments. Companies are struggling to find adequate office space in all three of Pakistan’s major cities.634 469. Urban population has increased by thirty-seven times since the Second World War and is now growing at the rate of approximately 5% per annum. As a result of this supply stagnation. Sale prices range between $1000 and $3000 per sq metre. Lahore has virtually no grade A commercial space. particularly Pakistanis returning from overseas. there is a high volume of office space currently under construction in Lahore and Karachi.2 1.0 6. the demand for highend housing will remain higher than the supply through 2013. yet the sector will still be undersupplied.000 units in 1998. OBG Research THE MARKET Real Estate 2008 . while the estimated demand was for 26. particularly in the IT. Pakistan currently has a population of 165m. Shahrah E Faisal in Karachi and Main Boulevard in Gulberg Town in Lahore are home to most businesses. with a further 965. Current developments with phases targeting overseas Pakistanis.2 1.645 442.

International Macroeconomic Data Set two Hyatt properties. an Intercontinental and a Marriott.500 tourists were registered as having visited Pakistan in 2007.400 in 2006. Units in these markets are street-facing and predominantly occupied by small private operators. Due to the high volume of supply that is set to hit the market by 2010. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 155. there are 800 hotel rooms scheduled for completion by 2010. although some international brands. modern offices and the aforementioned seven-star hotel. unmapped and not easily quantifiable. when there were just over half a million tourists. RETAIL: Domestic demand has been the cause of retail expansion in Pakistan in the recent past.2% in three-. Even though retail space in the city is expected to double by 2013.9 18. such is the level of demand. such as Bata. Good opportunities are instead concentrated in secondary cities.000 158. further investment in hotel properties in Karachi.and five-star properties. Occupancy rates have struggled to remain high in Pakistan’s major cities.000 166.253. There is still plenty of room in Pakistan’s market for more international-standard malls of this kind. Oxford Business Group . There is very little international awareness of Pakistan as a tourism destination.50 5.2 18. At present.6 17.77 8. a cinema and air-conditioning. distributed among Pakistan: retail indicators.714. remains fairly undynamic. despite its diverse cultural heritage. which is Pakistan’s most dynamic retail market.000 169.2 Inflation (%) 7. This is particularly apparent in Lahore. with a national average of 69. parking. The decline has certainly been a result of the unstable political situation in the country.9 17. Statistics from the government show that 839.815 Growth rate (%) 14. This is because they are generally purchased for use by the owner who can make a larger profit by not renting out.50 SOURCE: World Bank. In spite of the low visitor numbers. meaning that the lion’s share of the sector is informal.50 7. However. The high-profile Centaurus Project will feature Pakistan’s first seven-star property and will contain a 350-room hotel operated by Hilton Group.000 Household consumption expenditure (m) 120.942. IMF.438 143.863 200. opportunities for shopping and exceptional outdoor activities. have managed to open outlets.50 6.221 169. Pakistani consumers have shown a strong preference for street-facing retail over malls or “plazas” – tower blocks with retail on the first two floors and offices and apartments in the remainder of the building. with more than 2500 rooms slated for completion by 2013. Major developers are establishing properties in Gwadar – the Hashoo Group opened a Pearl Continental and plans to establish a Marriot in the near future. Most activity is concentrated around sector markets such as Jinnah Market and Super Market. the sector will remain severely undersupplied. a project currently under construction and set to open by March 2009.209 235. In Karachi. rental yields for retail property in these cities are low. there are 10 more hotels being planned around the city. with disposable incomes rising and international brands cautiously entering the market. The northern region of Kashmir has long been a point of interest and insecurity.000 163. In addition to that. Islamabad or Lahore seems ill-advised for the next three to four years. Retail and wholesale trade accounts for more than 19% of GDP. retail in the capital city. even though the numbers are still high when compared to 2003.400. The mall will boast five storeys. down 6. particularly in Karachi and Lahore – where the retail sector is strong but undersupplied. These accommodations are being built as part of Expo Centre Lahore.and five-star rooms 42% by 2009. French hotelier Accor has announced plans to build 12 Ibis hotels across Pakistan over a period of five years. a street-facing development attached to a sports stadium.84 PAKISTAN HOSPITALITY: Pakistan’s ability to attract foreign tourists has been constrained largely by the country’s reputation for political and social instability.170.000 160. Islamabad. For potential investors and developers. and the sector is growing at a rate of 9% per annum. new projects will increase the number of four. around 4%.4 18. The project is being built by Pak-Gulf Construction and will be constructed as part of the same complex as luxury apartments.6% from 898. the most expensive retail space is located at Fortress Stadium. Data from the Ministry of Finance shows that 2008 has also started on a negative note with tourist arrivals down by over 5% in the first four months compared to the same period in 2007. Islamabad is a particular focus for international brands. Pakistan’s construction surge has spilled over into the hospitality industry. four.046 277. The Centaurus Project will also feature Islamabad’s first international standard mall. More than 97% of retail trade takes place in private or family-owned stores. In Lahore.92 7. with several major hotel brands entering the market for the first time. In Lahore.485.

now that the government has made a decision to raise oil prices.000 111.862.1% in 2008. yet the islands make up only 7% of Indonesia’s land mass.000 109.6 9.379 432. but it is said that during the day there are up to 12m people there due to the volume of visitors.08 4.2% of the country’s annual GDP in 2007. the current shaky market situation is largely due to the lack of both consumer and investor confidence in the market.000 islands. Some major players that are getting involved in these plans are the Agung Podomoro Group.625.30 1.944 488. According to the World Travel & Tourism Council.000 224. Of these.30 1. Bali and the few neighbouring islands comprise 60% of the total population of the country. Inflation was reigned in considerably during 2007.30 1. An estimated 9m people live in Jakarta.000 236.08 4.3 9.620. World Bank THE MARKET Real Estate 2008 .793 GDP per capita ($ at PPP) 3456 3725 3979 4251 4552 4896 Average household size 4.825.000 Population growth (%) 1. This rather large decrease was due to broad government efforts to stabilise the rupiah.30 GDP ($m at current prices) 364.30 1. The Indonesian population that resides in Java. as well as at least 1.35m low-cost houses from 2004-09 in order to accommodate the needs of low-income earners.2 SOURCE: IMF.950.830. elevating it to a per-capita average of $3725. while that for Indonesia is projected at 6.865. the Artha Graha Group and Bakrieland Development – all of which are Indonesian companies. In the short term the government is pro-actively developing plans for affordable housing that include subsidies for homes and financing options to lowincome groups.051. 2006-11 Population 2006 2007 2008 2009 2010 2011 222.3% per annum until 2017. Tourism made up 7. In 2007 GDP grew 6.000 233.07 Labour force 107.08 4.149 536.000 230. If the upcoming 2009 elections run smoothly. That scenario does not bring cheer for poorer Indonesians who are already suffering from high energy and food costs. 43% were lower-middle grade. accord- Indonesia: economic and demographic indicators.4 8. the latter should return to the market. sales for apartments and condominiums intended for the other end of the income ladder stood at 55. dropping to 6.940. However.7 8. However. RESIDENTIAL: One of the issues requiring the attention of the government in Jakarta is that the city suffers from a huge undersupply of affordable housing. That growth is forecasted to finish slightly lower in 2008 at 5.1%.2 8.3%.55% of 2006.30 1.168 587. due to the recent global fuel prices.96% compared to the 14.000 115.000 Unemployment rate (%) 10.4% over the same period.938.000 113. The goal is to have these apartments built by 2011.08 4.07 4. real GDP growth for the travel and tourism economy in South-east Asia is expected to average 6. inflation could again bounce back as high as 10% in 2008.000 227.223 units in the first quarter of 2008. the Gapura Prima Group.000 117. 49% were middle grade and the remaining 8% were higher grade units. However. This makes Jakarta the most densely populated city in Indonesia.INDONESIA 85 Indonesia Strong fundamentals override worries Indonesia is the world’s fourth-most-populous country with nearly 225m people inhabiting over 17.509 645. and is expected to remain relatively consistent despite a very slight decline to 7.860. The tourism and agriculture sectors remain the primary drivers of the economy in Indonesia.824. The government has plans to address this issue at first by constructing 1000 low-cost residential buildings around the city.

