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CBRE RESEARCH | UAE

UAE
R E A L E S TAT E M A R K E T O U T LO O K

RESETTING
IN THE NEW
NORMAL

CBRE RESEARCH | INDIA

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U A E R E A L E S TAT E I N T H E N E W N O R M A L
A N I N N OVAT I O N D R I V E N E C O N O M Y

ECONOMY RESIDENTIAL OFFICE RETAIL HOSPITALITY I&L ALTERNATIVE SECTORS

REcover REvival REcalibrate REdefine REbound REsilience REfresh

Rebound in GDP Tangible opportunities Physical offices to stay; Retail formats and Strengthening recovery, Network, diversified and Cold storage and data
anticipated as travel within sub-markets portfolio optimization configurations to realign; especially at tech-enhanced supply centers to remain lucrative
restrictions are lifted continue to thrive, and hybrid working tech and e-commerce to year-end with Dubai chain to reshape the investment classes;
and business confidence providing investors and anticipated to be drive change Expo. Long-term sector, with e-commerce student accommodation
improves. Other developers with dominant themes potential as Dubai puts continuing to drive and flexible spaces to also
economic indicators to development tourism at the core of its logistics requirements gain steam

CBRE RESEARCH | UAE

follow similar trend opportunities in niche economic strategy
segments

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UAE ECONOMY
GAINING MOMENTUM

World economy expected to improve in 2021, as

vaccination programs pick up pace and mobility;
global GDP projected to rebound to 5.5% in 20211,
from a contraction of 3.5% in 2020. Improvement in
the global economic outlook and the upcoming Expo
UAE
are expected to support UAE’s economic recovery. ECONOMY
The UAE government has successfully PAGE 2
launched vaccination programs across
the country, boasting the world’s The introduction of key policies and
second largest vaccine campaign. initiatives is expected to support
economic recovery and future growth,
such as 100% foreign ownership,
citizenship laws, remote working
visas, and enhanced diplomatic
relations with Israel.

CBRE RESEARCH | UAE

1. IMF’s World Economic Outlook Update, January 2021

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UAE ECONOMY
GAINING MOMENTUM

Figure 1: UAE GDP Growth (2019 – 2022) Figure 2: GDP Forecast for GCC economies

6.0%
4.0%
4.0% 2020 2021
4.0%
1.7% 3.4% 3.2% 3.1%
2.0% 2.9% 2.8% UAE
2.0% ECONOMY
1.1% 1.1% PAGE 3
0.0% 0.0%

-2.0%
-2.0%
-4.0% -3.0%
-4.0% -4.8%
-6.0% -5.3% -6.4%
-6.0% -8.0% -7.7% -7.8%

-10.0%
-7.7%

CBRE RESEARCH | UAE

-8.0 %
2019 2020 2021 2022 UAE SAUDI ARABIA OMAN KUWAIT BAHRAIN QATAR

Source: CBRE Research & Analysis, Oxford Economics

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UAE ECONOMY
GAINING MOMENTUM

• UAE experienced deflationary trend in 2020.

Key economic indicators, such as FOREX reserves and oil prices, are Key Government initiatives are likely to have an
expected to improve in 2021 and support economic recovery. • Deflation was primarily fuelled by declining housing, water, electricity impact on UAE real estate market in the short to
and fuel costs, as well as lower costs for education and other utilities. medium term:
Table 1: UAE Key Economic Indicators (2019 - 2021)
• Government subsidies also played a major role as the UAE reduced
various fees and offered waivers to support the economy and • New visa schemes, such as the retirement visa, virtual
minimize the impact of COVID-19 across various sectors. work visa and long-term residency visa, are expected
• Inflation is expected to increase in 2021, as the economy starts to to help strengthen the UAE’s position as an attractive
recover. destination to live, work and retire in.
Forex Oil Prices Manufacturing • The Dubai 2040 Urban Master Plan aims to provide
FDI
Reserves (USD per Inflation better housing options, increase green spaces and
(in USD mn) Barrel)
(in USD mn) PMI
introduce sustainable mobility solutions, ultimately
creating new opportunities for investment in
2019 106,381 64.3 -2,123.9 50.2 -1.9% infrastructure and helping to deliver this plan.
• The Government introduced, ‘Make it in the Emirates,’
2020 102,164 41.9 -3,594.6 51.2 -3.0% an industrial strategy which aims to transform UAE into
a manufacturing powerhouse and thereby creating

CBRE RESEARCH | UAE

2021 105,918 58.5* -3,666.5 52.7** 2.9% increased demand for industrial and logistics uses.
• The upcoming Expo is anticipated to generate 25
million visits, which will further boost retail, hospitality
and leisure spend in the UAE.
Source : Central Bank of the UAE, Oxford Economics
* Estimated ** April 2021

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RESIDENTIAL
‘ R E ’ - E VA LUAT I N G L I V I N G S PAC E S

Developers are offering

UAE increasingly a tenant-led market, with
rent-to-own schemes,
occupiers having greater bargaining power and The UAE senior housing, staff accommodation
fee waivers, attractive
flexibility in negotiating with landlords. Incentives and student housing offerings are currently in
post hand-over payment
seen more and more frequently include rental a nascent stage. Range of Government initiatives
plans to attract investor
reductions and the possibility of rental payments expected to support future demand for these
and owner-occupier
in multiple cheques. relatively untapped market segments.
demand.

