Saudi Arabia's real estate market offers among best investment opportunities in the world thanks to strong domestic housing demand, an attractive project pipeline and an expanding hospitality sector, global consultancy firm A.T. Kearney said on Tuesday. It placed Saudi Arabia fourth out of 50 markets in its 2010 Real Estate Global Opportunity Index, which ranks the most attractive emerging markets for investors. A.T. Kearney said a renewed focus on middle-income housing and a new mortgage law expected to come into force next year will stimulate demand. Saudi Arabia's real estate market is relatively underdeveloped and its expanding population, a lack of affordable housing and few home financing options has seen significant pent-up demand build up. The Kingdom faces a housing shortfall of up to 1 million units over the next three years, according to some analysts. The market's relative infancy has also shielded it from the worst of the global financial crisis, which has devastated neighboring Dubai and sent prices tumbling in other markets such as Abu Dhabi, Doha and Kuwait City. China came in first place on the index, followed by South Korea and India, while Brazil came in fifth place, A.T. Kearney said. The consultancy company ranked the United Arab Emirates as the second most attractive market in the Middle East and North Africa (MENA) at 18th place on the index, driven by growth in Abu Dhabi. A.T. Kearney said Abu Dhabi has a rich project pipeline and relative undersupply of residential and commercial real estate that will support prices going forward. It said Dubai is now paying the price for “overenthusiastic development” as weak demand and significant oversupply weigh on prices. Dubai, once the region's flagship real estate market, has suffered badly at the hands of the global financial crisis, with prices plunging more than 50 percent, billions of dollars worth of projects being cancelled and thousands losing their jobs. The market now faces increased uncertainty due to the government's debt woes and many analysts expect further prices falls and do not see a recovery before 2011 at the earliest. “Dubai's experience should offer a cautionary tale for other GCC (Gulf Cooperation Council) countries,” A.T. Kearney said. Elsewhere in the MENA region, Egypt came in 22nd on the index, while Kuwait came in 25th, the consultancy said.
