Investors expect a 10 percent gain in Saudi Arabia's real estate market over the next 12 months, far exceeding expectations in other Middle East markets, Jones Lang LaSalle, a leading global commercial real estate management and investment services company, and the largest in the Middle East, reported on Wednesday. Jones Lang LaSalle's recent Investor Sentiment Survey revealed investors expect Saudi Arabia to have the strongest performing real estate market in MENA (Middle East and North Africa) over the next 12-24 months. Forty percent of respondents already believe the Kingdom's real estate market has already stared to recover. An additional 40 percent of respondents expect the market to recover by the end of the year. Commenting on the survey findings, John Harris, head of Jones Lang LaSalle Mena's KSA branch, said “the report shows that there is currently more maturity and stability in the Kingdom of Saudi Arabia than elsewhere in the MENA region. Investor confidence in the Saudi real estate market performance is certainly partly attributable to the government's active role in stabilizing its economy and with investors increasingly coming from within the borders of Saudi Arabia this trend looks likely to continue. KSA residents have always dominated the market - but in recent months they have show a strong appetite for local assets during a time of global instability.” In the report, “Real Estate Investor Sentiment Survey - Middle East & North Africa”, Jones Lang LaSalle noted that investors recognize the strategic importance of Saudi Arabia but are finding it difficult to identify opportunities that meet their return expectations. While investor respondents expect yields of 12 percent+, there has been seen some yield compression over the last year, and the limited supply of investment grade assets have traded on initial yields of below 10 percent. However, there are more buyers than sellers of investable assets in the Kingdom so demand remains high. The report also showed that investors are looking at opportunities in the Kingdom away from the traditional cities of Riyadh and Jeddah and toward the Eastern Province - which is currently receiving renewed interest in integrated mixed use developments along the coast - and the Holy cities of Makkah and Madina. “Two major factors appear to be shaping expectations with investors increasingly focussing on those markets with strong demand fundamentals (driven by domestic population) and those with strong core economic growth drivers (such as oil and gas). Saudi Arabia is the only country in the region that offers a combination of these two factors, but this is not the easiest real estate market for investors to enter,” said Andrew Charlesworth, head of Capital Markets at Jones Lang LaSalle MENA. The report highlighted a significant increase in the percentage of investors that believe Saudi Arabia will have the strongest anticipated real estate performance. In October 2009 Saudi Arabia shared that accolade with Abu Dhabi on 26 percent but now 30 percent of investors believe that Saudi Arabia will witness the strongest performance. This increase in confidence has seen Abu Dhabi relegated to second place with 25 percent and Egypt following in third place with 13 percent.
