Vice Chairman and CEO of Dima Capital, Hossam Nasser Al-Muzayel, said that the world is going through an unprecedented state of huge changes, whether on the economic or political levels, and this had a significant negative impact on the real estate market, especially with inflation that almost got out of control at times. precedent.
He added in an interview with “Al-Arabiya” that the high cost of debt is one of the basic things in the real estate market, which has made real estate deals worldwide more expensive and somewhat less attractive, but this does not prevent the existence of viable investment opportunities, especially when financing is available commensurate with the size of studied risks in Big global markets such as USA and Europe.
Al-Muzayel said that market fluctuations are a recurring economic year that we have witnessed for decades, although what is new in the matter is the speed and magnitude of the changes that occur in an unusual way, especially with regard to the rates of increasing interest rates steadily over short periods.
The “US Fed” said that inflation is back under control and interest increases may not occur as it anticipates inflation levels, and I believe that the market has reached bottom and therefore current interest rates will not last long, and within the next 12 months we will witness a convergence between the prices of sellers and buyers, and the cost of debt will not remain at the same level This level will begin to decline gradually in 2024,” according to Al-Muzail.
He said that those interested in real estate investments, especially in the US market, which is one of the largest global markets and cannot be avoided, must seize these opportunities and move quickly before the expected increase in real estate prices, given the inverse relationship between interest rates and real estate prices.
He stated that many investors see a discrepancy in the attractiveness of real estate sectors, and for example during the pandemic, real estate activities were affected more than others, and there is a great disparity in commercial and office real estate, hospitality real estate and industrial real estate, and the latter performed excellently even during the pandemic, and the demand for this type of Income-producing real estate will continue into the future.
He explained that some investors have become convinced that the administrative office market has been subjected to a very severe slowdown, and therefore they see a great opportunity to increase capital profits if cash is available to purchase these properties without resorting to financing or obtaining it at an interest commensurate with the current situation for this type of investment.
Al-Muzayel said that the Bank of England will also not continue to raise the interest rate, and there is a close link between the interest rate increase in America and its reflection on the European market, and the British real estate market was affected more than the rest of the European markets, and price correction has already taken place in this market that witnesses great investment opportunities. Because they absorbed interest rate increases.
He pointed to the exposure of banks to the real estate market in the United Kingdom, and the intervention of non-bankers in financing real estate, but there is a large hedge on the part of banks on this exposure, and the market has reached the correction movement to almost the bottom, and if there are increases, it will be few, and the current time may be the best time to buy real estate In the United Kingdom, especially those who can buy in full cash without the intervention of banks and benefit from the corrective movement in prices, which have reached very good levels, and the opportunities that await those who seize them.