The trend of rising domestic tourism in the UAE is here to stay and further growth is expected in the medium term as uncertainty remains over international travel, according to CBRE.
Its new research note on the UAE also said that despite the devastating impact of coronavirus on the tourism industry, the development pipeline of new hotels remained strong.
CBRE, a commercial real estate and investment firm, said hoteliers in the UAE have made cost reductions, mainly through salary cuts and efficiency creation.
“Whilst salaries are reverting back to normal, reductions and rationalisations are here to stay as they have little or no impact on a guests’ experience but do contribute to higher gross profits,” the report said. adding: “Despite the troubles industry players have gone through, investors remain confident in the UAE as a tourism destination.”
The UAE, which has the world’s second-highest vaccination rate and has introduced a host of residency visa schemes, business-friendly regulatory and diplomatic initiatives, is expected to underpin a strong rate of economic growth, both in the short and long run, CBRE noted.
Its report added: “Whilst this recovery in economic activity and the resultant resurgence in business confidence will help underpin performance in the UAE’s real estate markets, the pandemic has no doubt accelerated already shifting fundamentals in sectors such as the offices, retail and industrial, and logistics sectors.”
On the UAE’s residential real estate sector, CBRE said it was seeing an “increasingly tenant-led market”, with occupiers having greater bargaining power and flexibility in negotiating with landlords.
Incentives seen more frequently include rental reductions and the possibility of rental payments in multiple cheques.
Developers are offering rent-to-own schemes, fee waivers, attractive post-hand-over payment plans to attract investor and owner-occupier demand, it noted.
CBRE also said that millennials are emerging as a key consumer class, with the reconfiguration of residential spaces expected as well as increased demand for digitally enabled homes and larger unit sizes to accommodate home offices.
Increased working from home and the Dubai 2040 Urban Master Plan are expected to further accelerate the shift towards green housing, with end-users increasingly motivated to reduce utility costs as they spend more time at home, it added.
Regarding the office sector, CBRE said post Covid-19, Dubai will remain the preferred regional hub for multinational occupiers in the region, for the short term at least.
It added that the physical office is here to stay despite the growing work from home trend, adding that sustained flexibility in lease terms and tenures is expected.
CBRE also said flexibility will remain key to success in the UAE’s retail sector as the rapid growth of online shopping is resulting in more omnichannel retail, adding that preserving the “physical experience” will be a critical component, particularly in the Middle East.
Initiatives such as Click & Collect and product returns via the store are expected to increase significantly, it noted.
Follow us on
