Effective vaccination drives, new residency and work visa options, and ease of international travel indicate that the UAE real estate market has much to look forward to in the second half of 2021.

A recent report by CBRE notes that these efforts, in addition to a global economic rebound, and the Dubai Expo 2020, could lead to new structural trends in the real estate market, while accelerating existing ones.

H2 2021: REAL ESTATE MARKET TRENDS IN THE UAE

• RESIDENTIAL: The UAE will continue to be a tenant-led market, with occupiers looking to strike the best bargain with landlords, amidst flexible incentives such as rental reductions, rent-to-own schemes, and fee waivers. The CBRE report adds that green housing can expect to receive a boost due to work-from-home norms and the Dubai 2040 Urban Master Plan. A sustainability focus could be a key business success indicator going forward.

• OFFICE: Flexibility remains the dominant theme for the office real estate market. The desire for hybrid work options will reflect in flexibility in lease terms and tenures, and “physical” – both physical and digital – experiences. Emerging trends in this space include ESG, and employee health and welfare. Further, supply of units and rental performance are expected to continue to face some pressure from an influx of sub-lease space.

• RETAIL: The growth of ecommerce is likely to push a focus on omnichannel supply chain, workforce and inventory strategies, while at the same time retaining the physical retail experience. In addition to the boom in electronics purchases, quick service restaurants, grocery and homeware segments, will lead recovery in this sector. Occupiers will likely be on the lookout for store size optimisation, and flexibility in lease terms and the space itself.

• HOSPITALITY: While the pressure on the tourism sector is unlikely to ease too quickly, domestic tourism and staycations will continue to be a top trend for this sector. The mid-to-long term outlook remains optimistic, amidst government efforts to bolster tourism in the country. 

• INDUSTRIAL: Demand is expected to rise mainly from logistics grade warehousing. Grade A warehousing and multi-channel supply chains remain popular amongst investors, with food and cold storage space also catching speculative investor interest.

Additionally, data centres, and flexible co-living and co-working spaces are also gaining prominence in the real estate market. Overall, while performance in the residential and office sectors are expected to resemble that of 2020, the retail, hospitality and industrial sectors may be headed towards more optimistic trends than before.

WANT MORE REAL ESTATE INSIGHT? 
Subscribe to the Cityscape newsletter here

Price growth in the luxury housing market at global prime locations have remained largely resilient, a recent forecast by Knight Frank suggests.

In certain prime locations in Europe, the US, Singapore and Australia, prime sales are already back to pre-pandemic levels. In fact, 45% of surveyed cities noted that sales reached pre-pandemic levels in Q3 2020.

Here’s a snapshot of how the luxury housing market in these locations are expected to fare in 2021.

PRIME LOCATIONS ACROSS THE WORLD: LUXURY HOUSING MARKET

While Singapore and Sydney reported pre-pandemic sales for the luxury housing market, Auckland, Hong Kong, Melbourne, Mumbai and Shanghai are yet to attain the benchmark. 

Picking up from where it left off pre-pandemic, Shanghai is expected to demonstrate the strongest rebound by the end of the year. Auckland is not too far behind at 4%. The bustling metropolises of Hong Kong and Mumbai are not likely to see any price shifts.

EMEA REGION

European locations Berlin, Geneva, Lisbon, London and Paris were all able to bounce back to pre-pandemic sales levels, some because of low interest, pent-up demand, tax holidays or stronger market fundamentals. On the other hand, Cape Town, Dubai, Madrid, Monaco and Vienna were still making their way to recovery.

The outlook for luxury housing in Dubai seemed less positive than others. Conversely, Cape Town is forecast to have the strongest growth by end of year, followed by London and Lisbon (which is seeing stronger investments in infrastructure).

THE AMERICAS

Los Angeles, Miami, and Vancouver reported a rebound to pre-pandemic sales, while Buenos Aires and New York weren’t quite there yet. The forecast casts a shadow on Buenos Aires in particular (where growth was already weak), with luxury sales at the prime location expected to fall a further 8% by end of 2021. 

While New York is not expected to reflect any price changes, Miami is set to change at a positive 4%.

Overall, prime location luxury home sales are mostly expected to either pick up or hold steady in 2021. While a supply drop will even out any net sales growth in Berlin, Buenos Aires and Hong Kong may have to brace for a drop in prime sales. For Dubai, which registered a negative price change, a surge in demand is expected to shore up the sector and drive sales upwards.

EXPAND YOUR REAL ESTATE KNOWLEDGE
Subscribe to the Cityscape Intelligence newsletter here

The Red Sea Development Company has achieved fresh standardized targets for sustainability, scoring 84 out of 100 in its first ever ESG assessment by Global Real Estate Sustainability Benchmark (GRESB).