Sales of high-end apartments in Jakarta have been impressive over 2007 and 2008. Indonesia’s second-largest city. but strata-title offices common to agreements with foreign companies are more in demand than in previous years. is quickly becoming obsolete and people are now moving back into the capital. however.800 3. Bali is very popular with foreigners seeking to purchase property either as an investment. This trend. Due to the stiff competition for premium office space in Jakarta. due in part to the leasehold titles that are valid for a limited period.5 2.839. better quality office space. yet presents a traffic issue.1 Average stay length (days) 2. OBG Research second home or as a retirement home.039. This is leading to an increased demand for office space. with 70% of new units selling out in advance.5 2. older buildings are undergoing refurbishment and large companies are paying more to move into bigger.9m sq metres is grade A office space. They now stand between $10-15 per sq metre per month. This rate of construction is currently on pace to lead to an oversupply of high-end units. Depok.281. There is a total supply of approximately 5.312. according to Provis.5 2. the market in Jakarta will get more competitive. Rental prices for prime office space in the CBD in Jakarta are also increasing.122 Tourist arrivals growth (%) -2.183 sq metres is under construction. due to lower land prices.390 4.86 INDONESIA ing to Jones Lang Lasalle. at 75% in the CBD and 72. A further 29.1 2. scheduled to be completed by the end of 2010.4m sq metres of office space in Jakarta. Over 1m sq metres of new office space will be coming to the market within the next three years. New and higher-quality buildings will have the advantage.803 units are expected to be completed by the end of 2010. RETAIL: With a middle class estimated to be over 50m within a population of 225m. yet it appears that rentals are going to stabilise within the next few years as more stock comes on board. The cost of building office space outside of the CBD is much less. Unlike Jakarta. mining and finance companies will remain high over the next few years.5 2. however it is unlikely that their numbers will be substantial enough to sustain the high volume of supply that will be made available over the next two years. There are a total of 7032 serviced and non-serviced purpose-built apartments in Jakarta.309.872 4. Most condominiums in Jakarta offer strata-title ownership. They will be able to provide tenants with more efficient. Slightly lower than the 2007 figure of 88.000 9.746.099. well-equipped and secure office space. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. has also been growing at a noteworthy pace over the past few years and is emerging as another major Indonesian business centre. In the meanwhile.720 10.5 2.345. The real estate market in Surabaya. OFFICE: The steadily decreasing unemployment rate reveals that jobs are being created and the economy is seeing growth. Indonesian cities are rapidly urbanising.4 4.7% elsewhere in the city.519 3. By 2010 the population living in the cities is predicted to rise by about 50%. of which 1.6 13. however. The majority of retail space supply is concentrated in Jakarta and its satellite Oxford Business Group . The project’s estimated cost is over $600m.5 Total stay-nights 8. Expatriate workers are the target market for this higher-end segment .681 10.804 SOURCE: Local statistical authorities. which is available to foreigners but is based on leasehold titles that are valid for 20-50 years of ownership. Statistics show that foreigners prefer only to lease apartments in Jakarta instead of purchasing property.598. which had 84% occupancy in 2007. Building office space outside the CBD is becoming an increasingly popular trend with developers since most people live in suburban areas and traffic poses a huge problem in the city.2% overall. A further 725.5 5. International brand tenants have a significant presence in the country and enjoy a large consumer market with an elastic appetite for shopping. Indonesia: tourism and hospitality indicators.772.& 5-star guests) 3.367. as both poor city infrastructure and increasingly congested roads make the commute almost impossible. Occupancy rates are already below optimum levels.297 9.488 4. The demand for grade A office space in Jakarta due to oil.974 10. Tangerang and Bekasi) to avoid high property prices in the capital. Like Bali. Lombok is also catching the attention of investors as being ripe for development. Occupancy levels at the end of 2007 were at an average of 87. there is certainly a market for retail in Indonesia.2 2. The past decade has seen Jakarta’s workers move to neighbouring cities in the Bodetabek area (Bogor. Emaar has recently begun a joint venture with the Bali Tourism Board to develop a 1200 ha plot of land on the coast. Beachside developments in key areas are increasingly popular.138.8% in the CBD.

The Indonesian government is promoting Indonesia to Arab countries in the Gulf and putting emphasis on Islamic links between the cultures. Improvements have been largely driven by a 37. The amount of retail space on the market is anticipated to grow by 28% by 2011.000 227. In particular.000. IMF. In Bali alone there were 1. This will bring the total stock to approximately 5.051.862. China and now increasingly the Middle East. Indonesia has considerable tourism potential.000 236. Direct foreign arrivals reached an all-time high in the first quarter of 2007. amounting to 9% of GDP. of which fewer will have to fly to Denpasar Airport for a connecting flight.7 Inflation (%) 13.94 4. significantly higher than that of five-star rooms in larger Jakarta where the average is $114. such as the 2004 tsunami and terrorist attacks. However. The average value per five-star hotel room in Bali is $169. the Indonesian tourism industry has remained stable. This means that Lombok will be more accessible to visitors. Indonesia: retail indicators. Retail trade increases.INDONESIA 87 towns. the number of UAE tourists visiting Indonesia has significantly increased.865. poor infrastructure and little-tono development strategy. Maspion Square.262 461. yet overall occupancy rates were low – 67% at the end of 2007. the Indonesian government has adopted a fiscal incentives policy for development projects. being a country of diverse terrain. To attract private sector investment in tourism development.12 5. Discovery Mall.2 12. It will have a passenger capacity of 2. jungles and beaches. mean that Bali is becoming more and more popular not only as a holiday destination but as a place for second homes. of which Jakarta alone will account for 74%.000. However. A new airport under construction in Lombok is scheduled for completion in 2009. there are 14. in the first half of 2007. Bali tourism has continued to recover despite fresh travel warnings and. Already the government has successfully targeted investors from the Middle East. Jembatan Merah Plaza and Plaza Marina.74m tourist arrivals. leaving it at $130 per sq metre and in Jakarta at $72 per sq metre.0 15. Most tourists hail from East Asian countries. A further 688.000 230.473 257. The number of tourists who visited Indonesia rose 13% to 5.1m sq metres. the past year has seen the construction of shopping centres completed both in Surabaya. However. such as hotels.9 14. growing annually at a rate of between 10-13% for this group alone. By 2009 1. from 4. such as islands. with a further 2440 rooms to be built within the next two years. Tourism represents the second-largest source of foreign capital in Indonesia.2m sq metres of new gross leasable area (GLA) will be put on the market.4m people. three times that of the existing airport.824. a fact that injected capital and more market confidence into the area.6% . and on the island of Java. Mal Surabaya.6% rise in occupancy. Mal Galaxy. With Surabaya’s increasing urbanisation and its residents becoming more at ease with the city’s development.825. At the end of 2007 average gross rental rates were up.51m in 2007. almost 7% higher than the end of 2006.921 296. much of this potential has been under-exploited because of a lack of resources. Occupancy rates at the end of 2007 were at an average of 84%. along with those of tourism. achieved the region's highest revenue per available room growth at 58. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 222.41 7.90 4.518 hotel rooms of fourand five-star quality. This is because of increasing demand for hotels and the number of available rooms remaining stagnant due to the closure of a few older hotels in Jakarta.5m sq metres. such as Japan.057 347. Although with the new stock coming on board.226 399. tourist resorts. rental rates for premium grade A space have dropped slightly since 2006.000 Household consumption expenditure ($m) 228.289 sq metres of space is scheduled for completion at the end of 2009. recreational parks and convention facilities.3 15. HOSPITALITY: Despite setbacks.87m in 2006. Developers are also looking at Bali as a location to build shopping malls and retail space. Tunjungan Plaza.10 6.000 233. In Jakarta. Surabaya is said to be rivalling Jakarta in terms of construction and as a business centre. mountains. reflecting a return in public confidence. has very high occupancy and is currently undergoing expansion to accommodate retailers that wish to enter the market.8 17. The island’s sole large-scale shopping centre.28 SOURCE: World Bank.888 Growth rate (%) 24. The total stock of retail space (both leased and strata-title) in Jakarta is nearly 3. International Macroeconomic Data Set THE MARKET Real Estate 2008 . occupancy rates are set to decline slightly. Some notable shopping centres and malls that have become landmarks within the city include Surabaya Plaza.938.000 224.

31 4.000 28.583 222. However.88 MALAYSIA Malaysia Steadily growing and rapidly diversifying In 2007 Malaysia experienced GDP growth of 6.70 1. Wage gaps between income groups and even ethnic groups have been an issue in the past and a system of more even wealth distribution is one of the goals of the Ninth Malaysia Plan.000 26.091 186.000 Population growth (%) 1.297.2 2. Malaysia: economic and demographic indicators. resulting in RM125. At the same time. The government completely sanctioned FDI in 2007. This urban area has an estimated population density of 7388 people per sq km. According to Malaysian trade minister. with just under 30% living just in the Klang Valley (which is also known as the Kuala Lumpur Metropolitan Area). which will cause a significant rise in prices as they begin to match global fuel prices. Northern Corridor Economic Region (NCER) and the Iskandar Malaysia. 2006-11 Population 2006 2007 2008 2009 2010 2011 26. World Bank Oxford Business Group .000 27. according to UN Conference on Trade and Development statistics.3%.4 3. The median age is 24 years.000 11. with most coming from the indigenous tribes (15% of Sabah and 40% of Sarawak) who live in rural areas.404 13.761.25 4. the country’s economy was mainly driven by agriculture and the production of raw materials. Foreign direct investment (FDI) plays a large role in the country’s economic development.3 3. which exceeded the government’s forecast of 6%.28 4.000 28. In the past. STEADY GROWTH: In spite of the losses associated with the end of the fuel subsidies.000 10.776 15.000 27.2 3. with special attention being given to specific regions: East Coast Economic Region (ECER).238 259.7m people. while 32% of the population is under the age of 15 years. Malaysia has the highest income disparity in South-east Asia. with a forecasted growth rate of 5%. in the past decade.70 1.682.70 GDP ($m at current prices) 156.841.315 14. Rural Malaysia has yet to experience many of the benefits of the nation’s economic growth. However. There are approximately 5m people living in the eastern states of Sabah and Sarawak in Borneo.74%.941.695 Average household size 4.70 1.22 4.70 1.392.000 11.2 3.000 11.16 Labour force 10.233.482 207.745 GDP per capita ($ at PPP) 12.870.685 16. Malaysia is experiencing the benefits of the worldwide increase in fuel prices in the export market since the production of hydrocarbons is one of the country’s main economic drivers.196 240. however. Rafidah Aziz. YOUNG PEOPLE: Malaysia has an estimated population of 27.713.630.9 SOURCE: IMF.000 11. The government has introduced a number of new economic development corridors since the implementation of the Ninth Malaysia Plan.70 1.023 14. the Malaysian economy is growing steadily and rapidly diversifying.000 Unemployment rate (%) 3. The price hikes are expected to put a damper on private consumer spending and overall economic growth. The projected decrease is due to the government’s decision to stop providing fuel subsidies. At the end of 2007 Malaysia was ranked the 14th most attractive in the world to FDI.19 4. the figures for 2008 are not nearly as optimistic. with a population growth rate of 1. services and manufacturing playing more important roles. Up to 80% of the country’s residents live on the mainland of western Malaysia.9bn) in the manufacturing and services sector.180. the government has managed to transform the economy into an emerging multi-sector market with tourism. FDI soared by almost 69% in 2007.3bn ($35.380.

