Drop in oil prices Mixed blessing for the real estate sector
Standard & Poor’s has warned that the continuing decline in oil prices shows no sign of abating and will probably lead to a slowing down in Gulf economies and their associated infrastructural projects. Oil revenues constitute 46 percent of the average revenue in the GCC countries, with oil representing 75 percent of total exports. Reports continue to highlight the dangers of the decline in oil prices and the consequences for both Arab and foreign countries.
But if the drop in oil prices has had a negative impact on countries like Russia, Venezuela, Nigeria, KSA, and the UAE – the decline in prices has led to oil-producing countries losing over 1.5 trillion USD, it has also benefited economies in others, like China, India, Japan, South Korea, and Thailand.
The international real estate sector is experiencing the pros and cons as a result of the continuing decline in oil prices. Countries whose economies rely heavily on oil incomes are obviously being hit hardest, experts agree. DORCHESTER Magazine has interviewed international experts (Rajiv Biswas, Christopher Weafer, Prof. Olaf Stotz, Don Campbell, Edward Luttwak, John C. Goff, John Van Reenen, and Bob Hancké) on the decline in oil prices and its consequences worldwide.
In the UAE, for example, many experts are predicting that the results of the decline in oil prices and estimate that those who have cash liquidity, manage it in the right way and choose the right opportunities may not suffer. However, they also believe that real estate projects terminated by the government will not be affected in the same way as private projects. In Kuwait, experts agree that the decline in oil prices will not increase real estate opportunities, as the local market is not greatly affected by periodic events, even if those events are the decline of oil prices. The same goes for Saudi Arabia, especially since real estate projects are generally supported by the government and already have funds been allocated to them. The biggest impact of the decline in oil prices, however, is in the local Iraqi market which depends on oil revenues not only for real estate projects but for all national projects.