SICO Publishes its Fourth Annual Investor Return Requirements in the GCC Report, Highlighting Regional Insights and Investor Expectations
SICO’s Group CEO, Najla Al-Shirawi, commented on the report publication, saying, “As wenavigate an era of high interest rates, global inflationary pressures, and geopolitical uncertainty, theregion remains resilient, with Saudi Arabia and the UAE leading the charge in economictransformation. This report reflects the collective insights of the GCC's investment community andserves as a roadmap for identifying opportunities and aligning solutions with ever-changing marketneeds. As we move into 2025, these findings will be an essential resource for addressing marketchallenges, and we remain committed to supporting our clients with insights and solutions that alignwith their goals.”
Based on respondent expectations, the return requirements for listed equities, the most preferredasset class in terms of risk adjusted returns over the next 12 months, remained consistent at 9-12%for 2025 across the GCC, mirroring last year’s range.
Within income-generating real estate, required returns across the GCC were stable at 7-10%,despite challenges such as market volatility and tenant risks, economic growth driven by increasedgovernment spending and infrastructure development in markets like the UAE and Saudi Arabia isincreasing demand. With rising tourism, population growth, and a significant trajectory of private andpublic sector projects, the outlook for real estate remains positive.
Private equity retained its position as the asset class requiring the highest returns, exceeding 16%in Saudi Arabia and Oman, between 13-15% in the UAE, Kuwait, and Bahrain, and 10-12% in Qatar.In terms of 10-year USD government bonds, required returns ranged from 5% in Saudi Arabia, theUAE, Qatar, and Kuwait to 6% in Bahrain and Oman, consistent with investor expectations forrelatively lower-risk fixed-income instruments.
Cash deposit return requirements for Saudi Arabia, the UAE, Oman and Bahrain were similar to lastyear at 5–6%. Meanwhile, Qatar saw slightly lower return requirements this year at 3–4%, comparedto the previous year’s range of 5-6%. Respondents required a wider range of returns in Kuwait at 3–6%, compared with the 5-6% requirement last year. These results indicate relative stability in cashdeposit returns across most GCC markets, with slight adjustments reflecting liquidity conditions andregional dynamics.
In terms of issues impacting the investment landscape, the report highlights that while geopoliticaltensions were the top concern for investors, the GCC economies have demonstrated resilience.Supported by diversification efforts, government spending, and the growth of non-oil sectors, theinvestment landscape remains stable. The report further notes that global inflation, while a concern,is projected to decline, signaling a potential easing of economic pressures.
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