Trends shaping real estate in the GCC: An in-depth conversation with Anshuman Magazine of CBRE

In a wide-ranging conversation with Gulf Business, Anshuman Magazine, chairman and CEO of CBRE for India, Southeast Asia, the Middle East, and Africa, shared his insights into the dynamic real estate landscape of the GCC region.

Economic diversification and its impact on real estate

The GCC is making significant strides in reducing its dependency on oil, setting it apart from many other resource-rich regions, and “this shift is the catalyst for the current growth, driving demand for a range of new property types,” says Anshuman Magazine, who leads Dallas-based real estate services giant CBRE’s regional divisions.

He further elaborates, “The pivot away from oil dependency towards sectors such as tourism, logistics, and real estate has been transformative. This diversification has spurred massive construction across the GCC, including sports stadiums, hotels, and extensive road networks. The scale of infrastructure development, the concrete being poured daily, particularly in Saudi Arabia, the UAE, and other GCC countries, is unprecedented,” he highlights.

These evolving trends are also influencing CBRE’s operational strategies and growth trajectory in the region. He goes on to share, “In Saudi Arabia, we have tripled our manpower in the past year, and we continue to expand our teams in UAE cities like Abu Dhabi and Dubai. The regional growth has significantly impacted our headcount and overall organisational expansion.”

Real estate boom in Saudi Arabia and the UAE

Saudi Arabia, the largest economy in the GCC, is undergoing rapid real estate development under its Vision 2030 programme. The kingdom’s initiatives to position Riyadh as a major commercial hub have consequently intensified real estate activities. Currently, the GCC’s real estate projects are valued at approximately $1.68tn, with Saudi Arabia contributing 63.1 per cent of this total. The UAE follows with $409bn, making up 24.4 per cent of the total, as per CBRE’s Middle East Real Estate 2024 Outlook report.

“Since the announcement of the Vision 2030 programme, Saudi Arabia has seen rapid growth. The mandate for companies to establish their headquarters in Riyadh has supercharged the commercial real estate sector,” he acknowledges. “From commercial space occupancy levels to the traffic on the streets of the capital city, there is a lot of business activity in the country.”

Projections and trends

Hence, Magazine’s short-term outlook for Saudi Arabia’s real estate market is highly optimistic. Government investments in infrastructure and the initiation of giga and mega-projects in tourism and logistics are already yielding positive results. “This will increase the demand for various property types, including office spaces, industrial facilities, and hospitality accommodations,” he predicts.

In the longer term, spanning over five years, economic diversification and technological advancements will further shape the market, establishing Saudi Arabia as a regional hub. “As the kingdom moves beyond its oil-reliant economy, the real estate market will mirror this shift. We anticipate greater integration of technology within the sector, enhancing property management, transactions, and overall market efficiency,” he added.

Cross-border investments and regional integration

The GCC’s strategic location is fostering a rise in cross-border investments, particularly between the Middle East and India, and increasingly with Southeast Asia. “India is a significant market for the GCC, with notable investments from UAE and Saudi sovereign funds in areas like affordable housing,” notes Magazine.

This investment trend is reciprocated with capital flows from India into the GCC, particularly in the residential sector of cities like Dubai. These mutual interests are laying the groundwork for substantial future growth. “In the coming years, I expect an increase in trade and investments between Asia and the Middle East, surpassing past levels,” he said.

The maturing UAE real estate market

The UAE, especially Dubai, continues to outpace itself, with substantial new developments in other emirates such as Ras Al Khaimah and Abu Dhabi. “The UAE is not nearing saturation but maturing. Continued investments in infrastructure, technology, and sustainability will sustain growth in the UAE and the broader Middle East,” Magazine pointed out.

He emphasised that while prime areas in Dubai may stabilise, there remains significant growth potential in emerging sectors like logistics and technology. The market’s emphasis on innovation and sustainable development is a crucial driver.

Government investment and technological adoption

Governments across the GCC are reshaping the real estate market through extensive investments in infrastructure and Proptech solutions. This aggressive push is crafting a tech-enabled real estate environment, distinguishing it from more traditional markets worldwide.

“GCC governments are investing heavily in infrastructure and Proptech, accelerating real estate development and fostering a market that is more tech-enabled compared to traditional ones,” noted Magazine.

This real estate boom is accompanied by a transition to sustainability, which is “increasingly” becoming a cornerstone of real estate development in the GCC. The focus on energy-efficient buildings and green development practices is evident in both new and existing projects, aligning the region with global environmental standards and setting a precedent for future developments, he highlighted. “Sustainability is a priority in the GCC, with a keen focus on energy-efficient buildings and green practices, which might not be as prevalent in all global regions,” he emphasised.

Future trajectories and opportunities

Magazine remains confident that the UAE has not reached its peak, citing ongoing investments in infrastructure and technology that support long-term growth. “We have not peaked yet. We will continue to see investments flowing in and growth occurring,” he affirmed.

Additionally, the GCC’s strategic position makes it a gateway to Africa, presenting new opportunities as African economies expand and integrate more with global markets. “Africa’s population will significantly contribute to the global population. Economies like South Africa, Nigeria, and Egypt will play major roles,” he observed.

As the region evolves, the interplay between cross-border investments and strategic development will shape the future of real estate in the GCC and beyond. With strategic investments and a focus on sustainability, the GCC is setting new benchmarks for real estate development globally, concludes Magazine.