Watch: The continuing evolution of GCC real estate
Zain Qureshi, Global head of real estate finance and advisory at Mashreq comments on the advancements in the sector
Regional impetus
The GCC real estate sector is experiencing sustained growth, driven by robust economic fundamentals, proactive government initiatives and a surge in commercial and residential demand.
“Over the years, the sector has undergone substantial transformation, shifting from reliance on government and family offices to more stable and varied sources of liquidity, including capital markets, foreign direct investment and end-user proceeds,” says Zain Qureshi, global head of real estate finance and advisory.
He says this shift has attracted numerous privately-owned real estate developers to the region, enhancing both the variety of projects and the standard of construction.
Another key component has been favourable economic conditions, with inflation rates remaining significantly lower than global averages.
According to CBRE Research, across the GCC, average inflation levels dropped from 3.7% in 2022 to 2.2% in 2023, significantly lower than the average global inflation rate of 6.1% recorded last year.
Together, these factors are making the region attractive to local, regional and international investors.
Another indicator of these fundamentals has been the large number of planned and ongoing projects.
According to regional projects tracker MEED Projects, in 2024, the total value of planned or under-construction real estate projects in the GCC is estimated to be $1.6tn, up from $1.38tn in 2023.
Saudi Arabia is leading the way with $940bn, followed by the UAE with $453bn of the total.
Investing in and developing the built environment has become a cornerstone of the GCC’s economic diversification strategy.
The move by regional governments to reduce their dependence on oil and focus on sectors such as real estate, logistics and tourism has brought about significant transformation.
“Looking ahead, continued investment in infrastructure, technology and sustainability will fuel sustained growth in the real estate sector for the foreseeable future.”
Qureshi regards real estate as a strong investment product due to its potential to generate cash flows, capital appreciation opportunities and diversity in investment portfolios, as well as to be a hedge against inflation.
The region continues to attract attention thanks to continued investments in infrastructure growth, government-led economic and social measures to increase immigration, enhancements in freehold and investor zones, and the presence of flexible and strong regulations and robust legal frameworks.
Environment considerations
Sustainability is a key agenda item for the sector globally.
According to a McKinsey study, the real estate industry accounts for approximately 40% of global combustion-related emissions, 28% of which come from building operations.
In 2023, the UAE, Saudi Arabia, Bahrain and Qatar ratified the Paris Agreement, a landmark global treaty aimed at limiting global warming to 1.5 degrees Celsius, which means greenhouse gas emissions must peak before 2025 and decline 43% by 2030.
In this context, projects across the region are increasingly integrating environmentally friendly elements.
Qureshi highlights examples such as Masdar City in the UAE and Lusail City in Qatar, both designed with sustainability at their core.
While Masdar City focuses on renewable energy-powered, energy-efficient buildings and low-carbon transport, Lusail City integrates smart technologies, water conservation and green infrastructure to achieve sustainable urban development.
Similarly, sustainability is also a key pillar of Saudi Arabia’s Vision 2030, and central to its vision is the kingdom’s pledge to reach net-zero carbon emissions by 2060.
Two of its standout projects are Neom, with its significant focus on sustainable living, and the Red Sea Project, which is focused on creating natural destinations and preserving the environment with a commitment to renewable energy and a policy of zero waste to landfill.
Driven by these efforts, Qureshi sees a highly promising future for sustainable finance in the region.
Growing international interest is fuelling an increase in sustainable financing and investor activity, with significant momentum shifting towards green investments.
“We see more borrowers entering the market, with a growing number of green bonds and green sukuks (Islamic bonds) being issued in the region, shifting momentum away from traditional forms of raising capital,” he says.
Overall, the region stands to see a continued rise in liquidity dedicated to sustainability, underscoring the ongoing shift towards responsible and impactful investments.
Real estate financing
These growing real estate ambitions warrant more competitive financing solutions.
Currently, there is a mix of government entities with substantial liquidity needs and a rising number of privately-owned developers entering the region seeking diverse financing solutions.
With a division structured around three core verticals focused on escrow and trust accounts, client relationship management and structuring and advisory services, Mashreq offers tailored solutions to clients while effectively managing risk.
In addition to being active in its home market of the UAE, the institution is also present in the GCC region and has entered Western Europe and North America.
“Being more proactive in providing solutions to our clients is the most effective way to increase our market share and establish deeper relationships with those clients,” Qureshi concludes.