foreigners were only allowed to own property to be used strictly for personal use and not for any type of investment purposes. office space supply is expected to grow by 20% by the year 2011. My Second Home” campaign. such as Kuala Lumpur. with new stock coming on board.750) per unit. it takes approximately $3120 per employee to establish a workstation in Kuala Lumpur. An additional 120. Johor Bahru has also attracted many foreigners. occupancy and rising capital values.1 12. The number of properties that can be purchased is unlimited. which varies. a global real estate adviser on costs.0 Inflation (%) 3. with another 1m sq metres of office space in the rest of the Klang Valley.763 Growth rate (%) 14. BUYING PROPERTY: Among some of the other areas of interest for purchasing residential property in Malaysia are Penang and Johor Bahru.233. Local financing is now available to foreigners as well.000 28. Malaysia is still one of the most affordable options in Asia in terms of luxury housing. especially when comparing Kuala Lumpur to rivals such as Singapore City or Hong Kong. particularly Singaporeans and Indonesians. International Macroeconomic Data Set THE MARKET Real Estate 2008 . Malaysia: retail indicators.639 112. Just under 30% of the population resides in Kuala Lumpur and its metropolitan area. retail and mixed-use developments under construction. Laws restricting the purchase of residential real estate in Malaysia by foreigners virtually no longer exist. This is five-times less than what it would cost to set up a workstation in Singapore and nine-times less than Hong Kong.7m sq metres. This is driving many developers to construct office space in the city centre. Despite this. making the city and the surrounding region the main focus of most developers.43 2.761. Meanwhile. Previously. but there will still be a huge demand for prime office space.5 11. a second home or a retirement home. This is expected to relax slightly in 2008. with the Petronas Towers and the Menara Maxis at almost 100% occupancy. IMF.000 ($71. In April 2007 the capital gains tax was repealed in Malaysia. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 26.000 27. Some developments had an increase of 50%-70% from the initial launch price. However. to cope with the acute shortage of prime office space and stiff competition. According to a survey by DTZ.000 28. In 2007 the high-end condominium market performed well in terms of take-up rates. Previously.117 89.713.000 27.000 sq metres to enter the market by the end of 2008.000 Household consumption expenditure ($m) 65. which was launched six years ago to attract foreigners to buy property in Malaysia and to spend their retirements there. Prime office buildings have occupancy rates as high as 95%. Property-related tax in Malaysia includes a stamp duty. Rental yields in Kuala Lumpur range between 6. with the majority of the population living in the major cities. many older buildings are undergoing renovation and refurbishment.392. According to Knight Frank.MALAYSIA 89 In 2007 the real estate market was estimated to be worth over $29bn. This makes Malaysia still one of the cheapest places in Asia to establish an office.59 2.50 2.4 12. the tax was as high as 30% for properties sold within a year and gradually less for properties held for longer periods.000 26. Average occupancy rates were at 83% in the city centre and up to 90% in popular suburban areas. Capital values for high-end condominiums this year were between $2500 and $3120 per square metre in the city centre and between $1300 and $2350 per sq metre in suburban areas. RESIDENTIAL: As of September 2008 there were 27.1 12.7m people living in the country. OFFICE: There is a shortage of prime office space in the capital’s central business district.50 SOURCE: World Bank.50 2. commercial. an independent global property consultancy.5% but rentals are not increasing at the same rate as capital values. Kuala Lumpur. Outside of Kuala Lumpur. The capital city.11 2. Johor Bahru and Penang.101 71.2 10. the demand for premium condominiums remained high with some developments selling out within a month from the launch date.297. has a huge amount of new developments coming online each year. cities such as Penang and Johor Baru are up and coming. Penang has a large expatriate community that is mostly made up of British and Japanese expatriates who bought into the Penang property market during the “Malaysia. with numerous new residential.841. Since the end of 2006 foreigners have been allowed to purchase residential property valued above RM250.776 100. The total amount of office space in Kuala Lumpur is 3. who have bought property in the area as an investment.918 80. The percentage can increase to up to 3% depending on the sale price of the property.5% and 7.

and five-star hotels.178.334 in 2007 as a number of hotels were under renovation.870 sq metres in the Klang Valley. Australia.6 43.949.843 rooms in Kuala Lumpur are in four. a global hospitality industry consulting organisation.5m visitor arrivals. which is a 9. the retail market is expected to remain stable. the central bank – Bank Negara Malaysia – registered a 7. Some 15.5% in 2006 to 77. respectively. However. Kelantan and Kedah are aggressively promoting their states as leading tourist destinations in 2008 with their own campaigns. HOSPITALITY: Tourism continues to be a vital industry for Malaysia.90 MALAYSIA Although capital values of office space are not as high of those of high-end condominiums per sq metre (which can range from an average of $2000 per sq metre in 2006 to $2800 at the end of 2007). Kuala Lumpur currently has 232 hotels. the Middle East and India.397 38. RETAIL: Although Malaysia’s GDP growth forecast was a low 5%. Other cities that saw a significant increase in occupancy rates between 2006 and 2007 include Kedah.0 5.000 sq metres of space is set to be released. China.440.736. a slight increase over the 2007 figure of 229.000 in 2007.089. It is expected that consumer spending will drop dramatically due to global fuel price hikes and the government’s decision earlier in 2008 to cut fuel subsidies.784. despite the extremely competitive region in which the country lies. both as an important foreign exchange earner and as a source of domestic employment. Malaysia aims to further increase that figure to 22.576 rooms in 2006 to 31.4 12. 21% and 5.415. bringing the total supply up to 315.6% increase over 2006.04 7.7bn. The year 2007 saw 20. as a result of increasing tourism to Malaysia and a huge portion of retail sales coming from upper-income residents and tourism spending. In 2008 so far only 26. dropped slightly from 31. although it will clearly not exceed the previous year’s sales.828 Tourist arrivals growth (%) 8.076 SOURCE: Local statistical authorities. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. followed by Japan. rents for office space in Kuala Lumpur at the end of 2007 stood between $15 and $23 per sq metre and are expected to rise by the end of 2008. Tourism Malaysia. Economists have forecast that there will be a significant change in consumer patterns and lifestyles. with 6%. Oxford Business Group . but has consistently increased its arrival numbers.8 15. Malaysian hotels saw an increase in occupancy rates from 2006 to 2007 with the occupancy rate in Kuala Lumpur rising from 70. Growth has been strong in recent years. The total tourist receipts were over $14. personal disposable income has not increased as salaries have remained stagnant and the cost of living continues to rise.793 44.670 4.258. Five new hotels are expected to open in the area between the end of 2008 and 2009.2m sq ft of retail supply was released in 2007.& 5-star guests) 2.27 7.2% in 2007.438 4.582 27. which is a 26. OBG Research market will likely follow suit. A total of 4.704. however. Putrajaya in particular saw a significant increase due to its rising popularity with business visitors due to its close proximity to Kuala Lumpur. the state governments of Terengganu. according to the Malaysian Retailers Association. Putrajaya and Selangor.7% increase from the previous year.966 5.1 Average stay length (days) 7. the average value per room of a five-star hotel in Kuala Lumpur was $166.253 3. the Klang Valley area has become almost completely saturated with large shopping centres. the retail market is still expected to perform well.97m visitor arrivals. show that the largest number of tourists was from countries belonging to the Association of Southeast Asian Nations. Average room rates in 2007 were RM330 ($97) for five-star hotels in Kuala Lumpur and RM183 ($54) for four-star hotels in the capital. In line with this.4% at the end of 2007. Although GDP growth is predicted to slow in 2008 and the retail Malaysia: tourism and hospitality indicators. In 2007 retail sales grew by 8% due to higher tourist and consumer spending.77 8.844.576.1% growth in the first quarter of 2008.829. The retailers that will be most affected by this change in spending behaviour will be those whose products are not considered to be necessities. Malaysia has not just held its own in this field. Statistics from the Ministry of Tourism’s promotion organisation.437 2.52 7.089 18. and it looks set to continue. According to Tourism Malaysia. Occupancy rates for shopping centres in Kuala Lumpur were at 86. The total number of available rooms.439 33. Due to the large amount of retail space that was completed in 2007 and the projects that are still under construction.30 Total stay-nights 17. With the success of the government’s “Visit Malaysia” campaign in 2007 (which was extended to the end of August 2008).4% increases. According to HVS.0 13.03 8. Despite this.

