Key Equity Capital Insights for Regional Investors

Residential or commercial property prices have actually come under pressure after a duration of strong development, with current information from the Dubai Land Department revealing a drop in home mortgage transactions and money sales. Nonetheless, we believe the risk of an enduring migrant outflow and an extreme downturn in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened up local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. Many GCC sovereigns bring reasonably little financial obligation and financing dangers are therefore restricted in the UAE, the main bank's liquidity management has actually alleviated immediate issues.

That said, Bahrain has had the ability to count on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the area since the war began. High-frequency financial data highlight the stress on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Future-Proofing Regional Investments for 2026 Trends

In Saudi Arabia, the budget deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil revenue and a surge in spending, particularly on aids, showing contingency expenses tied to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a stop, swelling the budget plan deficit to the largest because 2017.

GCC inflation characteristics stay uneven, with food rates the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and higher supply-chain durability.

We continue to see cost pressures as largely temporal instead of a sign of a sustained inflationary cycle. Appropriately, we expect average inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we expect the US Federal Reserve to keep rates of interest on hold until December, and regional rate policies to follow fit.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer necessary income and FX inflows, have actually been curtailed by the United States marine blockade, while non-oil activity has been severely struck. In Iraq, oil exports have actually collapsed to a drip and we're forecasting GDP to agreement by around 22% this year, with a sharp 33% rebound in 2027 as oil exports normalise.

By contrast, Syria continues to reintegrate into the international economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the gradual resuming of regional trade links.

Positioning Middle East Investments against 2026 Shifts

The World Bank has slashed its 2026 development projection for Middle East economies, saying general GDP growth in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public infrastructure, had disrupted markets, increased financial volatility, and damaged the 2026 growth outlook, the World Bank Group said in its Economic Update for the Middle East, North Africa, Afghanistan and Pakistan.

The April 2026 World Bank's Macro Hardship Outlook anticipates that the area's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been devalued by 2.4 portion points considering that the January projections, showing the adverse effects of the continuous dispute.

Saudi Arabia: Projection was downgraded by 1.2 portion points since January. Development is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points since January.

Qatar: Significantly, growth forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points given that January. The economy is now expected to tape a contraction of 5.7%, below an estimated growth of 5.3%, due to extreme obstruction to melted gas materials. Qatar is an essential player in the international energy market, with a worldwide market share of liquefied gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would indicate a complete shutdown of the nation's financial lifeline, instantly halting income inflows to the state budget plan. Bahrain: Development projection for Bahrain's economy has decreased by 1.8 percentage points because January.