The real estate market in the UAE has shown a significant rebound since last year’s global pandemic. New business can be seen coming from foreign investors, discerning UAE locals and residents. While areas of interest remain from residential real estate opportunities, the bigger picture cannot be neglected.

The advent of Expo2020 has ushered in a positive effect on the commercial real estate and hospitality industries. Communities surrounding the Expo 2020 site have been sold out way ahead of the highly anticipated event. Some of these communities, like Al Furjan West, sold out in mere hours.

The impact of Expo 2020 is expected to reach the other emirates and affect the country’s overall economy. One of the reasons for the impressive post-pandemic performance of the real estate industry could be traced to the country’s quick response to the global crisis. The adaptive strategies rolled out by UAE’s real estate industry, including financial regulations in partnership with the central bank, help weather the worst of the economic downturn caused by the pandemic.

As a result, the UAE emerged as the 10th safest country for COVID-19 safety as assessed by Deep Knowledge Group. As proof of this impressive performance, hotel occupancies in H1 2021 recorded an outstanding 62%, an 8% increase from the worst of the pandemic last year. If this trend continues, it would be safe to say that the UAE will be amongst the first countries to recover its hospitality industry amid the aftermath of the pandemic.

In addition, multiple master projects have been awarded to influential developers to boost the construction industry. Some notable projects to look out for are:

• Al Jada by ARADA in Sharjah
• Samana Park Views
• Samana Waves
• Samana Golf Avenue II

The last three projects are by Samana Developers in Dubai.

The successful recovery of the hospitality and construction sectors is expected to boost the real estate sector and cement the surge in sales transactions in the off-plan and secondary markets. Consequently, Dubai’s Vision 2040 is looking bright as the UAE’s future-forward mindset appears reassuring to developers, investors and UAE residents.

Weathering the economic storm

Economic activity in the UAE remained subdued during 2020 due to the global contraction. Cuts in the oil production due to the implementation of OPEC+ agreements and stringent measures to counter the pandemic gave the economy a bruising. As a result, the GDP contracted for the first time since the global financial crisis.

On the bright side, the global economy witnessed a revival with a growth rate of 6% in Q2 of 2021. This positive trend was primarily due to greater vaccine access and consequent return to normal activities in the emerging markets. As expected, the UAE leads on this front, which catalyzed the macro-economic landscape of the country.

Finding the rainbow after the rain

For 2021, the Central Bank of the UAE forecasts a growth rate of 2.1% in the real total GDP of the country, with real non-hydrocarbon GDP projected to increase by 3.8%. In addition, the UAE has made significant strides in becoming a global investor hub, thanks to its corporate tax-free status, business-friendly and stable environment, and state-of-the-art infrastructure.

Recent improvements in policies and regulations, such as issuing Golden Visas to expatriates, amendments to commercial company laws, and citizenship to talented residents, enhance investor confidence and increase investment opportunities.

The non-oil sector continues to improve, as observed in Q2 2021, due to the resumption of global travel and an increase in local and international demand. As a result, it is expected that the UAE economy will make a full recovery this year, and economic activity will gradually accelerate following Expo 2020.

Expo 2020 is expected to highlight the attractiveness of Dubai for foreign investment, particularly in the real estate sector with its pro-business policies, global financial exchange, presence of a large number of high-net-worth individuals, a dynamic business community, strategic location and world-class infrastructure.

Author: Vinodh Mahadevan, Head of Valuations & Advisory, Land Sterling