460 35.000 96.863 202. is the fastest-growing sector in the Philippines. Demand has been expanding and absorbing all of the upcoming supply leading to reduced vacancy rates of between 3% and 6%.095. Also. INVESTMENTS SLOWING: The impact of the weak global financial market and the downturn in the US economy has impacted the inflow of foreign direct investment (FDI) into the country.205 Unemployment rate (%) 7. such as rice.000 94.00 5.572.00 2.486. After several years of stagnation.3bn during the same period in 2007.9 7. the central bank has cut its 2008 estimate for total FDI from the $4.00 5. as well as continued low interest rates and overseas remittances. Although growth is expected to slow to 4% toward the end of 2008. compared to nearly 18% in 2000-01. In 2008.548 34.893. this has not resulted in a reduction in remittances from overseas foreign workers. which has been growing at a compound annual growth rate (CAGR) of 6.068 GDP per capita ($ at PPP) 1352 1625 1916 2025 2148 2281 Average household size 5.8bn in 2006 and $14.025.129 173.9% between 2001 and 2007. World Bank THE MARKET Real Estate 2008 .296. Data from May 2008 has shown that the net FDI in the first five months of the year was $725m. worker remittances are expected to reach a total of $15.547. This has helped revive the real estate and construction sectors. FDI grew by 26% in 2006 and the beginning of 2007 also saw strong growth.332 186.204 35.00 2. The sector is set to develop further with the introduction of the real estate investment trust law and the rationalisation of the laws concerning foreign ownership of land. prices and rents over the past couple of years.056.7bn.9 7. the economy has shown its resilience by growing at a rate of 7. TECHNOLOGY SERVICES: There has been significant development in the IT. 2006-11 Population 2006 2007 2008 2009 2010 2011 86.9 7. The thriving BPO segment – including contact centres – and information technology (IT) industries.603 38. well below the net inflow of $2.2bn that was originally forecast to $2. now accounting for almost 55% of the country’s GDP.6bn. business-process outsourcing (BPO) operations were expected to lose business and inflation was expected to skyrocket due to the high prices of essential imports. it is anticipated that inflation will be curbed at 5.00 Labour force 34.9 7. Surprisingly.00 2.045.973. The services sector has continued to drive growth.00 GDP ($m at current prices) 117.712.4bn in 2007. Remittances in the first quarter of 2008 reached $4.562 144.THE PHILIPPINES 91 The Philippines Remittances and IT services are key The economic slowdown in the US was expected to have an adverse impact on the economy in the Philippines. However.00 5.000 Population growth (%) 2.9 7. Currently foreign investments are limited to 40% equity on land and leaseholds of up to 75 years.142. The services sector. worker remittances were expected to fall.3% in 2007 and growth in the first quarter of 2008 has been reported at 5.6bn. with growth in 2007 reaching 8.8%. Remittances reached $12. which is a 35% increase from the same period in 2007.00 2.7%.230 219.01 2. IT-enabled services and BPO industries. as well as interest from foreign investors and growth in the tourism sector.2%.00 5.000 92.231 36.000 90.000 88. the real estate sector started recovering and witnessed escalating capital values. are the main contributors to this.9 SOURCE: IMF.00 5. 100% equity is permitted for condominium units The Philippines: economic and demographic indicators.

2 6.335 3.770.334 1. OBG Research high-end projects from Ayala Land and Rockwell. Up to 62% of the population is between the ages of 15 and 64 years and as much as 10% of the population lives and works overseas. A number of projects are now under construction.170 in 2007 with the number reported to have grown by 2% in the first quarter of 2008.000. making it easier for individuals to finance the purchase of homes and condominiums. RESIDENTIAL: The Philippines has a population of over 90m with growth at a compound rate of 2.000 people in the Philippines are currently employed in the BPO and contact centre industries.000 employees and about 1. housing for the upper middle class and middle class is expected to continue to remain in demand for some time. In 2006 vacancy rates fell below 2% for grade A spaces with prices going up by 20%. with the majority of high-end units being sold to absentee owners. Strong macroeconomic indicators have caused interest rates to drop considerably.2 15. COMMERCIAL: The growth of the outsourcing sector has stimulated the office segment.137. This growth is expected to result in a huge demand for office space. The Philippines now ranks second to India as the destination of choice for BPO companies.426 SOURCE: Local statistical authorities. This growth is slow compared to the 6% rise during the same period in 2007.3%. Local market analysts have said that the sector has been growing at a rate of 100% per annum on average over the last five years and 50% annually in the last two years. As many as 300.2 15. Outright ownership of land is not permitted and the situation is unlikely to change in the near future.501 4.000 workers and earned revenues of $3bn. The stock of condominium units supplied by the Makati business district totalled 11.5 Total stay-nights 2. and the government hopes to increase this by at least 40% over the next couple of years to meet the growing demand worldwide.5 2.736.& 5-star guests) 1. accommodation near the business district and communitytype townhouses are all seeing increased levels of demand in the Manila area.770 Tourist arrivals growth (%) 8. Megaworld and Citiland leading the way in development.65m sq metres at the beginning of 2008. By 2010 the industry aims to have a 10% share of the worldwide market.508. Residential prices are expected to rise by 8% in 2008 to end at an average rate of $2300 per sq metre compared to an average of $1833 per sq metre in 2006. Buoyancy in the sector is reflected by rising capital values as a result of dominant The Philippines: tourism and hospitality indicators.5 2. The Fort and others that are located in the Makati business district and Ortigas Centre.000 5. Rents are also reported to have risen by 15% in 2007 with a slower growth of 4% expected in 2008 as a result of the increased supply. Average land rates in 2008 stood at $6700 per sq metre in the Makati CBD and $3000 per sq metre in Ortigas.200 1.341. which is expected to result in around 900. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist Arrivals (4. In the last quarter of 2007 vacancies have been reported at 2.5 2.2% over the last decade (1999-2008).5m indirect jobs.72m sq metres by the first quarter of 2009. Robinsons Land. with local developers such as Ayala Land. In other areas the prices were lower and generally fell between $1200 and $3000 per sq metre.4 15.705 1. Although the saturation will be visible in the highend residential sector.92 THE PHILIPPINES and retail establishments. Prices rose by 2% in the first three months of 2008 to reach $2600 per sq metre. Statistics released by the Business Process Association of the Philippines shows that the country has a 5% share of the $45bn worldwide IT-enabled services market. Sizeable projects that are under development in Manila include the Rockwell Centre.137.779 2.000. The increase is much higher in newer locations like Fort Bonofacio. although not at the aggressive rates seen in some other Asian markets. The number of companies registering climbed and the quantity of new jobs being created has risen. with vacancies rising slightly in the first quarter of 2008 to 3%.947 5.9 Average stay length (days) 2. which was mainly the result of Oxford Business Group . The stock of grade A residential units is increasing. Total office stock has been estimated at 2.5 2.2m-1.000 2. with forecasts putting it at 2.843.274. with Fort Bonofacio alone expected to add another 8523 units by 2011. Condominiums units. Rockwell and Eastwood.263 3. In 2006 the industry employed 235.309.5 2.344. Demand from Filipinos who are living overseas has provided a stimulus to the residential market. In 2007 the prices paid for developed land in the areas within the CBD ranged between $4000 and $5400 per sq metre.2 15.

