Property downturn spreading throughout the Middle East
Saudi Arabia, Kuwait, Bahrain and Qatar are now facing real estate price falls as the economic downturn spreads out around the Middle East.
Real estate companies in Saudi Arabia said the price of new apartments and villas are falling because of a lack of buyers and the downturn could see falls of 12%.
'There is a drop in demand for apartments,' said Mohammed Al-Sobai'e, a real estate office owner in Jeddah. He added that he expects a slowdown in the construction of new apartments to avoid the market being flooded.
Construction companies are struggling financially according to Maher Bundugji, a member of the contractors committee.
And in Qatar there is concern about the bust in Dubai spreading. A report from Kuwait investment bank Markaz shows that a large percentage (38%) of the population work in the real estate and construction industries and so a fall in prices could severely impact on jobs.
'Qatar's property market needs to be closely monitored to avoid a Dubai like situation in the future,' the report concludes.
The report also warns of a property bubble in Bahrain, and a potential bubble in Kuwait, although analysts believe that action by the government in Kuwait to curb lending on real estate will ease any damage.
'Our study finds evidence of a bubble in Bahrain although it had a less significant impact on the overall economy than in Dubai, while in Kuwait we expect a less painful correction,' the report concludes.