Middle East Real Estate Predictions: Dubai 2015
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Middle East Real Estate Predictions: Dubai 2015 #RealEstatePredictions
2 | Middle East Real Estate Predictions: Dubai | 2015
Introduction
Welcome to the first edition of Deloitte’s Middle East Real Estate
Predictions, which focuses on the Dubai market. This report will be
followed by an assessment of other key GCC cities and also a series of
Deloitte-hosted workshops and seminars.
Hospitality
• Predicted visitor growth of between
The aim of this report is to provide Deloitte’s insight into Dubai’s real 7% and 9%, on target to achieve
estate market and to stimulate debate amongst key stakeholders, land 20 million visitors per year by 2020
owners, developers, investors and operators. This report assesses trend • Stable growth market wide and continued
performance across Dubai’s real estate market in 2014 and predicts strong growth in Midscale sectors
performance in 2015 for Dubai’s residential, hospitality, office and retail • Increased development activity in Midscale
sectors. We welcome your feedback and participation in the ongoing sectors to capitalise on forecast visitor
debate. growth, limited existing stock
and government incentives
Robin Williamson
Managing Director and Real Estate industry leader
Office
• A number of new major office schemes
will be announced in key districts
• Greater polarisation between prime
Economy and secondary districts and heightened
differentiation between prime
• Fall in oil prices predicted to have a limited
and more peripheral stock
impact on Dubai’s economy
• Pre-lets will return to
• Further improvements to enhance the
the market
attractiveness of Dubai’s business environment
for foreign companies
• Population growth has the potential to drive
continued demand for residential and retail assets
Residential Retail
• Transaction volumes will reflect the longer • Demand for destination retail will drive greater
term trend of approximately 1,000 per month divergence between prime and secondary malls
• Residential sales prices likely to soften by • International demand will continue to grow,
a further 1% to 5% and stabilise thereafter driving footfall and expenditure
• Affordability will become increasingly • Super prime malls will continue to experience
important for purchasers growth in visitors, whilst residents will drive
and government alike demand for convenience and non-mall retail
Middle East Real Estate Predictions: Dubai | 2015 | 1
The UAE economy – 2014 performance
and 2015 outlook
Figure 1 – Average monthly crude oil prices, Dubai, 2014 and 2015 (YTD) The global price of crude oil fell sharply in H2 2014
from USD 110 to USD 60 per barrel. This decline
120 continued to a post 2009 low of USD 47 per barrel in
January 2015, compared to the UAE’s 2015 break even
Average crude oil price (USD per barrel)
110
oil price of USD 77.
100
Over the past three decades, Dubai has reduced its
90
reliance on the oil industry and consequently forecasts
80 suggest that the impact of lower global oil prices on
Dubai’s economy is likely to be relatively small. The
70
2015 budget shows that oil is expected to account for
60 4% of Dubai’s total revenue, down 5% from 2014.
50
The Economist Intelligence Unit (“EIU”) estimates that
40 the UAE’s real GDP growth was 4.6% in 2014. The EIU
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
forecasts the UAE’s real GDP growth to slow to 3.3% in
2014 2015 2015 but remain above the forecast global economic
Brent price WTI price Fiscal break even oil price for the UAE (2014)
growth rate of 2.8%. According to Dubai’s Department
of Economic Development, real GDP growth in Dubai is
Source: IMF, OPEC forecast to accelerate to 4.5% in 2015.
Free Zones are likely to become an even more important
platform for Dubai to attract foreign businesses and
Dubai has reduced its reliance on oil drive revenue growth from non-oil industries. The 2015
revenues and consequently the impact Ease of Doing Business Index ranked the UAE 22nd
globally, having climbed three places from 2014 and
of lower global oil prices on Dubai’s the UAE is recognised as a top ten improver.
economy is likely to be relatively small The UAE benefits from a strategic geographical location
for multinational corporations and the Government of
Dubai has invested significantly to develop an attractive
business environment with major infrastructure,
Free Zone incentives and favorable policy and tax
frameworks. These actions contributed towards a 7%
2 | Middle East Real Estate Predictions: Dubai | 2015
Figure 2 – GDP growth, UAE and World, 2010 to 2016
1.8 6%
5.2%
1.6 4.9%
4.7% 1.54 1.55 5%
1.4 1.48 4.6% 1.45
Nominal GDP (AED, Trillion)
1.37
Annual Real GDP growth
1.2 1.28 4%
4.0% 3.3% 3.4%
1.0 1.05
3%
0.8
2.8% 2.8%
2.6%
0.6 2.3% 2%
2.1% 2.1%
1.6%
0.4
1%
0.2
increase in Free Zone trade in the first half of 2014
(year-on-year). Areas where the UAE scored weaker in 0.0 0%
2010 2011 2012 2013 2014 2015 2016
The Ease of Doing Business Index include protection for
minority investors, enforcement of contracts and UAE Nominal GDP (LHS) UAE Real GDP growth (RHS) World Real GDP growth (RHS)
insolvency arrangements. However, we expect that
Source: EIU
these are likely to be priority areas for the Government
going forward.
