Starting with the residential market, Dubai is considered a safe haven in the region and has been the destination for significant overseas investment. Deloitte forecasts foreign investor demand to continue during 2015, although source markets and transaction volumes may be impacted by events in other global residential markets and the financial and political issues affecting certain countries. Deloitte predicts that demand for schemes by leading developers will continue, but with a potential slowing of transaction volumes.
Deloitte also forecasts greater interest from foreign developers and contractors targeting Dubai’s residential market in 2015, keen to profit from demand arising from the Emirate’s position as a safe haven investment destination.
With strong performance in the hotel market and having become the world’s busiest international airport (DXB) in 2014, Dubai is a popular destination for tourists, attracting an estimated 11.95 million international overnight visitors last year.
Expansion of Dubai’s tourism offer with the likes of theme parks and malls due to be delivered over the next few years is likely to further enhance the destination appeal of Dubai and drive further visitor growth, towards the target of 20 million visitors a year by 2020. Dubai has typically been considered as a luxury destination, but with greater midmarket hotel development activity forecast, it is likely that Dubai will be put on the map for a wider visitor catchment in terms of affordability.
When it comes to Dubai’s office market, destination within Dubai is of key importance and the fundamentals of ‘location, location, location’ ring true. Market activity shows that the best locations are attracting the most discerning occupiers, who in turn are prepared to pay higher level market rents for high quality accommodation with requisite amenities. Given the office supply pipeline in Dubai, with 2.5 million sq ft GLA planned in DIFC and DTCD alone, Deloitte predicts increasing polarisation between office areas during 2015, as well as greater divergence within districts. As well as location competitiveness in 2015, Deloitte predicts that those schemes with the most appealing overall offer, including facilities and amenities, building quality and car parking ratio, will secure the best tenants.
Finally, The Dubai Mall attracted a record 80 million visitors in 2014, putting Dubai firmly on the global retail destination map. Internationally renowned retailers are queueing up to secure hot spots in Dubai, including Apple, which has announced the opening of a regional flagship store in 2015.
In response to strong demand, a significant retail supply increase is planned, including expansion of existing malls, and Deloitte predicts that destination retail will be a key focus and differentiator. Similar to The Beach and City Walk, Deloitte predict that developers will draw on more creative retail formats which blur the boundaries between retail, wellness, leisure, F&B and entertainment to create a lifestyle destination and capitalize on expected increases in levels of disposable income in 2015.
By Annika Prince, assistant manager, Real estate, Deloitte Corporate Finance Limited
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