Banks in the GCC need to do more to manage the risks from their overexposure to the real estate sector, according to a study by US-based advisory firm AlixPartners.

“Banks are so entangled in real estate they need to take more action and be proactive in managing their portfolios,” says Claudio Scardovi, managing director at AlixPartners.

Real estate exposure has been one of the biggest areas of problem loans for GCC banks, whether it is direct investment in real estate schemes, or lending to developers or contractors that have hit debt problems.

Scardovi says that with a further $1.8 trillion of funding requirements in the GCC over the next 15 years, banks need to develop more robust risk management frameworks to help ensure they have a role in filtering out investments and projects that are not viable.