The Middle East

A possible merger between the Kingdom’s two airlines, combined with increasing hotel occupancy rates and a rise in traffic at the Bahrain International Airport, are proving promising for the aviation industry’s expansion.

With the first phase of the Khalifa Industrial Zone Abu Dhabi (KIZAD) projected for completion in the fourth quarter of 2012, Abu Dhabi’s manufacturing base looks set to expand significantly over the next few years. Authorities from Abu Dhabi Ports Company (ADPC), the state-owned entity that is developing KIZAD and other manufacturing zones and ports in the emirate, are confident that KIZAD’s low-cost business environment and links to transportation infrastructure will help ensure its success.

The aviation industry appears set to face increasing challenges over the next six months as airlines face lower than expected profits as a result of high fuel costs. However, with Dubai continuing to expand its airport capacity, the emirate is looking to position itself to take advantage of growth markets in South-east Asia.

The real estate sector is set for a boost after new legislation allowing banks to offer mortgage products to home buyers was given final approval, a move that should encourage many young Saudis to shift from renting to ownership. It may take time, however, for both banks and customers to acclimatise themselves to the conditions of the Kingdom’s new property market.

News that the government is seeking a transaction advisor for a new public-private partnership (PPP) schools project signals further opportunities for investors in Kuwait’s education sector.

Capital markets in Qatar should receive a boost from recently announced reforms that clarify oversight, broaden access and simplify transactions. Through such measures, the authorities and the private sector are hoping to increase liquidity and activity in a market considered to have significant potential.