HSBC Revises Real Estate Estimates for KSA, Kuwait, Egypt, and Türkiye Post-Q1 2025

Following the Q1 2025 earnings season, HSBC has issued updated forecasts for the real estate sector in Saudi Arabia, Kuwait, Egypt, and Türkiye, via its Real Estate Model Watch (REMW). This tool delivers concise, model-based updates following significant financial results or announcements, focusing primarily on financial estimates, target prices, stock ratings, and valuations.

Residential Sector Outperforms, Retail Growth Remains Steady

The latest figures reaffirm the residential segment’s strength, with companies such as Palm Hills Developments, Emlak Konut, Saudi Real Estate, and İş REIC posting notable year-on-year growth. Meanwhile, Dar Al Arkan recorded modest improvement.

On the retail front, growth was steady for players like Cenomi Centers, Mabanee, and the retail operations of Torunlar, reflecting consistent performance in the consumer-facing segments of the real estate market.

Estimates Remain Largely Unchanged, With Target Price Adjustments

Despite strong quarterly performance by Palm Hills and Emlak Konut, top-line estimates for most companies remain unchanged, apart from those two names. For Saudi Real Estate, HSBC maintained its estimates, already adjusted in April in line with company guidance.

In contrast, Dar Al Arkan’s projections have been revised downward, now more aligned with management’s own outlook.

Margins and WACC Adjustments Drive Valuation Changes

The key changes in valuation are tied to margin expectations—both contractions and expansions—as well as updates to the Weighted Average Cost of Capital (WACC). These WACC revisions reflect the latest internal strategy team’s adjustments for Risk-Free Rate (RfR) and Equity Risk Premium (ERP), leading to modifications in target prices across the board.

However, stock ratings remain unchanged for all the companies included in the report, suggesting HSBC’s overall confidence in the long-term trajectory of the region’s real estate market.