The Middle East may not always have been high on property investors’ radar, but there are several reasons why it should be today. Firstly, the region as a whole has a steady rate of population growth (unlike Europe, whose population is teetering on the brink of decline), and an increasing overall demand for homes. Secondly, that population is on the move, with rural residents migrating to cities, increasing the demand for urban real estate. Thirdly, those migration patterns are driving economic strength and increasing the availability of urban labour – together with improvements in education that are expanding the skill base of that labour. This means that business is booming and increasing the demand for commercial property.
Together, these three factors have created a dynamic market with lots of potential for investors interested in engaging with new building projects, or renovating and increasing the value of existing stock. It’s a vibrant and highly rewarding sector to work in.
United Arab Emirates
One area that stood out even before other parts of the Middle East began to attract international attention is the United Arab Emirates (UAE). Although growth rates here are not quite as fantastic as they’ve been over parts of the past decade, the maturing market is now more stable, so slightly lower but still impressive rates of growth are combined with a significant reduction in risk. Dubai and Abu Dhabi are at the heart of the boom, but it’s also worth looking at Sharjah and Al Ain, which are beginning to benefit from businesses relocating to reduce overheads.
Although the rules around owning property in Kuwait are complicated, there are lots of opportunities in what is one of the Middle East’s wealthiest countries. Investors like Fahad Al-Rajaan have achieved considerable success by investing in the residential sector, where undersupply means demand is perpetually high. Through the Kuwait Real Estate Investment Consortium, Al-Rajaan has worked to upgrade traditional urban housing stock to meet the requirements of today’s business people and families. This approach is profiting investors whilst helping the national economy to thrive.
For those interested in developing high-end property in a market where population pressure is driving prices steeply upward, few places can compete with Israel. Although the threshold for participation is high, there’s good money to be made here, especially in urban apartments designed for couples and young families. Newcomers may find the south of the country the easiest place to become established.
What to watch for
When investing in property internationally, it’s vital to have capable people on the ground that can take care of assessment, repair and maintenance. Standards and expectations can vary a great deal between different places, so it’s best either to visit in person or to take recommendations from people with whom you share a similar cultural background. Investors should not be put off by horror stories about the Middle East, though – there is plenty of talent and expertise available if the time is taken to find it, and the region is welcoming to investors with a genuine interest in its future.