The Middle East’s housing markets have been struggling for several years now, due to plummeting oil prices and the ongoing political and diplomatic crisis.
According to Global Property Guide’s survey, the coronavirus pandemic has aggravated the situation in the Middle East region. The IMF has recently forecast 3.3% economic growth for the MENA region this year, not enough to fully offset the 3.8% contraction last year. In fact, four of the eight weakest housing markets in the global survey are in the Middle East.
Egypt’s housing market remains depressed, with the nationwide real estate index falling by 14.38% during 2020, far worse than the 2.28% y-o-y decline seen in the previous year. Part of the explanation is possibly the very high interest rates available on deposits in Egyptian Pounds. Real house prices fell by 0.95% q-o-q during the latest quarter.
President Abdel Fattah el-Sisi recently removed the last restrictions on foreign ownership of land and property in Egypt, in an effort to buoy the housing market. He also allowed the government, the biggest landowner in Egypt, to use its land for public-private partnership schemes. However house prices are being undermined by the vast amount of new construction, for instance in the new capital. On a positive note, Egypt’s overall economy has successfully weathered the adverse impact of the COVID-19 pandemic, with its real GDP rising by 3.5% y-o-y in 2020, according to the Institute of International Finance (IIF). In fact, Egypt is the only nation in the MENA that avoided a negative GDP growth last year. The economy is projected to expand by 2.8% this year and by another 5% in 2022, according to the IMF.
Qatar’s housing market remains weak, with the real estate price index falling by 4.78% during 2020, after the previous year’s minimal rise of 0.55%. Property prices fell by 3.39% q-o-q during the latest quarter. The Qatari economy contracted by about 4.5% last year, following almost zero growth in 2019, according to the IMF. The economy is projected to grow by a modest 2.5% this year.
Saudi Arabia’s housing market is still struggling, with the residential real estate price index falling by 4.63% during 2020, in contrast to the previous year’s 0.97% increase. Quarter-on-quarter, prices increased by a minuscule 0.42% during the latest quarter. The economy is projected to grow by a modest 2.6% this year, following a contraction of 5.4% last year.
The UAE’s housing market sufferings seem unending, amidst a huge supply glut of both apartments and oil. In Dubai, residential property prices fell by 2.93% during 2020, an improvement from the previous year’s 4.05% decline. During the latest quarter, house prices in Dubai increased slightly by 0.52% q-o-q. The UAE economy is expected to grow by an unimpressive 1.3% this year, following a slump of 6.6% last year due to a crude oil price crash caused by the COVID-19 outbreak.
Morocco’s housing market is gradually improving, with residential property prices rising by 1.08% during 2020, following declines of 1.75% in 2019 and 0.51% in 2018. During the latest quarter, house prices increased 2.98%. The Moroccan economy will expand by about 4.9% this year, partially offsetting the 7% decline last year.
Israel’s housing market is stabilizing, with the nationwide average price of owner-occupied dwellings rising by a modest 2.64% during 2020, an improvement from the previous year’s 1.18% growth. Israeli house prices were almost unchanged during the latest quarter. The Israeli economy contracted by about 5.9% last year, in contrast to an annual average growth of 3.5% in 2017-19. The economy is projected to recover this year with 4.9% growth.
Image: Dubai, United Arab Emirates / Aleksandar Pasaric
