Sunday, May 17, 2009

Risk factors for Middle East property sector

The major risk factors for the Middle East real estate sector this year, is the uncertainty of markets and continued fallout from the global credit crisis. The market volatility and negative surprises arising out of the credit crisis are the two major risk factors for property sector this year, according to a poll by Ernst & Young and Oxford Analytica.

The poll involved more than 100 analysts speaking about the top business risks threatening global firms in this sector. The top ten risks were rated for global business 2009. The other risk factors apart from the said are - the inadequate infrastructure, global war for talent, changing demographics, pricing uncertainty, inability to exploit global and non-traditional opportunities, green revolution, sustainability and climate change, economic vulnerability and regulatory risks in developing markets and volatile energy costs.

In the Middle East, the property sector also faces risks arising due to economic vulnerability and regulatory risks.

Those polled also said business growth plans should take into consideration the shifting demographics to determine the location, and funding of the project. The growing middle class, for instance, will lead to demand for basic services, including education, and create demand for tourism and leisure infrastructure. The unbalanced surplus luxury properties will continue in this sector, as long the regional players factor in the rise of growing middle class with a liking for affordable housing.

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