Government-led initiatives over the past year are expected to boost demand in the UAE’s real estate market according to the 2019 Year in Review released by real estate and investment management firm JLL.
Government initiatives increased investor interest ahead of Expo 2020 Dubai and expansionary fiscal stances by the federal and local governments are expected to contribute to the economic backdrop of the region, the report outlined.
Several government initiatives were introduced to boost the hospitality sector in 2019, including the exemption of visa fee for transit passengers and a focus on Dubai’s cruise industry, among others.
The hotel sector is expected to recover considerably after a subdued performance in 2019, with various government initiatives and a strong visitor growth associated with Expo 2020 Dubai.
Abu Dhabi real estate sector's performance in 2020
In Abu Dhabi’s hospitality industry, projects slated for delivery in 2020 include the serviced apartment development on Saadiyat Island, Park View, and Fairmont Marina Hotel, among others.
Hotel stock is expected to average 32,500 by the end of 2021, with most developments located on Yas Island near entertainment landmarks falling in the upper scale segment.
With the delivery of a commercial building in Al Raha Beach, the total office stock in Abu Dhabi is at approximately 3.8 million square metres.
Around 109,300 square metres of office is scheduled for a 2020 delivery, including the delivery of Grade A office building in Zayed City and other privately developed buildings in Al Raha Beach.
By end of 2020, approximately 11,400 residential units are expected to enter the market, mainly within master-planned communities such as Al Reem Island, Al Raha Beach, Saadiyat Island, and phase 1 of Riyadh City.
In retail, prominent planned developments to be completed by 2021 feature projects such as technology-enabled Reem Mall on Al Reem Island, and a strip promenade waterfront concept with an array of entertainment concepts located in Bain Al Jesrain, Al Qana development. Retail supply is expected to climb to approximately 3.2 million square metres by the end of 2021.
Dubai real estate sector's performance in 2020
Hotel supply is expected to reach around 151,000 keys by the end of 2020, with 40% of future supply comprised of 4-star hotels, as a result of an increase in budget and midscale segment. Notable projects include Artesia in Damac Hills and Royal Atlantis in Palm Jumeirah.
Office supply is expected to increase to 9.1 million square metres by the end of 2020.
Notable projects include ICD Brookfield Place in DIFC and Dubai Hills Square in Dubai Hills Estate. Government-led initiatives such as One Free Zone Passport, dual-licensing, full ownership of onshore companies and reduction of market fees imposed on businesses by the Dubai Municipality are expected to generate employment, fuel investments, boost demand and increase business activity in Dubai.
By the end of 2020, residential supply is expected to reach 637,000, with an average annual increase of 15%. Major projects scheduled for delivery in 2020 include Azizi Riviera in Meydan and Al Habtoor City.
Retail supply is predicted to reach 5 million square metres by the end of 2020, with notable projects including Dubai Hills Estate Mall in Dubai Hills Estate and Al Khail Avenue in Jumeirah Village Triangle.
Commenting on UAE’s tourism and hospitality sector, head of research MENA at JLL, Dana Salbak, said: “Around 25 million visitors are expected in Dubai from 192 countries during Expo 2020 Dubai alone. These factors have ensured that the hotel market, specifically, will maintain healthy performance levels, renewing the UAE’s status as a major global tourist and business destination."
She added: "In the year ahead, market performance will also heavily depend on how quickly some of the newly announced initiatives take effect.”
UAE’s GDP grew at around 1.9% in 2019 and is expected to grow to 2.2% in 2020. In addition, Dubai’s recently announced budget of $18bn (AED 66.4bn) for 2020 — the largest ever annual budget approved — and a recent strategy, ‘2020: Towards the next 50’ are further expected to boost sentiment.