UAE: Keeping the real estate momentum going

Recent months have boldly played around different recovery scenarios for the UAE’s real estate sector – some say it’s driven by the government’s stellar handling of the Covid-19 health crisis; others pin it down to the recently concluded Expo 2020 Dubai.

Wherever the conversation goes, we know the recovery story borrows its plot points from a combination of both factors. The pandemic made the world realise the importance of global mobility – and this seems to be the UAE’s strategic approach in stimulating the economy, with the real estate industry as one of the biggest winners.

The important question to ask is how do we keep this real estate momentum going?

The year 2021 showcased an extraordinary display of resilience from Dubai. After a tumultuous year of global economic standstill, the emirate’s economy expanded at an estimated 3.5 per cent. The government played a huge role in ensuring the economy endured the pandemic – from introducing short-term economic relief packages, to relaxing visa and social regulations, to continue attracting talent and investment.

According to S&P Global, this growth is set to continue in 2022, with the GDP predicted to increase by 2.5 per cent and 2 per cent in 2023. Dubai’s population is also forecast to rise 2 per cent per year in 2022 and 2023. These numbers aided the much-anticipated comeback of Dubai’s property market, as investors and residents gradually regained their confidence in the emirate’s, and the wider UAE’s, economic health.

Transactions surged 60 per cent last year, while average annual prices of residential properties jumped 9 per cent and 6 per cent in Dubai and Abu Dhabi respectively, by December 2021.

Recent policy initiatives that make it easier for foreigners to live and work in the UAE have also bolstered the demand for real estate properties. Experts agree that this progressive approach will continue cementing the country’s position as a great enabler of global mobility.

The uptick in the real estate industry provides an interesting vantage point of realisation as people try to understand the impact of Covid-19 – particularly in the way it perpetually changed how we live our lives. Navigating a modern-day pandemic has pushed people to rethink their lifestyles, with community living becoming a preferred option – and even a priority – for many.

For others, especially foreign investors, reevaluating lifestyles meant looking for a country that has emerged from the pandemic relatively unscathed. The UAE was one of the first countries to successfully launch a nation-wide vaccination campaign, allowing it to open borders earlier than most other countries. This drew a lot of international attention, including from potential residents who now have more visa options.

Projections point to a continuous rise in property transaction volumes in the UAE, with a particular stellar performance by off-plan projects, and larger properties within community spaces.

The Expo 2020 Dubai has also put a spotlight on the potential of the emirate – not just in hosting international events amid a global crisis, but in strengthening its potential as a hub for businesses and residents alike. Over 24 million people visited the world Expo over its 6-month run, and the Dubai government has made its legacy plans clear from the outset.

Commercial real estate took more hits from the pandemic, as tenants were forced to make difficult business trade-offs, as they also accelerated digitalisation efforts to keep up with what seems like a consumer exodus to virtual retail spaces. Hawk-eyed analysts are watching the sector closely to unearth more predictive insights as pandemic recovery continues.

In the UAE at least, footfall to brick-and-mortar shops have generally recovered from its 2020 low, and while e-commerce dominated consumer spending, physical shopping remains a central role in the country’s lifestyle – for residents and tourists alike. Creativity will define the next few years in commercial real estate – and not just “regular creativity”, but a type that can cut through the promises of advanced life-like inventions that appeal to people’s natural inclination towards comfort and convenience.

Real estate operators and leaders are sitting on the precipice of a new lifestyle era – modern and contemporary ways of how societies live, work, shop, and play. The numbers in the UAE seem to be on our side, but the real challenge is preserving that trajectory, and ultimately unlocking the future of the industry.

Sultan Al Ghurair is the chief executive officer at Al Ghurair Properties