There is a strong correlation between the general health of a national economy and the performance of its real estate market. Real estate investments generally follow the path of the economic cycle since real estate companies provide office space, warehouses and other business facilities, shopping malls for retailers, housing and accommodation for individuals, families and tourists.
While there are common fundamental metrics that are relevant for all real estate investments such as occupancy rates, rental rate, cap rate, each segment of the real estate industry has distinct drivers. Office space and warehouses are very sensitive to the growth of new business establishment, and to the size of new government and private sector projects. Housing demand is highly related to domestic mobility in an economy and demographic trends, which makes it a defensive segment.
The performance of the hospitality sector is more dependent on consumer confidence and propensity to spend in a market. In this regard, its performance is cyclical, and its three key metrics are the revenue per available room, the average daily room rate, and the occupancy rate.
The Arab Gulf Region has seen tremendous growth at the back of abundant and cheap credit, sustained positive economical expectations for the region in general, significant domestic demand from the young population, and expected influx of expatriate populations. These favorable expectations have given a boost to real estate development sector all over the G.C.C. Region.
When the capital and debt markets turned sour post 2008, many real estate companies in the G.C.C. have experienced liquidity and solvency problems. There are however signs of recovery thanks to the execution of government funded development plans and projects which are boosting domestic demand.
TandemVision helps Real Estate and Hospitality Clients by developing sustainable growth strategies, as well as managing strategic risks. We design the processes, organisational structure and proper governance models with checks and balances to ensure investment decisions are made in accordance with global best practices.