many local real estate experts say that they expect that the new supply coming into the market will slow down price rises in the medium term.3 14.000 sq metres. Occupancy rates have remained stable at around 74% between 2007 and 2008.000 96.77 4.057 sq metres by the end of 2010. Sofitel. Most international hotel brands are present in the country and include Shangri-La. Recent openings include SM Group’s Mall of Asia at 391.000 Household consumption expenditure ($m) 82. which dominates shopping centre development by holding around 2. The pipeline is not very large and 2008 will see another very small increase in retail space.000 88. run on a seasonal basis during the rainy seasons and exhibit annual occupancy of around 50%.025. Partial data on tourist spending for the first six months of 2008 reached $1. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 86. Dusit and Crowne Plaza. International Macroeconomic Data Set THE MARKET Real Estate 2008 .702 Growth rate (%) 20. This is an increase compared to the 2.142. In the absence of substantial new supply.9% to reach 1.44 3.000 94.4 16.3 and 2. Resort-type accommodations. although the high-end segment will continue to pick up.799 128.5 17.296.1% by the end of 2008. Projects that are in the planning or construction phase include the 300-room Marriott Hotel.23 2. InterContinental. The amount of gross leasable area per capita stood at 0. respectively in Ayala Centre and Ortigas. In the first quarter of 2008. which has encouraged a number of new hospitality developments.529 149.257 109. of which 55% fall in the deluxe-quality category.5m in the first six months of 2007. By 2010 visitor receipts are projected to rise to $4. retail vacancy rates were reported to be around 13. which is a 10% decline from the same period in 2007. including beaches. Rentals in the Makati CBD have risen by over 50% in the last year and now range between $25 and $29 per sq metre per month. HOSPITALITY: Composed of 7107 islands. Tourism is a pillar of the government’s five-year development plan and it is hoped that increased investment in the sector will generate billions of dollars and millions of jobs.7m sq metres of current stock with 28 shopping malls across the country.8m visitors in 2006 and the 1. Henry Sy’s SM Centres. RETAIL: Disposable income is climbing due to economic growth and the rising value of remittances from Filipinos working overseas.000 90.000 hotel rooms. The year 2007 saw an even slower growth with supply rising from 4.59bn.712.THE PHILIPPINES 93 a dearth of new supply. Room rates vary considerably between destinations. while 2009 is expected to see a 3% increase. the Philippines has a number of natural attractions.372 94. mountains and waterfalls. such as beaches and golf courses. The Department of Tourism has embarked on an intensive tourism campaign to attract a projected 5m tourists by 2010. and several hotels in Fort Bonofacio. Ayala’s beach resort complex in Bataan.084 173. prices are still expected to continue to rise to around $2800 during 2008. Glorietta.000 sq metres. IMF. has also started introducing hypermarkets under the same name.000 sq metres. with 14.5 days. However.053 sq metres in 2008 and is projected to increase to 0.6m.50 SOURCE: World Bank.53m sq metres in 2006 to 4. forests. Rental prices are approaching pre-1997 Asian financial crisis peak levels.973.000 92. bringing the average to $20 per sq metre per month. Retail development has been modest in the past with stock growing at 9% CAGR between 2001 and 2006. rents are expected to rise slightly to $329 and $270. Rents increased by 30% per annum in 2006 and in 2007.000 sq metres and Ayala Land’s Trinnoma at 195. while the average length of stay ranges between 2.50 3. vacancies are expected to fall further to 11.7%. with 41.87bn. Developments in the Makati CBD include Del Rosa. and SM Cyberzone. Hyatt. with 12. While the market is currently undersupplied. An eventual slowdown will occur as a result of an additional 800. The Philippines: retail indicators.000 sq metres. Metro Manila has over 42. Tourist arrivals in the first six months of 2008 went up by 6. but these are not expect to be sustainable in the long term.5 Inflation (%) 6. the expansion of the GT Tower added around a total of 7000 sq metres of new space.1 16.78 3. In spite of the dropping vacancy rates.000 sq metres of space that is expected to come on-line by 2009.486. In 2009.6m sq metres in 2007. together with a diverse cultural heritage and tropical climate. Meanwhile. annual rents per sq metre have fallen from $322 in 2007 to $315 in 2008 at the Ayala Centre and from $254 in 2007 to $259 in 2008 at Ortigas. There have been reports that some landlords in Makati’s grade A market have reduced rents by 6% to 8% in the last quarter of 2007.0 16.

95 3. significant areas of land are still being reserved for green space. inflation should ease in the second half of the year.404 GDP per capita ($ at PPP) 46.000 4.7 2. RESIDENTIAL: Market activity in the residential property sector revived towards the second quarter of 2008. but cost less than Singaporean averages. The 2008 HDB releases were priced at $500. In the beginning of 2008 prime plots attracted up to $2663 per sq metre.1 2.16 4. military and government purposes.73 1.594.88 3. which was due to the launch of a large number of projects.000 for smaller units.589.000 2. due to external price pressures.27 1. a slight increase in comparison to $8.7 2. as a result of government policy discouraging large families through a system of financial bonuses and support.000 Unemployment rate (%) 2. a status granted to expats staying in the country over the long term.76 1. provided that combined household income remains below government-imposed limits and that apartments are not going to be sold within five years.863 49.99 3. With a land area of just 690 sq km.810. Corresponding to the healthy economy and a limited room for development.74 GDP ($m at current prices) 209. The construction industry is growing by more than 20% per year.751. but despite this. land sales in the first quarter in 2008 reached $8.000 4.94 SINGAPORE Singapore A healthy economy. with more than $110bn invested overseas and a generous account surplus. the real estate market in Singapore remains healthy. In total. normally starting at around $1m. population density across the island is more than 7000 people per sq km. 2006-11 Population 2006 2007 2008 2009 2010 2011 4.000 4.860. These apartments are not cheap by international standards. Singapore: economic and demographic indicators. In the private market apartments are more expensive.703 317.368 60.916.000 Population growth (%) 3.5% over the past three years. the growth forecast for Singapore’s economy for 2008 is between 4% and 6%. Domestic inflation reached a 26-year high of 7. Singapore has a population of 4.194 57.6 SOURCE: IMF. but still room for development Singapore attracts more than $7000 in foreign direct investment (FDI) per capita per year.000 2. REAL ESTATE AND CONSTRUCTION: The majority of Singapore’s citizens live in apartments. Singapore is also known for the size of its fiscal reserves.900 in 2007 and has grown by 7.82 Labour force 2.668.72 1. World Bank Oxford Business Group .750. However. The Housing Development Board’s (HDB) public housing is offered as a 99-year leasehold.000 2.548 248. Land remains at a premium and there is little space available for redevelopment.991 229. Unemployment rates in 2008 are expected to fall below 2%. The economic expansion has been attributed to increased exports and growth in the knowledge economy.401.3 2. The volume of launches increased by around 35.3bn.1%.5 2. have the right to apply for subsidised housing. Singaporean citizens and permanent residents.381 292.832.869 Average household size 3. Singapore’s birth rate is now one of the lowest in the world.713 51.890.6m and it is increasing at an annual rate of 1. However.000 4. GDP per capita was estimated at $48.85 3.000 2.930. According to the Ministry of Trade and Industry. 85% of which are government constructions.17bn in the last quarter of 2007.000 2.829 54.000 4.231 269.5% in April and May 2008.5% by mid-2008 to an estimated 1820 units from 1343 units in the first quarter of 2008.92 3.

will lead to a hike in the home prices.04 1. Although unfavourable macroeconomic situations.10 4. Due to a slow sales market there is a delay in demolition works of several collective sale sites.68 per sq metre per month in the first quarter down to $72.72 SOURCE: World Bank. like the slowdown in the US economy and rising inflation.817 73. Rents have begun to decrease in spite of a resistant behaviour by multinational companies due to the higher costs of living resulting from the rising inflation rate.589. With many major condominium projects being completed. In addition. OFFICE: Towards the second quarter of 2008 the rapid pace of office rental growth since the middle of 2006 finally eased due to reduced pressure on supply.70 2.668. which is an area just south of the Singapore river and home to many key commercial buildings. The Urban Redevelopment Authority’s estimates showed that in 2008 the rise in home prices throughout Singapore was 0.142 64.000 4. soared by a massive 182%. The 100-unit Nassim Park Residences at Nassim Hill. moved up by a modest 1.545 per sq metre. Now the developers do not need to resort to any more strategic pricing policies. Institutional investors remained interested in acquiring office buildings in the second quarter of 2008. This has also helped to ease the average combined occupancy rate of grade A and grade B office space.2 6.401. For the year as a whole.3% in the same period. This resulted in the fall of average monthly gross rents of luxury apartments by 6.6% and 1. In 2007 developers resorted to aggressive pricing strategies in order to increase sales. transitional offices. priced at an average of $32. Clover by the Park is located near to the Bishan MRT station and Junction 8 Shopping Centre and the units are priced attractively at an average of $8070 per sq metre. International Macroeconomic Data Set THE MARKET Real Estate 2008 . Whereas the midtier category units (measured by units located in the rest of central region). Altogether. sold within two months. had 77% of the units.SINGAPORE 95 The number of new high-end and luxury units launched in the quarter (measured by units located in the core central region) increased by 70% by June as compared to the first quarter. even despite concerns over the subprime crisis in the US and the slowing economy in the US and Europe.7% in the second quarter to $191. ranging between 0.000 4.41 per sq metre per month as of June 2008. the cost of housing could still potentially climb to an overall increase between 4% and 8%. which was very low in comparison to 3. Such market activity has given way to muted growth in home prices in the second quarter of 2008.000 4.8 7.3 6.4% in the second quarter. high-tech industrial spaces and business parks. developments near Mass Rapid Transit (MRT) stations are more valuable.443 68.97 2. There still remains latent demand for luxury homes.000 Household consumption expenditure ($m) 53. launched in May 2008. will continue to depress the residential property market. Dakota residences are located near the future Dakota MRT station and are priced at $10. All this will help to further lighten pressure on supply. Firms continued to show an increasing acceptance of alternative and non-traditional business locations such as retrofitted state buildings.9% in the second quarter of 2008.750. Average monthly gross rents of grade A office space in Raffles Place.916.832.280 per sq metre on average in second quarter 2008. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 4. Additionally. capital values of grade A office space have remained flat at $30.423 60. IMF.1 Inflation (%) 0.672 Growth rate (%) 8.74 per sq metre. For instance. helped to keep rental growth in check in second quarter of 2008.000 4. which in turn.6 7. pressure on the supply in the leasing market has eased.069 56. recovery in the US economy anytime in the second half of the year.7% in the first quarter. while average monthly gross rents of grade A office space in other micromarkets saw moderate increases.000 4. it is expected that the demand for office space will continue with the current trend and remain healthy. the Ministry of Finance recently issued a directive to government ministries and statutory boards to review their office space needs and look at the possibility of compacting their offices and relocating outside the central business district.280 per sq metre. from $77. In Singapore the pricing of real estate is highly affected by location.4 6. with 40% of financial services firms indicating intentions to increase staff over the Singapore: retail indicators. which finally showed a rise by the second quarter of 2008.47 2. The volume of new mass-market units launched outside of the central region actually fell by 26% from the first quarter of 2008.

