Markaz Hosts “House Views 2022: Navigating the Markets” Investment Webinar

Kuwait Financial Centre “Markaz” recently hosted its investment webinar, titled ‘Markaz House Views 2022: Navigating the Markets’, which focused on new and emerging trends and developments in the market such as the key themes and dominant performance drivers for various asset classes over the coming months. Moderated by Abdullatif W. Al-Nusif, Managing Director, Wealth Management and Business Development at Markaz, the discussion saw experts from Markaz address the questions that are top of mind for investors and share their viewpoints on a range of issues that they should watch closely.

M. R. Raghu, Chief Executive Officer of Marmore MENA Intelligence, a subsidiary of Markaz, discussed market performance in the past year and set out the opportunities and challenges awaiting investors in 2022. Raghu outlined the macro perspective including the outlook for oil, which is critical for GDP growth in the region as well as government spending. Uncertainties over central bank support, the scale of interest rate hikes, the threat of new variants of coronavirus, and the strength of economic recovery amid subsequent pandemic waves were some of the risks highlighted.

Kuwait Equities

2021 proved to be a good year for Kuwait equities as they returned over 30% amid healthy participation from both domestic and foreign investors, noted Mohammad K. AlAbdulkader, Vice President, Buy Side Research, MENA Equities at Markaz. However, the business environment remained challenging in 2021 causing low revenue growth. As a result, earnings growth has lagged the index rise leading to rich valuations. Credit offtake remains healthy, supported by strong growth in the retail category while corporate credit demand remained tepid. Revival in project awards on the back of government spending holds the key. For 2022, higher oil prices and reform initiatives such as the mortgage law bode well for a positive outlook. As per Markaz's analysis, favorable demographics of Kuwait could support housing demand beyond the government plan that should have a significant positive impact on many sectors in Boursa Kuwait

MENA Real Estate

Khaled A. Al-Mubaraki, Vice President, MENA Real Estate reiterated the positive impact of the mortgage law on residential real estate in Kuwait. While the disruptions caused by the COVID-19 pandemic are expected to smoothen in the near-term owing to rapid vaccination, the outlook is still unclear and depends on the government’s policy to balance population composition in the coming years. Government spending on infrastructure projects could provide a boost to the real estate sector.

The real estate market in Saudi Arabia has benefitted from government initiatives like the Sakani and Wafi programs. Mr. Khaled stated that the outlook for 2022 for the Saudi real estate market looks positive based on various macro indicators, and the infrastructure projects envisioned as part of the Vision 2030 program could provide further impetus.

The UAE economy, which opened its trade and travel sectors, witnessed a rebound in 2021. Targeted government policies to buoy the private sector and Expo 2020 Dubai supported the growth of the real estate market. Going ahead in 2022, the performance of the UAE real estate market is expected to depend on asset class (residential, retail, office, hospitality) and location.

International Real Estate

Commenting on the performance of international real estate markets, Christopher Santiago, Assistant Vice President, International Real Estate, Markaz, stated that commercial real estate benefitted from rising inflation expectations. At the sector level, the industrial segment continued to benefit from robust demand and asset values rose about 25% in 2021.

Multifamily maintained its status as the most liquid asset type in the U.S. in the third quarter, while complementary segments such as single-family residential attracted increased attention.

In Europe, investor interest in multifamily, along with single-family and affordable housing, continues unabated. Confidence in the student housing investment market is slowly improving. On the other hand, hotels and hospitality sectors – most impacted by the pandemic – witnessed a slow rebound in Q3, 2021.

For 2022, growth in traditional growth sectors is declining. COVID-19 is accelerating growth in emerging and fast-growing sectors such as data centers and distribution facilities. Rising construction costs, supply chain disruption, and skilled labor shortages are quickly becoming the most significant barriers to industry growth.

Concluding the webinar, Al-Nusif commended the initiative taken by Markaz to disseminate its research-backed insights to a wider audience of investors. Over the past years, Markaz has been at the forefront in leading a knowledge-based discourse in the global and regional markets to enable investors to take optimal decisions backed by sound research.