The Gulf’s Real Estate Boom Comes With Expectations

• Arabian sunrise: More real estate giants are investing across the Arabian Peninsula to tap the rally and attract regional capital.

• Chicago adapts: Chicago’s real estate market and political landscape is pushing more owners to convert empty office towers into residences.

• Playing doctor: Medical Properties Trust has been accused of falsifying its financial records and running a smear campaign to silence its critics.

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Editor’s Pick

The Gulf’s Real Estate Boom Comes With Expectations

The Gulf real estate market is on fire. Dubai home prices are up double digits year-over-year, office space in Riyadh is nearly fully leased, and cranes are multiplying across Doha’s skyline. After years of global uncertainty, the Middle East has emerged as one of the few regions still building confidently, fueled by government-backed mega projects and steady inflows of international capital. But with prices soaring and speculative developments accelerating, whispers of a bubble are starting to spread—echoing past boom cycles that ended in overbuilt skylines and empty towers.

That hasn’t stopped firms like Starwood Capital from doubling down. The company’s new Dubai office approval signals not just a commitment to local dealmaking, but an acknowledgment of a new reality: the Gulf is no longer content to simply fund foreign projects. Governments in the region now expect that firms raising capital there will also invest locally. For global real estate giants, setting up a presence is becoming as much about politics as it is about profits. Getting on the good side of Gulf leaders means aligning with their ambitions to diversify economies away from oil and transform their cities into global business and tourism hubs.

Brookfield is a prime example of this balancing act. Earlier this year, the Canadian investment firm committed billions to private equity and infrastructure across the Middle East. On the surface, it looked like a financial bet on a fast-growing region. But it was also a gesture of reciprocity—proof that Brookfield understood the unwritten rule of Gulf finance: capital raised locally should find its way back into local projects. The firm’s move paved the way for others, showing that planting roots in the region can unlock deeper relationships with sovereign funds and family offices that increasingly drive global real estate investment.

The trend extends beyond Starwood and Brookfield. Trump’s new tower in Dubai and Investcorp’s partnership in the Al Fadhili Field House development in Saudi Arabia are examples of how Western developers are using regional projects to strengthen ties with investors. These projects aren’t just about returns; they’re signals of allegiance, aligning with Gulf governments’ long-term vision of sustainable, globally integrated economies. In many cases, such investments have become the price of entry to the region’s vast capital networks.

The Gulf’s real estate boom might be running hot, but it’s also running deep. The world’s biggest developers aren’t just chasing the market—they’re chasing influence. By embedding themselves in the region’s economic transformation, they’re ensuring access to one of the few places still brimming with confidence and liquidity. Whether or not the bubble talk proves true, that kind of positioning could be the most valuable investment of all.

Overheard

Chicago’s Conversion Moment Has Finally Arrived

Chicago’s office-to-housing conversion wave is no longer just wishful thinking—it’s now backed by political momentum. With over 20 projects underway totaling millions of square feet, the city is accelerating the transition of under-used offices into apartments and mixed-use buildings. Long hampered by regulatory hurdles, the Chicago market is signaling a major shift.

One of the main bottlenecks: the once-promising “La Salle Street Reimagined” program. Launched in September 2022, the program calls for turning millions of square feet of under-used office space along La Salle Street between Randolph and Van Buren into a mixed-use neighborhood. The target was to add 1,000 + residential units with at least 30 percent affordability, activate ground-floor retail, and restore the street-level vitality of what was once the city’s financial spine.

Ambitious and well-funded, it was designed to transform the financial district’s aging stock into vibrant, 24/7 urban zones. But political cross-winds—concerns from aldermen, objections from preservation groups, and stalled zoning reforms—kept the initiative largely on the shelf. Fast forward, and the winds are changing. Chicago’s current leadership is backing zoning overlays, streamlining approvals, and offering incentives for conversions, creating a more favorable environment.

For developers, this means that Chicago is finally catching up to the conversion trend seen in other markets—like New York and San Francisco—but with a twist: the city wants change not just in product, but in the politics of product. That means local approvals matter, aldermanic support counts, and dealmakers who know how to navigate both the architect’s desk and the city council’s chamber will have a leg up. Chicago has never been an easy place when it comes to local politics but, at least for now, it seems that office conversions are gaining the kind of support needed for them to move forward.

What Happens When a Hospital REIT Tries to Doctor the Books?

Medical Properties Trust, a real-estate investment trust that specializes in hospital real estate, is back in the spotlight—and not for the kind of operational performance most investors hope for. The company has been accused of orchestrating a secretive campaign, via its major tenant Steward Health Care, to surveil critics and obscure the true financial health of the hospital chain. Investigative reporting reveals that while Steward was teetering on bankruptcy, insiders say MPT quietly propped up its tenant with cash infusions and leases that some analysts suspect were designed more for short-term rent revenue than long-term healthcare stability.

The implications for real estate investors are significant. When one tenant represents roughly a third of a REIT’s revenue—Steward once comprised about 30–40 % of MPT’s rental income—the lines between landlord and tenant blur, and risk becomes concentrated. Regulators allege the two entities were coordinated in ways that may have skirted disclosures required of public companies. For investors in the property sector, where lease-back assets and sale-leaseback structures are common, this is a warning: not all landlord/tenant relationships are clean slices of fee income—they can hide complex interdependencies and leverage risk.

For CRE owners, asset managers, lenders this episode should sharpen the lens on counterparty risk. It’s not enough to buy a “triple-net lease” and assume structural safety. You must ask deeper questions: Who controls the tenant’s operations? What happens if the tenant fails? Are the lease payments backed by free cash flow or just another capital stack-reshuffle? MPT’s example shows how a dominant tenant’s collapse can go from headline to impairment far quicker than expected.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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