The Red Sea Development Company is a wholly owned subsidiary of Saudi Arabia’s Public Investment Fund, established to develop the sustainable luxury tourism destination The Red Sea Project.

The company achieved the highest score in the Environmental category, scoring 49 out of 51. This is much higher than the GRESB’s average score of 34, the company said. It also achieved a Green Star by the GRESB for scoring over 50% in management and development categories. Moreover, the company also scored full marks in the materials, water use and waste management categories.

The GRESB awarded the score to The Red Sea Development Company for forming a strong environmental governance structure, and integrating environmental protection and enhancement measures.

“Since the project’s conception, sustainability has been our guiding principle for design and development, informing every single decision that is made. This award is a real testament to all our hard work and unwavering commitment to become the world’s first truly regenerative tourism project,” CEO of The Red Sea Development Company, John Pagano said.

OTHER SUSTAINABILITY HIGHLIGHTS FROM THE RED SEA DEVELOPMENT COMPANY

In April this year, the company closed a USD 3.76 billion term loan facility from four Saudi banks, with Green Financing accreditation. The accreditation was awarded as a recognition of sustainability efforts at The Red Sea Development Company.

It also announced a bottled water partnership with sustainable water brand Source, becoming the world’s first destination to offer bottled water that is made from patented solar technology that can extract pure water vapor from the atmosphere.

The partnership entails a Source production facility built onsite at The Red Sea Project. It will have a capacity for two million packaged glass bottles of water, and will run on a circular sustainable distribution model.

The Red Sea Development Company expects to open the doors to the luxury ecotourism project by the end of next year. Visitors will have access to 3,000 keys at 16 luxury hotels, spread across five islands and two inland locations. 

The project also passed the first stage of receiving a LEED accreditation earlier this year.

The project is expected to be completed by 2030, featuring 50 hotels with up to 8,000 keys, and 1,300 residential properties across 22 islands and six inland sites by then.

_{Photo credit: /www.theredsea.sa/en}

EXPAND YOUR REAL ESTATE KNOWLEDGE
Subscribe to the Cityscape Intelligence newsletter here

Saudi asset management company Alkhabeer Capital, headquartered in Jeddah, has commenced the subscription period for a second additional offering of its Alkhabeer REIT Fund, the company announced early this week.

The additional offering will help Alkhabeer REIT Fund achieve stable cash flows and make investment opportunities at the fund more attractive, the company said. Proceeds from the REIT offering will be used to acquire assets in the educational and industrial sectors, including Vision College for Education and Akun cold storage warehouses in Jeddah. This would take the total number of assets under the fund to 12.

SAUDI LOCALS, FOREIGN RESIDENTS AND QUALIFIED INSTITUTIONS CAN INVEST

The subscription period for the additional offering will commence for 15 working days, starting from 30 May 2021, until 17 June 2021. These dates correspond to 18 Shawwal 1442 and 7 Dhu Al-Qadah 1442 on the Islamic calendar.

With the second additional offering, Alkhabeer REIT Fund aims to grow its total assets under management by 19%, from SAR 1.73 billion to SAR 2.06 billion. For the offering, 38,037,835 additional units will be offered, of which 15,736,500 units will be made available for public subscription.

Additional shares are priced at SAR 9.03. Saudi locals, foreign residents and qualified institutions can invest in the fund through appointed receiving banks. Receiving banks include Al Jazira Capital, Al Rajhi Bank and Saudi National Bank. Additional shares are also available to clients of other banks through an online subscription system that can be found on the Alkhabeer Capital website.

SECOND ADDITIONAL OFFERING BY ALKHABEER REIT FUND

Alkhabeer REIT Fund is a close-ended real estate investment traded fund that is Sharia-compliant and publicly offered. The fund was listed in the Saudi stock exchange, Tadawul, in 2019. Its portfolio includes assets in the retail and industrial sectors, and offices, residential and educational properties. These are located in Jeddah, Riyadh and Tabuk.

The first additional offering of the Alkhabeer REIT Fund took place in 2020, with subscriptions opening in July. The offering was oversubscribed by 104%. The Fund’s assets under management  grew by 70% after the offering, the company said, reaching SAR 1.7 billion.

Earlier this year, Alkhabeer Capital gained the approval of Saudi market regulator Capital Market Authority to increase the total asset value of the Alkhabeer REIT Fund through key acquisitions. Both Vision College for Education and Akun warehouses were part of the strategic outlook. Industrial and logistical assets of three factories located in Riyadh were also considered.

EXPAND YOUR REAL ESTATE KNOWLEDGE
Subscribe to the Cityscape Intelligence newsletter here
 

The 17th Venice Biennale of Architecture kicked off in Venice last week, and will go on till 21 November 2021.

Taking place at the Giardini, Arsenale, and Forte Marghera, the Venice biennale features a total of 61 national participants from 46 countries. This year, the festival is themed around How will we live together? It covers matters of diversity, home, emerging communities, and the global society.