Increased working from home

Millennials emerging as a key and the Dubai 2040 Urban
consumer class, with reconfiguration Master Plan are expected to
of residential spaces expected as well further accelerate the shift
as increased demand for digitally towards green housing, with
enabled homes and larger unit sizes end-users increasingly motivated
to accommodate home offices. to reduce utility costs as they
spend more time at home.

CBRE RESEARCH | UAE

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OFFICE
‘RE’ASSESSING THE WORKPLACE

Enhanced demand for local

tech and Fin Tech start ups with Workplace strategies would Environmental,
key government initiatives being involve repositioning spaces, Social and
Post COVID-19, Dubai to remain introduced across the region amenities and services to Corporate
the preferred regional hub for to support and encourage meet changing employee Governance (ESG),
multinational occupiers in the region, innovation and technology. needs; enhanced tech health and wellness
Flexibility to be critical –
for the short term at least, given it remains tools to transform the way likely to be at the
sustained flexibility in lease
the most mature and secure market for commercial properties forefront of CRE
terms and tenures expected.
occupies to operate in. are being designed and strategies; employee
Flexible spaces to remain
attractive options in the marketed. productivity to be key.
Evolution of a ‘traditional’ to short term.
‘hybrid’ workforce via work-from-
anywhere to ensure Business Significant
Continuity. Occupiers are still increase in second
working on their long term generation
future occupational strategies (sub-lease) space
across their regional portfolio. coming to the
market over the last
12-18 months with
Physical offices here to stay; Hotelisation of office
this trend likely to
portfolio optimization via the right space via amenities

CBRE RESEARCH | UAE

continue placing
mix of traditional, flexible spaces and services through
further pressure on
and any relevant remote working ‘phygital’ experiences;
supply and rental
strategy. tech-enhanced spaces to
performance.
serve as a differentiator
of quality.

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R E TA I L
‘ R E ’ D E F I N I N G T H E C U S TO M E R E X P E R I E N C E

Prominent stakeholders to remain

Omnichannel strategies to push
focused on the sector; focus on
retailers to streamline supply chains
reinventing the “experience”;
Rapid growth of online and focus on workforce planning,
realignment of existing spaces expected
Accelerated growth in e-commerce shopping is resulting automation, inventory management
as emphasis on outdoor and open areas
expected; QSRs, grocery and in more omni-channel retail, and flexibility in production cycles.
to increase. Store size optimization
homeware segments to lead retail however preserving the Initiatives such as Click & Collect
expected to allow for faster recovery and
recovery while consumer electronics “physical experience” will and product returns via the store
better profitability.
would continue to capitalize on be a critical component of expected to increase significantly.
“time at home”. these omnichannel strategies,
particularly in the Middle East.

Flexibility to remain key Retail transformation

to success – landlords with to be led by technologies
flexible lease terms, malls that improve the customer
with flexible/convertible/open experience, allow cost
spaces to witness greater optimization and enable
retailer interest. agility.

CBRE RESEARCH | UAE

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H O S P I TA L I T Y
‘RE’BOUND IN PROGRESS

Despite positive trends, some pressure

On the rise before COVID-19, the remains on the wider tourism sector. With a
pandemic was a catalyst and growth reduced number of tourists and restrictions
accelerated for the domestic tourism on F&B & leisure facilities, the adaption to the
sector. The trend is here to stay, and further new norm is here for the foreseeable future.
growth is expected for the segment in the
medium term. Despite the troubles industry
players have gone through,
investors remain confident in
Government initiatives. the UAE as a tourism destination,
Early re-opening of borders, and the development pipeline of
Hoteliers have made cost reductions, coupled with strong preventive new hotels is still strong.
mainly through salary cuts and efficiency measures and testing policies, has
creation. Whilst salaries are reverting helped the UAE position itself as one Several properties have opened
back to normal, reductions and of the only international destinations in 2020, along with hotel
rationalizations are here to stay as they to attract visitors. transactions.

CBRE RESEARCH | UAE

have little or no impact on a guests’
experience, but do contribute to higher New visas introduced, such as
GOPs. “remote working visas” to create
incremental demand.

