DUBAI: The real estate markets in the Middle East will outperform all other regions in the world while India and China will be the key drivers of the sector in the Asia-Pacific region, according to a new survey.

The 'Investor Survey Sentiment', conducted by global real estate consultancy Jones Lang LaSalle in association Cityscape 2008, the real estate exhibition currently under way here, found that while the UAE will offer the best performing real estate market in the next couple of years, Saudi Arabia will be the next best performer.

The results of the survey were arrived at after taking the views of 350 developers, sovereign wealth funds and high net worth investors, Jones Lang LaSalle said in a statement.

Over 50 percent of the respondents believe the real estate markets in the Middle East will see the strongest performance of any region worldwide over the next two years.

India and China, too, have a strong outlook with 20 percent of the respondents believing these two markets will make the Asia Pacific the best performing market.

"Sentiment is a critical component when considering the health of any market," Blair Hagkull, Jones Lang LaSalle's managing director for the Middle East and North Africa (MENA), said in the statement.

"It is an important barometer, a key assessment criteria for any investor and the ideal gauge for considering future prosperity," he added.

The survey, according to the consultancy, is the most up-to-date as it was conducted after in the aftermath of US investment bank Lehman Brothers' collapse.

Also Read

→ High-end residential areas see 20-25% rise in price

→ Realty investors take equity route to offset tax burden

→ NCR sees fall in real estate projects

According to the survey, investors in the region are least positive towards west European real estate markets, with only 3 percent expecting this to be the strongest performing region.

Most Middle Eastern investors do not believe the US and European markets will witness a major improvement in performance in the short term.

The Middle East is expected to be one of the regions least affected by current global economic turmoil.

The survey found that though North America would be most affected by the crisis, it could also provide the most opportunities for value purchases over the next two years.

"There is a clear inverse relationship between strongest performing real estate markets and those economies expected to be most impacted by current global economic environment," the Jones Lang LaSalle statement said.

Investors also believe that, apart from MENA, emerging markets like Asia-Pacific and Eastern Europe will also be least affected by economic crisis.

With UAE expected to be the best performing market, investors remain particularly confident of growth in Abu Dhabi.

Almost a quarter of the respondents said Saudi Arabia would offer the strongest performing real estate markets, driven by a large and rapidly urbanising population and new legislation, which is opening up of real estate market.

Apart from the UAE and Saudi Arabia, Qatar emerges as the best performing market in the Gulf Cooperation Council (GCC) with less investors expecting Bahrain, Kuwait or Oman markets to perform the most strongly.

"The Gulf region offers strong relative international value with active buyers in the region generally looking to transact at 8-8.5 percent yields for prime commercial operating assets and slightly higher for hospitality products," Ian Ohan, head of investment transactions in MENA at Jones Lang LaSalle said in the statement.

"Investors are looking for strong capital growth in Abu Dhabi, the kingdom of Saudi Arabia and Qatar, reflecting their robust economic potential and more nascent stages in the real estate cycle."

He, however, added that though this was consistent with recent market evidence, it was likely to bow to upward pressure as the cost of debt rose.

According to Ohan, asset pricing in the region is increasingly being underpinned by cash flow valuation, reflecting a shift from development-led to capital-based real estate markets.

"We are anticipating greater transaction activity as sellers' value expectations begin to more closely resemble income valuations as debt markets tighten and speculative exit opportunities decline," he said.