Real Estate sector sees major shift after Mangaf fire tragedy

After the disastrous fire tragedy at Al-Mangaf and the subsequent government measures towards eradicating real estate violations, and preventing the crowding of labor in residential apartments, the real estate investment sector is going through a major change.

The sector is witnessing a high demand for renting out entire buildings, as companies can no longer house their labor in congested conditions. “Apartments for rent” banners have disappeared as companies scramble to rent additional space for their workers, as reported by Al Jarida, the Arabic daily. Landlords too prefer this type of tenant, as rents based on quarterly or semi-annual contracts provide them with better liquidity.

The Mangaf fire was the most significant but not the only reason for the recovery of investment real estate. The government’s trend towards opening family visas, and some expatriate visit visas, the main operator of this sector, contributed to the high demand for apartments.

Many property owners are currently correcting violations on their properties, for fear of imposed sanctions or a disaster like Mangaf, in addition to the fact that properties with violations don’t do well on the market.

The real estate sector has gone through many crises, the latest of which was the Corona pandemic, which caused occupancy rates to fall to low levels, contributing to a decrease in demand from investors, reaching below 80 percent.

Many real estate companies point out that the occupancy rates currently range between 85 and 87 percent, and the percentage may exceed 90 percent during the coming period, and this will naturally be reflected on rental values.