The evolution of a youthful demographic will lead the way for the property sector as it rebuilds itself in the Gulf Cooperation Council (GCC), a report released here has said.

With the 2011 GDP slated to hover around the 5.9 per cent mark in the GCC (compared with 4.5 per cent in 2010 and 0.7 per cent in 2009), real estate markets are once again looking at a growth cycle that feels more tangible, less speculative and is predicated on several drivers that are spurring the climb, the report released by Al Masah Capital said.

Although the trend may not be equal at this point in time across the GCC because of different socio-political situations and due to the gap between the pre-crisis levels and today’s unique market dynamics, the expectation is now fixed in concrete, rather than vain hope, the Dubai-based alternative investment house said.

“Perhaps the most vital growth driver is the region’s expanding population, most of which is young and has the ability to create exponential investment in the property sector. It is this young, upwardly mobile demographic that has the potential to dissolve the current fear over high vacancy rates and concerns about oversupply,” said Mr Shailesh Dash, founder and chief executive of Al Masah Capital.

Almost 30 per cent of the GCC population is under 15 years of age and this augurs well for the long-term future.

Another 80 per cent is active in securing higher levels of income, more prudent in terms of money management and smarter when looking for safe investments.

The high proportion of youth in the population curve creates a perfect market. The IMF estimates that the region’s population (39.5 million as of 2009) will grow at more than double the pace of the world during 2009-15. This massive segment will exponentially boost the housing sector.

Add to this other drivers like the swift economic recovery in this region arising from carefully planned countercyclical government spending as well as the timely upsurge in oil prices and it is easy to accept the projections of swift growth as based in fact, it said.

For now, the real estate sector in the UAE and Bahrain remains relatively weak, while that of Saudi Arabia and Qatar is rebuilding gradually.

In Saudi Arabia, King Abdullah’s announcement that the kingdom will spend $67 billion on building 500,000 homes, as well as the crucial passing of the long-awaited mortgage, has been a shot in the arm for the kingdom’s real estate market.

Related Topics
comment COMMENT NOW