Investors Are Reeling As Excess Supply Bites
The Khaleej Times reports on Abu Dhahbi. “More housing units are expected to be vacant in Abu Dhabi in Q3. This will have ‘a more dramatic impact’ on residential rental demand, said property advisory company JLL Mena. ‘Job cuts by the oil and gas sector is leading to a decline in population growth,’ the report said. Approximately 4,000 units are expected to enter the market by the end of 2016, mainly within Reem Island, Rawdhat and Saraya, although based on past trends, a proportion of these could experience delays at handover. David Dudley, international director and head of the Abu Dhabi office at JLL Mena, added ‘Over recent years, prime residential prices went up at 25 per cent per annum which was unsustainable. As the market softened during 2015, prices have remained stable but transaction volumes have dropped significantly, which is starting to put pressure on sales prices.’”
The National on Saudi Arabia. “House prices in Saudi Arabia’s biggest cities continued to decline in the three months to the end of June, as falling oil revenue continued to put pressure on the kingdom’s economy. Property broker JLL’s data showed that villa prices in the Saudi capital Riyadh stood 5 per cent lower during the second quarter than they were during the same period a year ago, while apartment prices were 1 per cent lower. In Jeddah, the kingdom’s second city, year-on-year villa prices were down by about 4 per cent and apartment prices fell by 5 per cent.”
“The government’s National Transformation Plan, announced on April 25, includes a target to double the contribution of the property industry to the country’s GDP to 10 per cent, as part of a wider plan to reduce Saudi Arabia’s dependence on oil. Official targets include plans to make it cheaper for Saudi nationals to buy their own homes by building more houses and providing grants and more easily accessible mortgages. Knight Frank estimates that 30 per cent of Saudis own homes compared with a global average of 70 per cent.”
The Peninsula on Qatar. “Qatar’s real estate prices have witnessed a steady decline during the second quarter of 2016 compared to the previous quarter, after reaching to its peak for this year in March 2016. ‘The rentals for housing units in Thumama, Al Wukair and Matar Qadeem (Old Airport) areas have declined by nearly 10-20 percent, but the property owners continue to demand the same rentals they leased during boom time. Many of them prefer to keep their properties vacant rather than leasing at a lower price,’ said the promoter of a real estate leasing company, who did not wish to be named.”
From Nigeria Today. “Job losses have also become regular occurrences in the economy. Royal Dutch Shell Petroleum Development Company, Addax Petroleum Development Company and other key operators in the oil sector sacked thousands of their workers within the first quarter of this year. No thanks to the falling oil prices and the need to stay in business. SPDC had announced its plan to offload 10,000 members of staff and direct contractor positions in 2015 and 2016. There were also thousands of job losses in the banking, insurance and manufacturing sectors.”
“The Vacancy Factor Index shows a 72 per cent rise in the number of vacant properties based on the housing stock as at January, last year, within highbrow neighborhoods of Lekki, Victoria Island and Ikoyi. These areas are proximate to the central business district or downtown areas of the Lagos metropolis. Ruling out a quick recovery for the real estate sector because that market has a time lag to return to equilibrium, Rewane said: ‘We expect demand for housing locally to shrink further initially due to lower disposable income and a move from prime areas to more affordable locations.’”
The Standard Media on Kenya. “Investors in several neighbourhoods in Nairobi are reeling from a slump in home prices and rent as excess supply bites. Selling prices in Kilimani have dropped more than 5 per cent since last June to lead in the slump that has also been witnessed in Donholm, Eastleigh and Ridgeways, according to real estate consultancy HassConsult. A dip in prices is a reflection of slowing demand, further compounding concerns that developers who borrowed to fund for-sale projects could be coming under distress.”
“Implications of the supply-demand showdown have already been captured by the Central Bank of Kenya, which reported bad loans in the real estate sector had jumped by nearly half in the three months ending March.One of the reasons for the slowing uptake is that home sellers may have priced themselves out of the market. The average closing price for a residence in Nairobi has jumped seven-fold in 10 years, while rent has risen just three-and-half times, according to survey.”
The Namibian. “Namibian property owners have been hit by the Angolan economic crisis as most of their tenants from Namibia’s northern neighbour struggle to pay rent, and some have been forced to vacate. Angola’s economy, which heavily depends on oil revenue, has recently been hit by a crisis due to a plunge in global oil prices. While it was difficult to get a place to rent in recent years, many places in Windhoek’s central areas are empty as Angolans, who had a reputation for paying anything landlords demanded, now find it difficult to pay the rent which has steeply gone up over the years because of the artificial demand.”
“Many Angolans living in Namibia paid high rentals over the years as their country was awash with US dollar bills, which when converted to Namibia dollars, made high local rates appear petty. But the plunge in global oil prices made a huge impact on the Angolan economy as limited US dollars came into circulation. Places visited by The Namibian such as Dorado Park, Windhoek West, Windhoek North and Hochland Park, which were previously mostly rented out to Angolan students, have vacant rooms.”
“‘All these flats are empty. Angolans are either leaving, or moving to Katutura,’ said a security guard at a block of flats in Dorado Park, where at least four units which were all occupied by Angolan nationals before are empty now.”
“The latest statistics from the Angolan Industrial Association revealed that Angola had lost some 60 000 jobs in the past 12 months due to the falling international oil prices. According to Jose Severino, AIA chairman, the statistics which were released on 12 June showed that most of the job losses occured in the civil engineering and oil sectors, with state revenues reduced by half from June 2015 to May 2016.”
“Over the years, Namibians have blamed the Angolan US dollar boom for making landlords in Windhoek charge exorbitant rents. Real estate agent Esther Nicodemus said the sector has been feeling the pinch of the Angolan crisis lately. ‘Most of my clients were those people (Angolans). It has really been hard lately,’ she stated.”