Rents for prime retail spaces are forecasted to rise 3-5% for the whole of 2008. retail sales are expected to remain at healthy levels for the rest of 2008. Average room rates climbed almost 22.802 Tourist arrivals growth (%) 38.453. The revenue per available room for four.609.& 5-star guests) 2.7 6.5 6. More than 10m tourists visited Singapore in 2007. somewhat slower compared to the 7. The government is targeting 17m tourist arrivals and $21. an increase of some 56% over the centre’s current NLA.4% for four stars and 18.097. The average 4. such as the Marina Bay and Sentosa integrated resorts. The Fullerton Hotel at Raffles Place has created its own luxury retail cluster. Formula One racing and health care tourism to attract a wider range of visitors and achieve the set targets.182 2. turning its underutilised conference rooms into some 464. situated in Yishun town centre.2% as compared to 2009’s 5. Retail rents reflected moderate increases during the second quarter of 2008. The second quarter of 2008 saw a great deal of renovation work for retail malls. By May 2008 average daily rates for the five-star segment had increased by 20%. compared with 2007. which will be a fall in growth rate from the annual average of 5. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4.6 3. The combined net leasable area (NLA) will be 21. At the end of 2007 average occupancy stood at 88%.324.5% to average at $460 per sq metre per month. as more of the abundant future supply would cater to leisure travelers.036 9. although the growth in rents will be moderated due to an increased supply of units. which will potentially also contribute to the demand for office space.6 3.3bn in tourist earnings by 2015.670 SOURCE: Local statistical authorities.021 2. The increasing demand implies that retail rents are going to strengthen further. Oxford Business Group . entertainment and tourism centre. the average occupancy rate of grade A office space is expected to remain above 95% and rents are forecasted to increase slightly to a maximum of 2% on an average per quarter for the remainder of 2008.7 3.8 6. Singapore: tourism and hospitality indicators. including the opening of the two integrated resorts.387. which has been given a considerable boost by continuing expansion of road and air routes throughout Asia. OBG Research In addition to Orchard Road. which is due for completion in mid-2009. 14 sites have been selected for development.and five-star hotels in 2007 was the highest for 10 years.9% as compared to the first quarter of $355 per sq metre per month.1% growth in retail sales between January and April 2008 was. excluding motor vehicles. and will together contribute a further 4800 rooms to the market.964. with a growth of 22. It then announced that it would soon start with a $40m expansion of Northpoint.96 SINGAPORE next six months.362 2. as well as the redevelopment of properties for retail purposes. The retail sector will also greatly benefit from strong growth in intra-regional travel.7 3.342 7. by 1.052. has just completed the $13m makeover works and the successful relaunch Anchorpoint. in addition to focusing on meetings.8% for five stars.553 sq metres. RETAIL: There was an increase in retail sales.94bn into the country. The sector is optimistic on hotel rates for 2009 and the demand is forecasted to grow 5% and supply 4% per annum. however.8% to the end of 2007.192. Looking at the immediate future.484 8. Rents for prime retail space located at regional centres grew by 1. bringing close to $9.556.040 2.2% growth for the same period the previous year.8 Total stay-nights 7. Since August 2006. incentives.51 sq metres of retail stores. as well as the hosting of the Youth Olympics in 2010. which is a developer-sponsored real-investment trust specialising in retail. HOSPITALITY: The hospitality sector is considered to be one of the economic pillars of Singapore. there are a number of growing luxury retail outlets and areas in the financial districts.430 2.232 9. A number of upcoming visitor-generating events. Due to sound economic fundamentals and continued tourists arrivals.964. The government is promoting several key projects.087. conferences and exhibitions facilitated for business travellers. will help the demand for retail space remain buoyant.030 7.4% achieved for the last two years.188.0 5. There should also be strong demand for serviced and leisure hotels. Average monthly gross rents of prime retail space in Orchard Road rose to 1.4 Average stay length (days) 3.9% growth. Frasers Centrepoint Trust. It is believed that hotels catering to business travelers are better positioned to benefit from the tourism boom. which is a retail. reaching $158 per night.4 3.6 -1. In the year ahead more multinational companies can be expected to set up offices or make plans to use Singapore as their regional centre.

Under Thai law foreigners may only hold land if they have permission from the Interior Ministry or have a registered business promoted by the Board of Investment. Across Thailand the attitude toward tourism is increasingly ambiguous.409.000 65.20 4.000 Unemployment rate (%) 1.703 245.280.00 1. and particularly for the spread of HIV.6%.173 31. the tsunami in 2004 and the military issues in 2006. and the unemployment rate has also seen a reduction down to 1. The numbers stood at 4. The government has announced clearer policy directions. with the increase mainly due to the recovery in domestic demand. but it is on the rise in line with the increase in global food and fuel prices.26 0.000 67.234 Average household size 4. The industry is forecasted to do well in 2008. Economic growth in 2008 is estimated to be about 5. Thailand has managed to maintain a steady GDP growth over the past few years.000 68. Since 2000 the poverty rate in Thailand has decreased by over 2%. There are.000 37. The new.000 37. Inflation rates are forecasted to rise to 8% by the end of 2008. Pattani and Narathiwat has become increasingly violent. To combat these attitudes and the international opinions towards tourism in the country.16 Labour force 36. with foreign arrivals blamed for negative impacts on the social structure. with a series of coordinated bombings against tourism targets.00 1. mainly due to the increase in agricultural prices.933 345.900.3% in 2007.000 36.398. making exports one of Thailand’s main economic drivers.160.4 1.204 GDP per capita ($ at PPP) 7397 7900 8401 8942 9550 10. At the end of 2007 GDP per capita was a healthy $8000.27 4. This directive has traditionally been set aside.70 1. 2006-11 Population 2006 2007 2008 2009 2010 2011 65. democratically elected government has begun to bolster investors’ faith in the market but many investors are still weary. in 2007 foreign buyers were warned that they would no longer be able to hold real estate in this manner – something that has become a matter of great concern for owners of second homes.00 1.4 SOURCE: IMF.5% in 2007. however.1 1.670.8% in 2006 and a slightly lower figure of 4. Domestic demand is also expected to recover in 2008 with the newly restored faith in the political situation.732.27 4. which should give a considerable boost to investor confidence. Inflation was 2. the government has introduced policies designed to foster a more select.THAILAND 97 Thailand The country bounces back from a series of challenges Despite the turmoil that has stricken the economy over the past decade. ranks the fourth highest among them. which when compared to neighbouring Association of Southeast Asian Nations (ASEAN) countries.27 4. Exports from Thailand account for some 60% of GDP.7%. The Islamic secessionist movement in the southern provinces of Yala.27 4.000 Population growth (%) 0. however. are likely to remain stable in support of economic growth. has Thailand: economic and demographic indicators.000 38.2 1. with the diversification of Thailand’s export destinations high on the political agenda. high-end tourist demographic.720. Increases in income were seen most in families involved in farming but those involved in non-farming activities were affected badly.250. such as the 1998/99 Asian financial crisis.000 66.061. with foreigners able to buy land through shell companies. However. other sources of concern.659 272. World Bank THE MARKET Real Estate 2008 .00 GDP ($m at current prices) 206.2 1. The newly elected government.000 67.5 1.000 38. Interest rates.740. however.494 294.400.

