Middle East

• Which country is likely to earn the highest returns? »
•  Analysis 
• Rank
•  Compare 

The Gulf is booming. Bet on marginal markets, which enjoy the spin-offs

Strong growth throughout the Middle East
The Gulf is enjoying three separate but simultaneous booms. First, there is the oil boom with its great wealth. Second, there was the transfer of émigré wealth from Iran and Iraq. Third, there is a tourism boom, the result of the Gulf aggressively opening up to Western buyers.

Dubai – 9% yields but probably overbuilt
Common sense says Dubai is overbuilt. However as a business hub, its attractions can only grow – tax free, well connected, a financial and logistics centre, a transport hub, Dubai is being catapulted to global city status. In a region with high political risks, it is also relatively low political risk.

Egypt – 12% yields, but political risk
We prefer Cairo, Egypt. Cairo enjoys better yields in key locations, a prime example being Maadi, an upscale area catering to expatriate buyers. Apartments in Maadi typically return gross rental yields of around 11-15%. This is in the context of strong Egyptian GDP growth, partly as a result of liberalising economic reforms. Seaside property in Egypt enjoys much lower yields.

However, note that there are serious political risks when president Hosni Mubarak, now 78, dies. The Muslim Brotherhood is Egypt’s most popular political party, though not fully represented in parliament. The authorities will seek to manage the succession to prevent a Brotherhood take-over. The army will decide the outcome, but is not itself free of the Brothers’ influence.

Morocco – a bet on the tourist boom
As a second choice we like Morocco, which is enjoying a tourist boom. Though GDP growth has been surprisingly lethargic, the sheer volume of tourism is pushing up prices and generating growth.

Jordan – safety first
A third possibility is Jordan, which has seen strong increases in property prices and rents, as a result of the influx of Iraqi refugees. However, long-term growth has been anaemic.