As preparations for Expo 2020 get underway alongside the UAE's growing focus on infrastructure projects, experts and analysts are predicting 2019 to be a year of great opportunities for the UAE's real estate sector. New legislation such as long-term visas, retirement visas, and the easing of foreign investment have fueled growth in the sector. Digital technologies fostering efficiency and improving transparency have further created a conducive environment for growth in the sector. Investor appetite is improving but concerns about market uncertainty and increasing supply of residential units remain.
“As in any evolving market, challenges do exist in the UAE’s real estate industry, however, there are a number of key opportunities across a range of sectors in 2019. The introduction of new legislation has bolstered the strength of the industry by further supporting the UAE’s growth into a world-class business hub. And the nation’s business-friendly reputation serves to attract more international corporates to the country, whilst encouraging talented professionals to set up home and remain indefinitely in the UAE," said Simon Townsend, Head of Strategic Advisory at CBRE MENAT and General Manager of CBRE KSA.
In 2018, the real estate market in the UAE endured project handover delays and subdued demand as it battled ambitious schedules, the fallout of the VAT introduction and fluctuating oil prices affecting the market.
The consolidation of office space will be a key trend for 2019 as an increasing number of corporates look to reduce costs and increase operational synergies, according to CBRE, a Fortune 500 and S&P 500 company that offers insights on the real estate sector. "Build-to-suit" office space – a feature that is particularly popular among international investors and corporates – will begin to trend in 2019.
The move towards Grade A office spaces is also likely to continue this year. The recent introduction of dual licensing for certain specific locations is expected to further stimulate the UAE’s real estate market whilst highlighting the strength of the UAE as a world-class location in which to conduct business.
The spike in the scheduled supply of residential units is expected to continue with buyers being gifted a score of options. Investors and buyers will also benefit from enhanced infrastructure projects, especially around Metro expansion planned ahead of Expo 2020. CBRE projects a softening of transaction volumes across both apartments and villa typologies in 2019, compared to the previous year. Developers are expected to offer attractive payment plans and incentives to attract first-time buyers or owner-occupiers.
Top five locations for future supply:
- Mohammed bin Rashid City
- Dubai Creek Harbor
- Jumeirah Village Circle
- Dubai South
The UAE has positioned itself as a global leader in retail and will continue to be a top destination for entertainment as landlords continue to optimize their tenant mix to sustain the premium leisure and wellness offerings at malls. E-commerce is also projected to grow alongside retailers giving retailers multiple platforms for online and offline propositions. Health food concepts are expected to storm the market coupled with the rise of APAC food brands. Technology and increasing data analytics will aid retailers to focus on experiential shopping even at brick-and-mortar outlets.
Access to land will remain a challenge, according to the CBRE. However, investors will have opportunities among clients who want longer leases. Strategic areas such as Dubai Investment Park and Dubai South will continue to see high activity in online shopping and same-day deliveries. The large speculative industrial warehouse will continue to enter the market, while rental prices are expected to remain stable for both investors and companies in need of a warehouse facility. The large, bespoke storage and warehouse spaces will be driven up by the food and beverage industry. A rise in e-commerce could also indicate more distribution nodes to ensure quick deliveries to serve the demanding customer base.