9 11. due to investors choosing to wait out the period of unrest.280. Oxford Business Group .52 2.250 163. RESIDENTIAL: At the end of 2007 the condominium supply in downtown Bangkok was just under 60.000 67. the political situation in early 2007 also affected investor behaviour. the residential markets on the coastal regions were affected badly.726 205. Villas are popular as well. Rentals in 2007 increased only slightly from 2006 and at the end of the year stood at $222 per sq metre per annum.000 67.99 SOURCE: World Bank.000 Household consumption expenditure ($m) 115.877 Growth rate (%) 14. Phuket. the number of condominium projects launched in 2007 is lower than in 2006. The economic slowdown has also put a damper on the take-up rate of condominiums in Bangkok. Pattaya is receiving increasing interest in the condo market. luxury apartments.49m sq metres. office rentals will have to rise from the relatively inexpensive rates to provide incentives for new development.3 12. Although overall demand has declined. The newly elected government has also recently announced its plans to resume public infrastructure projects in 2008 and has set aside a bigger budget for this purpose and for public investment. Due to a shortage of land in the CBD. However. 20. on the other hand. Thailand has a population of over 65m people. Pattaya is only a short drive away from the capital (145 km south). most condominium projects are developed in suburban areas outside the CBD.23 3. due to the recent hike in construction costs. due to increasing cost of living.732.000 65. In Bangkok. sending the market toward an oversupply.46 2. some high-end buyers are being slowly pushed into the mid-range market.000 units.98 THAILAND announced that these legislations will be changed over the course of 2008.38m sq metres and the total supply in Bangkok metropolitan area is presently 7.5%. Demand for the high-end market is still going steady. the demand for holiday homes increases.740. Grade A office space in Bangkok is currently 1. with almost all completed units taken up and up to 50% sales on projects under construction. this is not so with high-end. According to CB Richard Ellis. as buyers and investors continue to be interested in the unique developments situated in prime areas. IMF. which can still be easily accessed through the mass rapid transit trains. investor concerns have now shifted focus to the current global economic situation and the subprime crisis in the US. with occupancies remaining stable year-on-year (y-o-y). such as Ratchadapisek and Ratchayothin. A total of 154. one of the popular weekend getaway destinations. OFFICE: In 2007 the total supply of office space in Bangkok was approximately 4. provided the political situation stabilises. According to Knight Frank research.8m sq metres. as they chose to wait out the period of unrest and put most transactions on hold.64 2.000 66. Although locally. Despite decreasing take-up rates. with around 8m of them living in the capital city.2 12. concerns surrounding the political situation had more or less died down for the time being.8 12.388 145. Of these units. mainly due to the current market situation of an oversupply of units. Average occupancy rates stood at a strong 91. after the tsunami hit.061. however.04 1. This trend is also due to the political unrest in Thailand. A great many developers have begun to slow down the launch of new condominium projects in Bangkok. The annual population growth rate is currently 0. Rentals also remained stable and are expected to remain stable throughout 2008.409. International Macroeconomic Data Set ation has calmed down. with a higher percentage of marketed villa projects being sold. showing a 2% y-o-y increase. The re-election of a democratic government has stabilised the market now and it should see more activity in 2008. with investors slowing down and being more careful in terms of the purchase of property. due to the market slowing down and reaching an oversupply in the second home and upper-class markets. with many Bangkok residents buying second homes in Pattaya.695 129. The biggest market is the condominium market. At the end of 2007 the average price per sq metre in Bangkok was $2517. is receiving increasing interest from investors.000 sq metres is set to enter the market by the end of 2008. Takeup rates are decreasing slowly.398. The residential market in resort locations is highly dependent on the tourism industry. Although the situ- Thailand: retail indicators.000 units were completed in 2007. which has made the market slightly volatile. In 2005.000 68.64%. 2006-11 Year 2006 2007 2008 2009 2010 2011 Population 65. and as more and more tourists visit Phuket each year.7 Inflation (%) 4. investors are still weary.1 12. prices for units are increasing slightly.024 182.

providing the political situation remains stable.780. Demand is expected to rise in 2008 provided that the political situation remains stable.965. In 2008 Thai Airways launched flights to Samui. Top tourist destinations include Pattaya. like in the residential sector. 3.458. with 40% of the supply located in downtown Bangkok.000 sq metres to be completed by the end of 2008. with over 50% of that number coming from Asian countries and 24% from ASEAN countries.90 9.2 8. Some 4000 rooms are expected to be delivered by the end of 2008. Rentals increased in 2007 due to slightly higher vacancy rates. and will continue to do so. The occupancy rates for high-end and luxury hotels in the first quarter of 2008 was 76%.990. That was a growth of 4. with that number currently forecasted to increase by almost 50% by 2010.7 6. In 2005 visitor arrivals dropped drastically to only 2. The total stock of high-end hotel rooms in Bangkok is 7991.65% from the previous year.245 6. with 4.663 61. Total stock of retail space in Bangkok at the end of 2007 was 4. provided the political situation stabilises.62 8.400 6. with over 260.439.045 6.46m international tourist arrivals in Thailand.2m visitor arrivals in total (local and foreign). with a total of 6. however.THAILAND 99 Although rents went up in 2007. but vacancy rates could likely increase due to the high volume of new leasable space that is expected to be completed by the end of 2008. With over 4.000 interna- tional tourist arrivals in 2007.466 7. HOSPITALITY: In 2007 there were 14.38m. OBG Research THE MARKET Real Estate 2008 . The average length of stay for international tourists also increased from 8. Thailand is also promoting itself as a destination for the meetings. respectively. Phuket and Samui. Since then however. many of whom own holiday homes in the city.16m and 897. however. the tourism industry has picked up and the number of visitors has nearly doubled. Tourism is a rather large and important factor in retail sales. RETAIL: The retail consumer market is beginning to revive. making it the only airline operator to operate international flights with stopovers in Bangkok to the island. tourism receipts totalled at a little over $10bn. In Bangkok there is a total supply of 24.811 71. Phuket is another very popular destination. The most popular of these resort destinations is Pattaya.7m local and international visitor arrivals. Prime retail centres in the city centre continue to focus their marketing attention on attracting tourists.01 Total stay-night 50. Average room rates in Bangkok increased from $123 in the first quarter of 2007 to $194 in the first quarter of 2008.8 Average stay length (days) 8. According to Euromonitor International. The airport is also aiming to become the second international flight centre of Thailand.613 Tourist arrivals growth (%) 20. This is expected to create more tourism interest in the island and to attract more visitors to the island in the next few years. Pattaya attracts many visitors because of its proximity to Bangkok and is. the retail environment in Thailand is also under review. incentives.62 days in 2006 to 9.341. an independent provider of business intelligence. 2006-11 Year 2006 2007 2008 2009 2010 2011 Tourist arrivals (4. Thailand: tourism and hospitality indicators. providing the political situation in the country remains stable. Early 2008 saw a decrease in vacancy rates of 1%.033.259 7. with the government introducing legislation in late 2007.69 8. which was designed to protect smaller retailers. Samui had just over 1m visitors in 2007. Locally. Vacancy rates decreased in 2007 but by the end of 2008 conditions were looking up and retailers were slightly more optimistic.429 55.93m sq metres.6 6.476.062. the net take-up rate.19 days in the following year.0 4. The retail consumer market has begun to revive itself. major retailers are looking at focusing more on building smallerscale trade centres around Bangkok.4m arrivals due to the damage inflicted by the tsunami in 2004. due to spending behaviour changes caused by inflation. Total retail sales in Thailand are expected to reach $78bn in 2008.881 SOURCE: Local statistical authorities. a 58% increase.962 66. conventions and exhibitions market as an economical alternative to more expensive cities such as Hong Kong and Singapore. which was an increase of 2% from the same period of the previous year.804.928 52. with multinational chains absorbing an increasing share of the market.080 rooms. in fact. which will cater to different clientele rather than starting construction on more large-scale shopping centres in the city.& 5-star guests) 5.349. was slightly less than the previous year. the global fuel hike and the recent increase in food prices. Current market research estimates are that the price of rental for retail space will rise by the end of the year to $512 per sq metre per year.946.66 8. a very popular weekend destination with Bangkok residents.78 8.4 6.

Oxford Business Group . 1 of 1967. Under this law. and $5m for joint ventures with Indian partners for real estate projects. .Foreign ownership of land is allowed but is subject to authorisation. 230 of 1996 .Property ownership is limited to two properties with an area not exceeding 4000 sq metres each. Bahrain Government Decree of 2001 .PMAs must have at least 5% Indonesian ownership (Foreign Capital Investment Law No.000. which is a foreign investment company.Foreign nationals and firms are permitted to own or lease property in Jordan for investment purposes and personal use. . . India Investment Law of 2005 . the threshold is 15%. 2005) Indonesia Law 5 of 1960 . agriculture) or allow for ownership of land or real estate.For an investment to be considered foreign. .Foreign nationals have the right to own property in designated investment areas. amended by Law No. between $25. 19 for 2005 . are open to foreign ownership of residential and commercial buildings of 3.For investments less than or equal to $25. Manama. Some areas in the capital. as well as wholly owned subsidiaries. UAE nationals (and companies owned by them) are permitted to own a freehold interest in any land.100% Foreign Direct Investment (FDI) is permitted through automatic route for setting up of SEZs in the country (Special Economic Zone Act. are only permitted to own freehold and leasehold (99 years) in designated areas..1 of 1995. and for investment greater than $125. 7 of 2006 .$10m minimum capitalisation is required for wholly owned subsidiaries. 7 of 2006 regulates the registration of real property in Dubai. the threshold is 30%.000 and $125. GCC nationals can own land in designated investment areas and lease land anywhere in Abu Dhabi. .g. Properties may be sold only after 5 years of ownership. but developers require 500. obtain right to ownership of land where the company's business objectives require this (e. . .000 the threshold is 20%. 11 of 1970 and the Company Law No. . Egypt Investment Incentives and Guarantees Law 8 of 1997: Law No.Other foreign nationals can acquire land based on usufruct right for up to 99 years (leasehold) or musatawa right for up to 50 years renewable within the investment areas. Abu Dhabi Law No. Vacant land is required to be developed within 5 years.100 INVESTMENT LAWS Investment laws COUNTRY LAW PROVISION FOR REAL ESTATE ACQUISITION Algeria Foreign Investment Law .GCC nationals are given access to all types of real estate ownership in Bahrain. . Dubai Law No.Law No.Foreign companies holding a majority share in a Jordanian company.Foreign ownership of property is allowed only for Persons of Indian Origin or Non-Resident Indians.000.UAE nationals are given the right to own land anywhere in Abu Dhabi.Non-Egyptians can own land in Egypt. 5 or 10 storeys.) Jordan Investment Promotion Law of 2000 .100% land ownership is allowed. 2 for 2007. it must meet a minimum threshold level of foreign equity relative to the total value of the investment.Foreign land ownership is permitted in selected areas under development. . however. Exceptions are subject to Prime Minister's approval.Investors can purchase real estate in specific zones. revising some provisions of Law No.000 sq metres minimum built-up area for development projects and 10 ha minimum land area for plotted developments.Foreigners are not allowed to own land unless they own it though a PMA (Penanaman Modal Asing). .Non-UAE nationals. . provided that their home country permits reciprocal property ownership rights for Jordanians. .

