Middle East Real Estate Predictions
Deloitte’s fifth Middle East Real Estate Predictions Dubai 2019 report examines the performance of Dubai’s real estate market in 2018 and forecasts the changes in the hospitality, residential, office, retail and industrial and logistics markets in 2019.
Oliver Morgan, Development Director in Deloitte’s Real Estate team in the Middle East said, “We are in a testing market with growth in supply, while macroeconomic headwinds are visible. Notably Dubai’s market is influenced by other global markets and external forces and as such the coming year is expected to be challenging.”
Dubai’s hospitality market will see continued growth in tourist arrivals, with a change in visitor preferences to more affordable offerings, as key source markets continue to face economic uncertainty. Midscale hotels are expected to exert pricing pressure on other segments as they seek to provide a quality experience at value for money. Despite economic and market challenges in 2018 compared to previous years, Dubai remains one of the most competitive hotel markets in the world.
The residential market has experienced significant pressure owing to an increase in supply and reduced purchasing power from key source markets. Longer-term prospects should be viewed beyond 2019 as the population continues to grow and household sizes get smaller.
Dubai’s office market will see a fundamental shift in patterns of occupation with anticipated changes to ownership regulations. Companies will have a larger variety of options as they are not restricted to specific areas. Once this comes into effect, it is expected to prompt certain relocations as larger corporate occupiers seek to consolidate and optimise their operations. The introduction of these new regulations, in addition to new quality accommodation options, may see a two-tier office market in 2019.
Digital disrupters are changing the retail landscape. The increased supply of retail units, popularity of e-commerce and declining disposable incomes continue to put pressure on the retail sector. Retailers that offer experienced focused shopping through an omni-channel platform are increasingly in pole position to attract customers. Data and technology provide the retailers with a better understanding of consumers, the ability to respond to preferences in real time, as well as offer greater convenience and access to product information.
Continued growth in UAE imports and exports have driven demand for industrial and logistics. A strong infrastructure pipeline, improving business sentiment, the expansion of e-commerce and preparations for the EXPO 2020 will spur further investment in the logistics sector.