Of the 61 participants, 23 will feature their exhibits at the Arsenale. These include two GCC pavilions–the UAE and Saudi Arabia.

THE UAE PAVILION

Commissioned by the Salama Bint Hamdan Al Nahyan Foundation, the UAE pavilion focuses on crystallisation of salt in the region’s native sabkhas, or salt flats. The project is called Wetland, and is curated by Wael Al Awar and Kenichi Teramoto.

Wetland explores the sabkhas as a source for renewable construction materials.

The crystallisation process in the sabkhas offers a locally sourced alternative to Portland cement, which contributes 8% of global carbon emissions.

Scientists from Tokyo, Abu Dhabi, and Sharjah have been working towards reproducing the crystallisation process, the results of which are on display at the UAE pavilion in the Venice Biennale of Architecture. Some of the research, including casting module shapes for use in a full-scale structure, took place at the Wetland Lab at Dubai’s Alserkal Avenue.

THE SAUDI ARABIA PAVILION

The Saudi Arabia pavilion will exhibit two projects at the Venice Biennale of Architecture. The first, After Illusion, is commissioned by Misk Art Institute. 

Curated by Eiman Elgibreen, After Illusion is about artist and exhibitor at the Saudi Arabia pavilion Zahrah Al Ghamdi’s relationship with her home over time. It seeks to represent the familiar feeling of home as it changes over the years, as well as Al Ghamdi’s own journey to self-realisation.

The title of the poem comes from an ancient Arabic poem by Zuhayr bin Abī Sūlmā about being away from home.

Accommodations, the second project, is commissioned by the Architecture and Design Authority in Saudi Arabia. It explores the theme of ‘otherisation’, in spatial and social terms. It displays how quarantine, hosting, and housing take character in temporary and permanent structures, in the backdrop of contagion.

The project visits large events such as pilgrimages and pandemics to document how physical spaces respond to emergencies, by focusing on the contradictions arising out of the need for both separation and accommodation.

_{Photo credit: www.english.alarabiya.net, www.thenationalnews.com/arts-culture/wetland-how-the-uae-s-sustainable-exhibition-at-the-venice-biennale-of-architecture-came-together-1.1226908, https://www.labiennale.org/en/architecture/2021}

LOOKING TO ENHANCE YOUR REAL ESTATE KNOWLEDGE? 
Sign up now to the Cityscape Intelligence newsletter here

In a boost for Dubai tourism, With post-COVID tourism picking up in the UAE, Dubai International Airport was recently named the world’s busiest international airport in May 2021. 

With nearly 1.9 million scheduled seats, the airport emerged at the top of rankings by aviation intelligence firm OAG, based on scheduled capacity as compared to 2019. The city also featured in the top 10 busiest international routes.

The rankings are a positive sign for Dubai tourism, which expects to rebound by 2022.

AFTERMATH OF THE PANDEMIC

Tourism was one of the worst affected sectors worldwide due to the pandemic. At the same time, Dubai tourism was the only tourism sector to register a positive year-on-year growth at a muted 0.3%, against the backdrop of a global average decline in international tourism by 74%.

This was a result of immediate healthcare response, prevention efforts, and mass vaccination programs, the government said.

By Q1 this year, Dubai tourism welcomed 1.67 million international guests, with India and Russia being the top two source markets for tourists. Other countries include France, the US, and Pakistan. 

While revenue per available room and average daily rates dropped as compared to 2020 levels, occupied room nights grew by over one million, and guests' average length of stay extended by one whole night in Q1. Average occupancy, at 63%, closely beat 2020 levels of 62%.

DUBAI TOURISM GETS A POST PANDEMIC LIFT

Dubai tourism has received a boost amidst a slew of government initiatives and fresh regulations to bolster the sector during the COVID-19 pandemic. 

Safety initiatives, such as free RT-PCR testing for all incoming passengers at the Dubai International Airport, vaccination drives for Chinese nationals visiting the country, ‘Safe Travels’ stamps, and remote working visas for tourists, have done well to promote Dubai tourism as a safe and attractive tourist destination. 

In January this year, the UAE announced the formation of the Emirates Tourism Council to bolster the country’s tourism portfolio. The Dubai government is also looking to market the city as a “multi-faceted must-visit family destination” in Summer 2021, the government said.

Further, the city is banking on sustainable tourism to propel Dubai tourism forward in the long term. Dubai expects to increase land area covered by hotels and tourism activities by 134%, public beaches by 400%, and green spaces by 60% through its Dubai 2040 Urban Master Plan. Other sustainable tourism initiatives include ‘Get Into The Green Scene’ launched by Dubai Sustainable Tourism to promote the city’s sustainable attractions.

WANT MORE REAL ESTATE INSIGHT? 
Subscribe to the Cityscape newsletter here