Health care usurps real estate as GCC investors’ favoured market in 2017

Health care was identified as the key investment market by professionals for the first time. Silvia Razgova / The National

The healthcare sector is likely to receive the highest volume of non-oil investment in 2017, replacing a more sluggish real estate market as the most popular target market for capital, according to a new study by the CFA ­Institute.

The institute, whose membership is made up of investment professionals, said that its latest Middle East market sentiment survey indicated that the real estate sector was suffering somewhat as a result of the stronger dollar.

When asked about the effect of the stronger US currency on GCC investment, 42 per cent of members said it would pressurise local currency pegs and negatively affect the real estate market.

Amer Khansaheb, the president of CFA Society Emirates, said that it was “very interesting” that health care was identified as the key investment market by professionals for the first time, followed by tourism and hospitality, with real estate pushed into third. “The strengthening of the dollar had a negative impact on real estate.”

He also said that liquidity – or a lack of it – among lenders was another factor, with higher interest rates pushing up lending costs.

“The cost of funding projects is going up [and] at the same time, projects are less appealing for foreigners, so less cash is coming in. It’s definitely a concern and this is why growth is slowing,” he said.

The survey of 100 institute members from four GCC countries – Bahrain, Kuwait, Saudi Arabia and the UAE – found that although 61 per cent of members felt that bond yields were likely to rise this year, 47 per cent felt that increasing costs of capital should not undermine corporate profitability.

CFA Institute members also identified better transparency, regulation and a strong code of ethics as the three most important factors in terms of improving trust in the investment industry.

“This is in line with the investment industry across the globe,” said Mr Khansaheb. “Lack of trustworthiness in the investment industry has shown through a number of CFA Institute surveys that have been done in the past year.”

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