GCC Real Estate Industry Heats Up Amidst Strong Competition

Real estate developers in the GCC need to have a ‘selective development approach’ if they want to grow amidst increasing competition, a report has said.

The study, by consultancy Roland Berger, stated that investors in the GCC remain cautious about new real estate projects despite signs of a macro-economic revival. A developer’s experience and capabilities will play a major role in a potential investment.

“Successfully dealing with increasingly demanding clients, reacting to stronger competitive pressure from skilled international players and getting access to land banks will determine the winners and losers,” said Tobias Plate, partner at Roland Berger Strategy Consultants.

The study said that developers should not target just opportunistic growth in the market.

“Overall, the competitive landscape is intensifying, forcing GCC real estate developers to rethink their strategic positioning,” said Fabian Engels, principal at Roland Berger Strategy Consultants Middle East.

“Increasingly demanding clients are requiring more from developers, expecting that total completion time, cost and especially quality be on par with international standards.”

Engels said that local companies are already partnering with global firms.

International competition has also intensified post the opening-up of regional markets, which has encouraged more foreign investment to the region, the report said.

“Clearly, GCC real estate developers need to scrutinise their positioning and strategic leverage to be successful in the future,” said Plate.

“Segments, geographic differences, clients, business model, asset intensity, equity and financing requirements, potential risk and possible outsourcing of functions are just a few topics that need to be addressed, in light of potentially changing economic conditions.”