GCC real estate 'eyeing company mergers' as Covid crisis bites

The impact of the Covid-19 pandemic is being felt in major industries in the region, including the real estate market, where developers are eyeing a reduction in unit prices by as much as 25 per cent and also company mergers to minimize business risks and significantly increase the ease of doing business, according to Maximiliano Development Management Services (MDMS).


A Saudi-based development management service company, MDMS provides interior and architectural designs including engineering services.


As uncertainty continues, real estate developers are deploying a range of measures and policies to mitigate the ongoing challenges and boosting their position and deepening their relationships with their employees, investors, end-users and other stakeholders.


MDMS Managing Director Engineer Marwa A. Murad said: "One of the major risks facing the real estate market is the inability of buyers to pay the instalments so strategies must be adopted such as the reduction in unit prices by 25% in the event of cash sales and small developers who may face the risk of bankruptcy might consider merging with another developer to protect its business."


"Since the virus outbreak, there has been a stiff competition between real estate developers and it will intensify as the unprecedented crisis has created a supply-demand imbalance in the sector," she explained.


Murad pointed out that the risk facing the real estate market was the inability of customers to pay the instalments, thus causing a delay in the construction work. 


"As a result, developers may require a shorter period for the instalments which eventually leads to an oversupply of units, thereby creating a negative business cycle," she observed.


“The depth and breadth of the coronavirus outbreak’s economic impact on the real estate sector are still uncertain but real estate players will be well served to take immediate action to improve their businesses and also keep an eye on a future that could be meaningfully different," added Murad.


MDMS is a key player in the growing construction industry in Saudi Arabia. During the last three years, it had been working closely with the National Housing Company to develop housing projects for Saudi citizens. 


The company had collaborated with the National Housing Company for the sale work of the Murcia project, one of the largest projects in Riyadh, which is the construction of more than 5,000 housing villas and apartments. 


MDMS is also the sales consultant for the Murcia project phase 1 and 2 and successfully sold 90% of the phase 1 units, it added.-TradeArabia News Service 


Source: http://www.tradearabia.com/news/CONS_372104.html


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