PwC Middle East recently outlined six principles that can help secure sustainable growth of real estate markets in the region.

1. 6 PRINCIPLES UNDERLYING
SUSTAINABLE REAL ESTATE
GROWTH IN THE MIDDLE EAST

2. ■ A number of real estate markets across the Middle East are poised to experience
significant growth in the coming years. Amid this potential for growth, there has
been a growing conversation about how to engage in real estate development in a
sustainable way. Governments across the region have engaged in significant
economic measures and incentive packages to drive growth in this sector.
However, there is no clear pathway for how to sustain this growth for the long run.
Importantly, a robust real estate market can drive larger economic development,
which is why governments have made this a central focus. Recently, PwC Middle
East looked at the top-ranking markets in the region and conducted an analysis to
identify best practices for the region.

3. ■ Much of the focus of this analysis has to do with closing regulatory gaps between
markets in the Middle East and those in other parts of the world. Doing this will
increase the confidence of nationals to purchase real estate in their own countries
while also encouraging more investment from foreigners. Ultimately, PwC
identified six key principles that can be used to reduce market volatility and help
correct prices following the economic effects of the pandemic. The principles were
chosen to create a positive balance in terms of competition, reduce asymmetric
information, and improve market distortions, all of which discourage people from
buying into markets. While the principles apply across the region, each country will
need to focus on specific elements more than others. The identified PwC principles
include:

4. Create property registrations
■ A property registration serves as a central database for information to help reduce
fraudulent transactions. This registration needs an effective and efficient system
for cataloging and classifying property. Such a system can eliminate a lot of the
guesswork that occurs when it comes to property sales. Registrations largely speed
the process of real estate transactions and help minimize the costs involved with
buying or selling. Reduced costs remove some of the hurdles that can exist when it
comes to purchasing real estate. Property registrations are also important in
attracting foreign investment to a particular market since they help instill
confidence that the transaction is a valid one.

5. Integrate legal frameworks
■ Real estate sectors should have an integrated legal system that aligns with both
local and international norms. Such a system protects the legal right to ownership
and serves as a fundamental building block for the entire sector. Plus, a solid legal
foundation reduces the time necessary for resolving disputes and can help protect
certain populations within the market. Knowing this, people may become more
likely to participate in the market as a result. The stress of disputes has historically
kept many people from pursuing property ownership in the Middle East.

6. Improve service proficiency
■ Improving service proficiency largely means investing in technology to support the
real estate market. Alongside this, governments should think about how they train
their employees in technical skills. Technology can facilitate the development of
many other principles on this list, but governments need to ensure they have
skilled staff to build and maintain the technology, not to mention to help the
general public use it. Today, many people do not trust paper transactions and for
good reason. Technological solutions help build trust among people interested in
completing purchases, especially when it comes to registering the property and
verifying ownership.

7. Ensure effective governance
■ If governments do not already have a structure for managing real estate within the
country, they need one. A centralized body for overseeing regulatory and
monitoring activities is key for boosting trust. Also, this sort of body can establish
audit and enforcement policies to ensure continued effective governance. Plus,
these bodies are essential in developing a communication framework between the
various players in real estate. Improving this sort of framework can help lead to
better policy creation and implementation by allowing all players to have their
voices heard.

8. Provide sustainable finance options
■ The finance and credit policies of nations across the globe all look very different.
This is because countries tend to fine-tune these options according to the concerns
and expectations of local consumers, as well as investors. In the Middle East, this
means that the mortgage market is often not very large. However, the lack of
financing options keeps many people removed from the real estate market. Access
to financing can significantly boost the dynamics of a real estate market by
expanding the number of people who can participate. Mortgage markets need to
be robust, as this is the way to keep rates competitive and affordable, which in turn
helps get the private sector more involved with real estate.

9. Manage data transparently and securely
■ People who purchase real estate need access to a secure database of property.
When information is available in a transparent manner, people can verify data and
reduce the risk of falling victim to fraud. Ideally, people can access this database
easily and understand how the data is kept safe from third-party alteration.
Transparency has emerged as one of the key barriers to investment in real estate
in the Middle East. Markets that are more transparent readily attract investors
because that helps keep the investment safe. Moreover, transparency encourages
fairness and competitiveness within the market.