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Economic Growth in GCC Outpaces Previous Expectations – Real Estate Hiring Again

Middle East : 16 June 2011

Higher Economic Growth Expected in Saudi

The economy of Saudi Arabia will experience five percent growth in 2011 according to Business Monitor International, which is significantly higher than previous predictions of 3.9 percent. This increase is a result of the measures put in place by King Abdullah.

Analysts at BMI stated that increased public spending caused them to reconsider earlier forecasts. A drop of one percent in the deficit is also predicted. The non-hydrocarbon sector is vital and government initiatives focusing on economic diversity should strengthen private consumption.

The BMI report sees growth of around eight percent in the banking sector, as opposed to the 2.5 percent increase of 2010. The governor of the Kingdom’s central bank predicts economic growth of about six percent, higher than current estimates of 4.3 percent. About 30 percent of Saudi’s annual output, around $130 billion, will be spent on measures such as job creation, house construction and unemployment benefits.

According to the IMF the Saudi economy will see 7.5 percent expansion this year, much higher than was stated in the March Reuters poll forecasting 4.5 percent growth.

Hydrocarbons make up more than 80 percent of budgeted revenue and higher oil prices have spurred growth again this year. Although there was a fall in world oil prices last week due to recent OPEC forecasts, and year-on-year inflation in the Kingdom hit 4.8 percent in April, prospects in the Saudi economy are healthy.

John Burbank from Passport Capital stated that growth and larger capital returns are likely to occur in the Kingdom over a longer period of time. With a massive program focusing on infrastructure, Burbank expects Saudi Arabia to open up to foreign investors much like India has in the last decade. He noted that foreigners will invest in the Kingdom and as capital begins to flow Saudi’s equities should rise. Burbank also noted that oil prices are likely to remain steady and the Kingdom will re-invest that wealth into the local economy.

Growth In UAE Spurred By Oil and Trade

A strong trade sector, rising oil prices and rapid regional growth will see the UAE’s GDP reach five percent growth for this year and next, according to the National Bank of Kuwait. The NBK also increased their forecast for non-oil growth in the UAE to four percent and stated that lower inflation rates will help the nation be more competitive in the international forum. These positive economic factors are up against continual effects of corporate restructuring, the overhanging debt, slow bank lending and weak property and construction sectors.

Crude output rose by over 150,000 bpd in response to lost Libyan sources, which helped growth forecasts for the hydrocarbon sector jump to seven percent from five. If oil prices remain high, even more growth will be seen next year and overall GDP growth should reach five percent for 2011 and 2012, according to NBK.

The consumer price index in the UAE fell to 1.2 percent in March, down from October’s peak of 1.8 percent, which was opposite the expectations of most analysts. The CPI was driven down by lower food inflation figures, falling rents and an increased supply of new apartments.

Inflation should remain low for 2011 assuming the deceleration of food price inflation persists. The NBK said it should average around two percent in 2011. Next year may see acceleration with increasing economic growth and a weaker US dollar affecting import prices. Even at three percent, the UAE inflation would remain one of the lowest in the region.

NBK expects spending to increase slowly this year, as earlier corporate and banking measures fade away and more budget cuts occur in Dubai. If oil revenues surge the budget surplus could exceed 15 percent of GDP, the first time that has occurred since 2008, assuming the off balance sheet revenues such as ADNOC profits and investment income are included.

Real GDP growth in the GCC region is expected to reach seven percent, an increase from earlier forecasts of 5.5 percent and mainly due to increased oil output, government spending and the results of the unrest seen across the MENA region.

Growth Forecasts See Hiring and Competitive Salaries in GCC Real Estate Firms

Hiring is continuing across the GCC real estate sector with highly competitive salaries at every level, according to those involved in recruitment. Over the long-term the outlook is positive.

Recruitment consultants note that realtors are on a hiring spree, especially in the UAE and Saudi Arabia, as well as Qatar. Many of these realtors are involved in government infrastructure and affordable housing projects. With higher oil prices and regime changes in the Arab region the recruitment picture looks positive, according to industry experts.

Even after a major slowdown, the real estate sector joins many other industries that are seeing increased hiring across the GCC. Numerous careers are opening up, including management positions within various disciplines such as valuations, project, asset and facilities management, accounting, corporate real estate services and the development of hospitality projects.

Much of the hiring is concentrated in the UAE at the junior to mid levels. A recent survey showed that 35 percent of MENA firms surveyed were hiring junior execs in the next three months, while 28 percent would hire executives and 27 percent needed senior execs. A further five percent would be hiring for the top positions.

Recruitment experts state that salaries remain stable, with an average of Dh 38,351 monthly across the disciplines. The employment market is currently balanced and in a salary comparison survey it was found that salaries in the Middle East are about 30 to 40 percent above those in Europe and the UK.

Many made redundant during the Great Recession have found other work, so the search for new real estate talent is going global. Experience in the Middle East is highly desired. Aggressive luring of talent from competitors is not occurring as frequently and skilled professionals with credentials are being sought after.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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