INVESTMENT LAWS

101

Investment laws
COUNTRY LAW PROVISION FOR REAL ESTATE ACQUISITION

Kuwait

Foreign Investment Law (No. 8/2001)

- Foreign land ownership is permitted only to GCC nationals. Kuwaiti joint-stock companies with foreign equity can own land, provided it is used for business operations (e.g. office space). - Real estate investment is not restricted to GCC-nationals. Other foreign investors can subscribe to Kuwaiti shareholding companies for real estate investment. - Other foreign nationals are not permitted to own property in Kuwait. Note: Kuwait is considering permitting foreign ownership of property, which may boost optimism in the market.

Lebanon

Law number 296 in 2001 (amendment)

- Non-Lebanese persons can own real estate in Lebanon. - Property taxes and registration fees have been reduced for overseas real estate buyers from 16% to 5%. - Individual purchasers may not procure more than 3000 sq meters of real estate unless they have special permission to do so.

Libya

Foreign Investment Law No. 5 of 1997

- Foreign investors are given right to land ownership only for use, rent, or project development. Land ownership for investment is still unclear. - Foreign nationals are allowed to own or lease property, but the law does not indicate whether the property can be used as collateral or can be transferred. - The minimum capital needed is left to the discretion of the public officials and is not specified by law. The Board often requires a minimum of €600,000.

Malaysia

National Land Code

- No capital gains tax on residential property. - All foreigners except for Israelis and Serbians are allowed to invest in residential property. - Stamp duty can be up to 4% and up to 0.5%is also payable on loans.

Morocco

Investment Charter of 1995

- Residential investment is encouraged by offering fiscal incentives for social housing developments of more than 2500 units over a period of 5 years, with public land granted to developers. - Privatisation of urban and rural land holdings provides leeway for investors in other residential segments and developments. Agricultural land can also be purchased provided it will be used for tourism projects. - Foreign nationals can own property either for residence or investment. - No minimum capitalisation is required but incentives are applicable to capitalisation of above $21.5m investment.

Nigeria

Land Use Decree 1978

- Foreigners can obtain leases from the State for a maximum of 99 years for the use of land.

Northern Emirates

Localised Property Laws

- Freehold property ownership is offered in Ras Al Khaimah, Ajman and to a limited degree in Fujairah. - Leasehold properties are available in Sharjah. Property law in Umm Al Quwain limits foreign ownership to property (not land).

Oman

Royal Decree 12/2006

-  Land ownership rights were initially granted to GCC national and corporate entities (wholly owned by GCC nationals). Ownership rights have since been extended to non-GCC nationals within integrated tourism zones, either for residential or investment purposes. - Foreign nationals can own real estate in designated integrated tourism-related areas.

Pakistan

Foreign Private Investment (Promotion & Protection) Act of 1976

- Foreign entities are permitted to purchase land in Pakistan, but are required to develop within four years on pain of forfeiture. - Non-resident Pakistani, overseas Pakistani and foreign nationals may also purchase immovable property in Pakistan. - Minimum foreign equity for investments has been reduced from $500,000 to $300,000.

The Philippines

Foreign Investment Act of 1991 - Investment requires 60% equity from either a Filipino national or company. - Land ownership is limited to 40% equity and can be leased for 50 years, renewable for another 25 years. - Foreign nationals can purchase condominium units and retail establishments, as well as commercial units.

THE MARKET Real Estate 2008

102

INVESTMENT LAWS

Investment laws
COUNTRY Qatar LAW Law No. 17 of 2004 PROVISION FOR REAL ESTATE ACQUISITION - 100% foreign land ownership is offered in designated eco-tourism areas. - Non-Qataris are given the right to usufruct real estate for 99 years (renewable for further similar term in eco-tourism designated areas) and can own one or more apartment units in multi-storey buildings in residential areas. - GCC nationals are allowed to purchase properties in wider investment areas.

Saudi Arabia

Regulations of Real Estate Ownership and Investment by Non-Saudis 17/4/1421

- Investors can purchase land for real estate development, providing development occurs within 5 years of purchase. - Non-Saudis enjoying legal residency in Saudi Arabia are permitted to own property in Saudi Arabia for use as a personal residence, subject to obtaining a permit from the Ministry of Interior. - Foreign companies are also permitted to acquire residential accommodation, subject to approval of the licensing authority. - Ownership within Mecca and Medina is restricted to Muslims. Non-Saudi Muslims are permitted to lease property within the vicinity for a period of two years, renewable for the same term. - For investment in developments a minimum project cost of SR30m is required.

Singapore

Residential Property Act amended in 2005

- Foreign persons (including natural persons, foreign companies and societies) are restricted from purchasing vacant land and landed residential property, such as bungalows, terrace houses, semi-detached houses; approval will have to be obtained from the Minister for Law to purchase any of these. - Foreigners are allowed to lease restricted residential property for a term not exceeding 7 years. - No restrictions on foreign ownership of industrial and commercial real estate.

Sri Lanka

Law No. 4 Board of Investment

- 100% foreign investment for construction of residential buildings, tourism and leisure related activities is permitted.

Act As Amended in 1980, 1982, - Private land ownership is limited to 50 acres per person. Land transfers to foreign nationals incur 100% tax. 1992 and 2002 - Foreign nationals can own property subject to 100% tax. Property acquisition on 99 years lease is available and subject to 7% tax. - Minimum investment of $5m for construction project is required.

Syria

Law No. 10 (Investment Law) of 1991; Law No. 17 of 2007

- Foreign nationals are allowed to own land. - Foreign nationals can own property up to as much as 2 housing units as provided by Law No. 17 of 2007.

Thailand

Thailand Land Code

- Thai property law does not allow foreigners to own freehold land in Thailand although they are allowed 100% ownership in a lease on Thai land. - Foreigners are allowed to own a limited amount of land based on an investment of 40 million baht for 5 consecutive years, provided that the land is used for residential purposes (investment promotion act).

Tunisia

Law N. 93-120 The Investment Code

- Foreign investors can acquire land (except farm land) and buildings for tourism and services projects. - Foreign ownership of property is permitted.

Turkey

Foreign Direct Investment - Law No. 4875 of 2003; Purchase of Property by Foreigners Law of 2006

- Foreign ownership of land and property is permitted on reciprocal terms, applicable to foreigners whose country permits Turkish citizens or companies to own property there. - Only foreign commercial companies with a legal entity who operate under special laws (e.g. Tourism Encouragement Law, Industrial Zones Law, Oil/Petroleum Law etc) are given the right to own property in Turkey. - In respect to FDI, foreign investors with legal entity established or operating within Turkey can acquire real estate, provided such acquisition is legal for a Turkish national. - Turkish nationals and foreigners have equal individual property ownership rights, with the exception of certain restricted areas.

Yemen

Land Code

- Investors have the right to ownership of land and buildings. - To benefit from investment incentives, minimum capital of YR50m is required. Developments must consist of not less than 50 residential units reserved for home ownership or rentals to a 3rd party, and tourist establishments of not lower than 3-star category.

Oxford Business Group

DUE DILIGENCE: We are committed to working with clients to assess projects’ viability for acquisition or sale. construction costs and price data on close to 30 emerging markets. OBG SERVICES RESEARCH: Research teams based in our regional offices across the world carry out over 100 interviews in each country every year. allowing OBG to maintain a core database of economic statistics. mixed-use projects with wide-ranging applications and unusual risk profiles. a publishing and research company providing business intelligence on emerging markets across the Middle East. Oxford Business Group .104 CONSULTING SERVICES OBG Consulting OBG Consulting is the research and advisory division of Oxford Business Group. Africa. the real estate and development division participated in projects worth $120bn throughout the Middle East. In 2007. FEASIBILITY: OBG has helped assess the financial viability of real estate projects on sites of up to 7m sq metres. By mid-2008. VALUATIONS: The valuations team includes surveyors trained in the UK and the Gulf who work with master developers and private clients to focus on commercial valuations of complex. Eastern Europe and the Levant. long-term projects. OBG’s real estate and consultancy division provides advisory services to some of the biggest names in international development and contracting. the consultancy worked on more than $160bn worth of developments on four continents. North Africa and Asia. Our team specialises in large-scale. helping clients to place developments within market contexts and calculating potential for advancement. Asia.