What's at Stake this week?

January 29, 2023

The first 10 days into January have seen property market sales worth AED 10Bn,  the latest data from DLD revealed. It’s looking like the first quarter is off to a great start already! Luxury homes, in particular, are attracting buyers from all over as 45 properties have already fetched more than AED 15Mn in the first 15 days of the year. Let’s take a look at some other takeaways from this week, shall we? 👇

Market Watch: The Gulf

Is the GCC the place to be?
Shaping the post-pandemic global economy 

It goes without saying the pandemic has significantly impacted the global economy in more ways than one and the Gulf has been no exception. Countries in the region, which include the likes of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE as members of the Gulf Cooperation Council, have experienced their fair share of economic slowdowns due in large part to a decline in oil prices and tourist activity. 

Despite the challenges made prominent by lockdowns and strict COVID measures, much of the region committed to responding quickly and effectively, resulting in praise from leaders, governments, and residents. Ahead of their annual meeting in Davos, the World Economic Forum published: “much of the region has seen an impressive rebound in economic activity”, affirming the exemplary swift response and resilience to the pandemic has massively paid off, especially for leading economies like the UAE and Saudi Arabia.

The article goes on to comment on the growth momentum in the GCC, driven by a comprehensive strategy to diversify the regional economy into new areas. This concerted effort has resulted in the GCC becoming a prominent player in the global economy, as evidenced by a report from HSBC that shows its growth rate surpassing that of many of its peers. Owing to the implementation of top-notch infrastructure, regulations that are competitive on a global scale, and a youthful, highly educated population, PwC economists have characterized the GCC as a beacon of stability: “an island of calm in this storm”.

In MENA, it is estimated that about USD $4.3Tn of projects are planned or are underway across multiple sectors including infrastructure, energy, transport, real estate, and social services, and each demand a sense of urgency. According to PwC’s calculations, GCC economies will on average record a 3.6% GDP growth this year, which is not far off from the IMF’s projections. 

The bottom line? The WEF said it best: “the Gulf region looks set to remain a bright spot for the post-pandemic global economy”. All eyes remain on the region’s biggest players as they continue to take ownership in diversifying their economies, shifting priority and financing to expanding their non-oil sectors in light of their renewed focus on sustainable innovation and optimism for the future.

Zooming In: Egypt

A new economic boost
Egypt secures additional funding

Following the confirmation of a USD $3Bn support package from the IMF, Egypt has now signed a USD $1.5Bn financing agreement with the International Islamic Trade Finance Corporation (ITFC), headquartered in Saudi Arabia, according to Reuters. This comes at a time when the local government has been making significant efforts to revive the economy and attract more foreign investment during a currency crunch exacerbated by the Russian-Ukrainian conflict. 

Earlier this month, the real estate divisions of the Federation of Egyptian Industries (FEI) and the Federation of Egyptian Chambers of Commerce (FEDCOC) requested the government swiftly adopt a set of measures that would provide “favorable lending terms and loosen rules for delivery times” to avoid legal penalties and provide support to the industry in the face of high inflation. This past December, Bloomberg reported that inflation across the country had exceeded 21%, which has prompted the central bank to raise interest rates to further attract FDI.

Key real estate players have also asked to be included in the government’s newly announced loan program which is set to offer EGP 150Bn worth of loans at a subsidized 11% interest rate, but allocated mainly to the manufacturing and agriculture industries. As material costs continue to rise rapidly, questions have been posed by many participants in the market about the fate of real estate developers and the prices of properties, which are already experiencing upward pressure.

Have you heard? Egypt’s National Strategic Plan 2052 was announced back in 2015 and is currently underway! It’s an ambitious, forward-thinking strategy that aims to guide the nation’s development over the next several decades. Some of its key focus areas include…

  • Economic development: to increase economic competitiveness and diversification in an effort to push the country’s GDP growth rate to reach 7% annually and reduce the unemployment rate to below 10%.
  • Environmental development: to preserve and protect the country’s natural resources and promote the use of sustainable energy sources.
  • Good governance and political stability: to advocate for transparency and accountability in the public sector as well as reinforce the country’s legal framework.

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