The construction sector in the Middle East is expected to grow again this year, providing a significant boost to the countries non-oil contribution to GDP, the latest report from KFH-Research suggests.
Analysts stated that industrial production will ‘improve gradually’, but the non-oil sector will be ‘more significant.
All signs point to a resurgence in the real estate market, particularly in the well-developed luxury areas within Dubai. 2012 saw the most growth in pricing across the board in more than four years.
“We forecast moderate economic growth for the UAE, at three percent in 2012, conservatively lower than the Central Bank’s forecast that growth maybe exceeding 3.5 percent,” KFH-Research said.
The strength in the market is supported by the growth of HNMI’s in the Middle East who are again looking to the property asset classes as a means of secure long-term capital growth.
The report showed that in the Middle East, the number of HNWI’s has increased by 2.7 percent year-on-year to 450,000. Total financial wealth of the Middle East HNWI’s grew by 0.7% year-on-year to US$ 1.7 trillion.
It is thought there are around one million wealthy households in the GCC region, with total investable assets of between US$ one trillion to US$ 1.2 trillion. Of these, around 260,000 to 280,000 households have total assets of more than US$ one million in each household.
By country, Saudi Arabia has the most number of wealthy households, estimated between 600,000 and 625,000, followed by the UAE (200,000-220,000) and Kuwait (120,000-130,000). Naturally, Saudi Arabia also has the highest total investable assets in the region, estimated at US$ 500 billion to US$ 550 billion, followed by the UAE (US$ 260 billion to US$ 280 billion) and Kuwait (US$ 140 billion to US$ 150 billion).
As the wealth of the GCC high spenders increases again we expect to see further investment in the Dubai property market, which is considered a safe haven within the region and secure place for investment. This will support the continued growth in the luxury sector of the market, with serviced hotel apartments a prime investment opportunity for those looking to own a high-end, well serviced property and the flexibility of earning rental returns while they are not living in the apartment.
What impact do you see on the Dubai Property Market in 2013? What is your own personal experience of the price rises seen over the past 12 months? We would love to hear from you in the comments section below, or joining us on Twitter, @dxbpropinvest