Mega events such as the Expo 2020 are key catalysts for growth of the real estate sector, with the world-class event having given rise to new shopping centres, luxury housing, hotels and over 400 restaurants since it was announced, says Chris Speller, Group Director of Cityscape, a major real estate event set to take place in-person in Dubai next month (November 7 to 11).
Despite the challenges posed by the Covid-19 pandemic, he expects the Middle East and North Africa (Mena) region’s real estate industry to recover within one to two years. The Expo 2020 Dubai will usher in potentially hundreds of new businesses, and real developers in the UAE should look to offer value for money for either larger units or high-end facilities in order to attract buyers.
Longer term, the Expo 2020’s legacy will continue to have an impact of the emirate’s real estate sector. The Dubai 2040 Urban Master Plan has outlined and divided the city into key areas for continued urban development, focusing on efficiency, sustainability and mobility.
“With a clearly outlined road map on the future development of these areas, it really is an exciting time for Dubai’s real estate,” Speller states.
Cityscape is moving to the brand-new Dubai Exhibition Centre which is co-located with Expo 2020.
Excerpts of the interview:
Please highlight the impact the Expo 2020 has had on Dubai and the UAE’s real estate sector, right from the announcement that the emirate would host the event.
Since the announcement that Expo 2020 would take place in Dubai, there has been an increase of residential and commercial development around the site. New shopping centres, hotels and over 400 restaurants as well as luxury housing and cycling paths are to be completed prior to the highly anticipated event.
According to a recent Ernst & Young report, titled ‘The economic impact of Expo 2020 Dubai’, the event is estimated to bring in AED122 billion ($33.2 billion) to the overall UAE economy. While that will largely be made up of the tourism, hospitality and F&B industries, there has been a noticeable uptick in demand for rented apartments as an increase of visitors are expected to gather in Dubai. It is the perfect opportunity for landowners and investors who are on the lookout for a strong market for their properties.
The demand from foreign real estate investors has also been projected to increase and has spurred on the development of high-end residential projects across Dubai such as Palace Residences and Tonino Lamborghini Residences. The Expo 2020 site will house several advancements in real estate including the architectural wonders of Middle East pavilions.
As for developments made in hospitality, according to the TopHotelProjects database, the year began with 434 hotel projects, and 81,792 rooms scheduled to go live globally in January 2022.
Despite the recent challenges posed by the Covid-19 pandemic, the ‘UAE & Mena Real Estate Report’, which was produced by Informa Markets in 2021, found that 74 per cent of respondents are anticipating a recovery for the Mena region’s real estate industry within one to two years since 2020. A key catalyst of this growth are regional mega-events such as Expo 2020.
What are the types of projects that developers have opted to push ahead with?
It is key that developers understand the changing demands of potential investors and organisations, especially with Expo 2020 Dubai ready to open its doors to potentially hundreds of new businesses. Offering value for money for either larger units or high-end facilities will be key to attracting buyers. Commercial real estate developers will need to offer flexible areas for investors to create the perfect space for their business as opposed to pre-structured floorspace.
We are already seeing the implementation of these changes first-hand. Developers are focusing on adding high-end facilities such as gyms to established living spaces. In addition, environmentally friendly buildings are in the making.
Due to the pandemic, working from home has become the norm. This shift in workspace has encouraged homebuyers to look at investing in larger properties including villas and townhouses to ensure comfort while working from home.
Has there been a surge in demand for property over the recent months? Which areas are most in demand?
Yes, market activity has increased over the last six months. Pricing for family villas and high-end beach and golf course properties has begun to stabilise. As Standard & Poor’s credit analyst Sapna Jagtiani mentioned earlier this year, prices were down by 40 to 50 per cent from the last peak in 2014. By the end of 2020, rent was five to 10 per cent lower than ever in the last decade.
Over the last few months as prices have increased in the market, developers have been eager to start constructing new apartments and villas again. The interest rates have been lower than usual, just like the property prices and mortgage rates, making them look extremely attractive to those looking to buy in the market.
Do you expect a surge in investors among visitors to the Expo 2020 Dubai? What are the incentives that are being offered to attract such investors?
With a surge of new visitors to the emirate for Expo 2020, we expect that there will be a surge of prospective investors in Dubai’s real estate sector. The likelihood of investing in Dubai has become increasingly more attractive due to a number of proactive government incentives such as the introduction of new visas; special investor and retirement visas, golden long-term visas, and the reduction of the loan-to-value (LTV) for first-time homebuyers to 20 per cent initiated by the UAE Central Bank. These initiatives will provide a significant boost to the industry and, in turn, the economy.”
What are the latest trends in the real estate market and how do you see these evolving in the post-pandemic era? Post Expo 2020?
There is no doubt that the pandemic will continue to affect our lives and it is a pertinent topic for many industry leaders and decision makers. As people have adapted to working from home and creating safely distanced workspaces, we will likely see a continuation from the commercial real estate sector as it reacts to shifting demands.
Businesses will review the way they structure and operate in commercial and private spaces. As these changes continue to impact businesses, we will see developers review their traditional approach to design and react accordingly.
And, with the addition of the Dubai 2040 Urban Master Plan, which will see large-scale changes to the city’s developed areas, Expo 2020’s legacy will continue to have an impact of the emirate’s real estate sector. The initiative has outlined and divided the city into key areas for continued urban development, focusing on efficiency, sustainability and mobility. With a clearly outlined road map on the future development of these areas, it really is an exciting time for Dubai’s real estate.
With the development of the Expo site, please comment on the impact it has had on the development and demand for real estate in the surrounding areas. How do you see it post Expo 2020?
Expo 2020 has opened up a new focus for investors in areas such as Business Bay, Jumeirah Village Circle, Sports City, Barsha South and areas close to the Expo site. While the property occupancy is still low, the expansion of Maktoum airport has anticipated a dramatic increase in tourism to these areas. With upgraded infrastructure including new metro links, additional commercial and residential spaces – the area is rapidly growing. There has been an influx of tourists who have been working from home, from Dubai and this is expected to steadily increase.
The Expo site will have a new community designed to be utilised post event. Over 10 km of cycling tracks and 45,900 sq m of parks, and other facilities will lead to the area becoming a commercial and residential hotspot post the event.