The sixth annual Middle East Real Estate Predictions study by Deloitte analyzes Dubai’s real estate market performance in 2020. It predicts changes in the hotel, residential, office, retail, industrial, and logistics sectors in 2021.
COVID-19 created considerable disruption throughout all real estate markets in 2020, with owners & occupiers being forced to make required business changes in response to statutory capacity and mobility limitations.
It’s still unclear if the epidemic will cause structural changes in specific user groups. With the COVID-19 vaccine anticipated to be ready in 2021, the planned Expo beginning in October and the 50th National Day in December will allow tourists and locals to see Dubai in a post-COVID-19 future.
The Performance of the Dubai real estate market
- The hotel industry in Dubai has been hit hard and has had to adjust during a tough time. It is anticipated that a recovery will occur, and the performance matrix will revert to considerably healthy levels, with the vaccination now being pushed out and Expo rescheduled to begin on October 1, 2021.
- As of Q3 2020, residential property rentals have decreased by 10%, putting tenants in the driver’s seat. Furthermore, demand for secondary market properties has exceeded transaction volumes for off-plan apartments, with cash transactions being the most common.
- Changes in office space needs are anticipated to be driven mainly by the effect of COVID-19 on company performance.
- Footfall and expenditure at brick-and-mortar shops were affected by the decrease in foreign tourists owing to COVID-19 travel restrictions. The Economist Intelligence Unit (EIU) predicts that overall UAE retail sales would fall by 10.3 percent in 2020, increasing by 2.6 percent a year through 2024.
- Demand for warehouse space in Dubai continues to be driven by logistics and distribution, e-commerce, and cold storage services.
Newest Market Trends
- Financial planning and funding concerns are some of the top issues in the near term across all real estate industries. The form and speed of recovery for the real estate industries in 2021 will most likely be determined by macroeconomic and demographic variables and associated government efforts.
- Demographic and economic reasons and targeted offers from developers and banks have contributed to an increase in residential property trading volumes from both investors and resident owner/occupiers.
- The value of having a conventional office location vs. remote working is anticipated to differ by sector. It’s conceivable that businesses adopt a hybrid model, combining core leased/owned space with on-demand flexible offices and a larger proportion of work-from-home policies than before COVID-19.
- The development of the e-commerce industry has boosted the need for storage and fulfillment centers, which is driving up warehouse demand.