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April 11, 2017
Healthcare in Saudi Arabia – Will the future tide move towards private sector?
Saudi Arabia has one of the fastest growing populations in the GCC region, indicating a spiraling future demand for healthcare facilities. Despite huge government spending in healthcare facilities and growth of the sector in the past, health care infrastructure in Saudi Arabia needs to be elevated to match international standards. Apart from the constraints on government expenditure in the current scenario of lower oil prices, healthcare market also needs to overcome challenges such as dependency on imports for medicines and...
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February 26, 2017
Impact of low oil price on Saudi Remittance industry
The expats in the GCC region collectively remitted USD 105bn in 2015, increasing at a CAGR of 15% from USD 53bn at the end of 2010. Saudi, UAE and Kuwait have accounted for more than 80% of the outflow during 2010-2015. Saudi Arabia, with leading outward remittance among the GCC, countries is also consistently ranked second globally after the USA. The robust oil prices and vibrant economic activity in Saudi Arabia led to a surge in urban development, which in...
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February 15, 2017
Sharia Gold Standard – A new Opportunity?
Strict norms have hindered the development of gold related investable products in the Islamic finance world and restricted the investment only in the form of bullion and jewelry. A few gold related Islamic investment products which supported investors to buy and sell precious metals in a bulk form at competitive rates while, managing the supply chain to ensure secure vaulting existed prior to the introduction of the Gold Standard. However, lack of understanding and harmony of Sharia law with regards...
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December 22, 2016
Consolidation among UAE brokerages is the need of the hour
The article originally appeared in The National | Business. Some sectors are more stressed than others and the brokerage sector in the UAE is one of them. Just as the UAE is overbanked, it is also overbrokered. Built on soaring volumes and value traded before the global financial crisis, the industry was aided by heavy retail participation mostly trading for speculative purpose than investing reasons. Lack of investor sophistication meant more volume and value traded and, hence, juicy commissions. No...
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December 20, 2016
Saudi Mortgage – Can it remove home ownership barrier?
The article originally appeared in Wealth Monitor. The housing market in the Kingdom of Saudi Arabia (KSA) continues to face the crisis of supply shortage and ever-increasing demand. High population growth and rising per capita income fuelled the growth of demand for residential units over the past decade. With the population expected to reach 35mn in 2020 from 31mn in 2014, and average household size estimated to reduce from 5.6 to 5.28 as per current declining trends, aggregate demand for...
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June 23, 2016
Why have REITs not taken off in the GCC?
Though UAE and KSA, the major markets in GCC have regulations for REITs, restriction on foreign ownership of property, with the exception of few places in Dubai, and restrictions for foreign investments in capital markets pose challenges to the development of REITs in the region. Dubai markets have 49% restriction on the ownership for REITs while in many advanced countries 100% foreign ownership is allowed. Islamic REITs can be a popular investment option for traditional investors who wish to...
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June 20, 2016
Private equity can fill the funding gaps left by banks
The article originally appeared in The National | Business. Is this the perfect time for GCC private equity and venture capital to scale up? After the global financial crisis, private equity activity in the GCC declined tremendously. Fundraising became anaemic, despite the sizeable amount of dry powder accumulated over the boom years, and deals had stalled as acquisition finance became expensive and difficult to obtain. After a long hibernation, value raised under private equity experienced a quantum leap from US$900 million...
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April 28, 2016
Saudi Arabia seeking alternative transportation
Expenditure on the transportation sector in Saudi Arabia has primarily been focused on road networks. Larger land area and higher density of vehicles per Km are one of the important factors behind the increased investments in transport and infrastructure over the years. Saudi Arabia stands first among the GCC nations, when compared on the grounds of investments made in road sector. Of all investments made in GCC in road projects, close to half of the investment share comes from Saudi...
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April 7, 2016
Kuwait Projects: KWD 10bn Awarded – Where is the trickle-down effect?
According to Marmore’s recently published report on Kuwait Projects, in 2015, Kuwait awarded projects worth KWD 10bn, an increase of 20% compared to 2014. The aggregate value of projects awarded during 2014 and 2015 was KWD 18bn. However, this is yet to impact positively on key areas of the economy. Projects Impact Indicator Source: Marmore; * World Bank estimates, **As per IIF, 2015 nominal GDP of Kuwait - USD 121.1bn As of Q1 2016, there are 420 ongoing projects in...
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March 31, 2016
Why Saudi Arabia Requires Fannie Mae and Freddie Mac?
Mortgage penetration rates (mortgage debt as a percentage of GDP) in Saudi Arabia are low at 2%, compared to 5-10% in the neighboring GCC countries. In contrast, developed countries like the US and UK, have mortgage penetration rates of more than 70%. However, various efforts such as introduction of mortgage law, tax on vacant land and establishing Saudi Real Estate Development Fund (REDF) to increase home ownership helped mortgage loan book to grow by about 40% annually between 2011 and...