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INDUSTRIAL & LOGISTICS

REDEFINING ‘RE’SILIENCE

Focus on food security Global market sensitivities

Ongoing investment into
and cold storage space - as in evidence over the
mutli channel supply
is expected to form a last 18 months - will remain
chains, resulting in more
E-commerce and 3PL expected key component of a key consideration for
resilience and less impact
to continue to drive demand of speculative development occupiers in their leasing
from transport specific
Grade A warehousing. There in the industrial and strategies, and importantly
delays.
will be an increase in demand for logistics market. flexible lease terms.
such space outside of the customs
bonded Free Zone, to enable Leasing transactions of
servicing of the local market. logistics grade warehousing
Increased investment in automation
and robotics for supply chain and will continue to drive
warehouses will be essential with the the majority of demand
wider application of technology to and rents expected to
drive efficiencies across the entire see improvement owing
Diversification away from under performing supply chain. to the shortage of stock.
traditional asset types, such as residential, office Secondary grade assets
and retail will be the focus for investor activity. will remain under
The challenge will remain a shortage of pressure without capital
medium to long term income, paired with investment through
good under lying real estate. refurbishment and
redevelopment.

CBRE RESEARCH | UAE

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FLEXIBLE SPACES / CO-WORKING
• Flexible spaces to remain key to increasing
portfolio agility, providing short-term
solutions and catering to headcount
volatility; managed spaces to drive demand.
• Cautious expansion by operators; likely
to maximize occupancy through various
means such as day passes, reduced lock-ins,
extended rent free periods, etc.
THE NEW NORMAL ECONOMY
A LT E R N AT I V E S E C TO R S
COLD STORAGE (CS)
• CS segment to be driven by
increasing demand for Online
Food Delivery (OFD) services
and the growth of cloud kitchens
/ e-grocers; CS operators to
continue to expand.
• Post COVID-19, impetus to
life sciences segments such as
vaccine / generic drug and
formulation centers to also
boost CS demand; higher
domestic / global investment
expected.
RESIDENTIAL
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21
‘ R E ’ L E VA N T TO T H E C O R E
DATA CENTERS
• Post COVID-19, DC demand to
be augmented by the increasing
need for data storage, sustained
policy impetus and nationwide
digital initiatives; third-party
colocation and cloud demand
likely to witness high growth.
• Domestic / global operators, and
investors to expand
their DC footprint.
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STUDENT ACCOMMODATION /
CO-LIVING
• A reconfiguration of the traditional
student housing layout is expected;
larger rooms / single occupancy
rooms and larger common areas
to allow for compliance with social
distancing norms.
• Increased use of technology to
provide virtual tours, contactless
services/requests and access to
premises.
• Growing prevalence of co-living as
a residential typology, catering to
quality, convenience living within
unique, urban communities. Format
of communal amenities to evolve in
line with continued focus on health
and safety post COVID-19.
CBRE RESEARCH | UAE
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W H AT D O E S T H E F U T U R E H O L D ?
The UAE Government has been active in issuing new reforms, initiatives and ambitious plans for the country, with the aim of
increasing the UAE’s global competitiveness and attracting international investors and skilled professionals to the country.
These reforms are expected to support the economy as well as the recovery of the wider real estate market through bolstered
and more diverse demand moving forward.

Table 2:Impact of Structural Changes across Real Estate Sector in the UAE Figure 3: How are key real estate sectors expected to fare in 2021?
Acceleration of existing trends New structural trends
post COVID-19 post COVID-19 Lower than 2020 Similar to 2020 Improved from 2020

Increased
Tech- Heightened Global
leasing & Remote
Asset enhanced e-commerce supply chain working Asset Outlook Key Driver
portfolio penetration diversification
spaces
flexibility
• Tenant-led market in the short run as market adjusts
RESIDENTIAL to increased supply levels
RESIDENTIAL
• Positive transaction growth witnessed in Q1 indicating
improved market conditions

OFFICE • Occupiers expected to take advantage of subdued

OFFICE
market conditions and continue flight to quality

• Physical retailers expected to offer an integrated

RETAIL
RETAIL experience through e-commerce
• Tourism expected to gradually recover in the long run

CBRE RESEARCH | UAE

HOSPITALITY • Rise in domestic tourism and the upcoming Expo
HOSPITALITY
expected to boost demand for hospitality

I&L • Operation 300bn expected to double the size of the

I&L
industrial sector in the UAE

Source: CBRE’s ‘Indian Real Estate in 2021: Reboot, Reimagine, Regain’, January 2021

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C O N TA C T U S
FOR MORE INFORMATION ABOUT THIS REPORT, PLEASE CONTACT:

Abhinav Joshi Michael Heitmann Gabriella De La Torre Ria Lobo Michael Young Bruno Trenchard Nicola Milton
Head of Research - India, Head of Consulting Director, Consulting Senior Analyst, Consulting Head of Advisory & Senior Manager, Marketing Manager
Middle East & North Africa Michael.Heitmann@cbre.com Gabriella.DelaTorre@cbre.com Ria.Lobo@cbre.com Transaction Services Hotels and Hospitality Nicola.Milton@cbre.com
abhinav.joshi@cbre.co.in Michael.Young@cbre.com Bruno.Trenchard@cbre.com

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doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm
independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the
material are reserved and cannot be reproduced without prior written permission of CBRE. RERA license No 583633 reports

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