The population of Dubai grew by 5% in 2014 to
approximately 2.3 million and is forecast to rise at
a similar rate in 2015, driven predominantly by
The 2015 Ease of Doing Business Index
in-migration. This level of growth may pose ranked the UAE 22nd globally, having
infrastructure challenges over the coming years,
requiring additional government investment in climbed three places from 2014. The
infrastructure and utilities.
UAE is recognised as a top 10 improver.
The age groups between 20 and 35 account for
approximately 50% of Dubai's population and constitute
a core demand driver for residential property. Mid-to-
upper income cohorts within this age group are an
important driver of retail demand.
Middle East Real Estate Predictions: Dubai | 2015 | 3
Dubai’s residential market – 2014
performance and 2015 outlook
Figure 3 – Residential monthly sales transactions, Dubai, Figure 4 – Average residential sales prices, Dubai, 2014
2013 and 2014
10% 1,550
2,500 1,488 1,488
8% 1,467 1,500
Number of transactions
Sales price (AED per sq ft)
Quarterly percentage change
2,000 1,450
6% 1,445
1,500 1,390 1,424 1,428 1,400
4% 1,374 1,350
1,000
1,300
500 2%
1,250
0 0%
Jan Apr Aug Dec 1,200
-2% 1,150
2013 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Source: REIDIN
Apartments - quarterly change Villas - quarterly change
Apartment average sales price Villa average sales price
Dubai’s residential market continued to experience
Source: REIDIN
strong growth at the beginning of 2014, however,
transaction volumes slowed and sales price growth
flattened towards the end of the year. Analysis of key residential submarkets in Dubai reveals
varying performance, which is masked when assessing
2014 residential sales transactions in Dubai totaled city averages. During 2014, Dubai’s traditionally more
12,515, compared to 17,493 in the previous year, secondary and tertiary areas such as The Views,
representing a fall of 28%. Analysis of monthly data Jumeirah Lakes Towers (“JLT”) and International City
shows a significant fall in residential transaction experienced relatively strong growth in average sales
volumes in Dubai in September to December 2014, prices (albeit from a lower base), as purchasers may
when monthly transactions averaged 828, compared have been priced out of the more prime areas. Prime
to 1,700 during the same period in 2013. Palm Jumeirah villas witnessed continued strong
growth driven by limited availability of stock, whilst
Notably, in H1 2014, residential sales prices in Dubai Business Bay prices were unchanged, most likely as
exceeded peak prices in 2008 and it is possible that a result of significant new supply in the market. The
investors are exercising a greater level of caution and Springs/Meadows recorded a marginal decline, which
this, combined with a decline in demand from key can most likely be attributed to an increase in new villa
source markets, such as Russia, may have driven down completions across Dubai.
sales volumes towards the end of 2014.
Dubai’s rental index shows that rents in International
During 2014, average sales prices for apartments across City increased the most during 2014 (27 percentage
Dubai experienced growth of 14.1% and stood at points), followed second by JLT (10 percentage points).
AED 1,467 per sq ft in December 2014. Average villa In contrast, Palm Jumeirah and Arabian Ranches
prices across Dubai increased by 8.8% during the same experienced the smallest change in rental prices. During
period to AED 1,428 per sq ft. Residential prices in 2014, rents across key Dubai submarkets reached a new
Dubai achieved the greatest growth in Q1 and Q2 2014. high since the Index began in 2009, with the exception
Growth in H2 2014 was approximately -1.5%. of Business Bay, where rental growth was flat from
May to December, with rents at the end of the year
approximately 9 percentage points lower.
4 | Middle East Real Estate Predictions: Dubai | 2015
Figure 5 – Average residential sales prices, key Dubai submarkets, 2014
5,000 40%
4,500 35%
Average sales price (AED per sq ft)
33.3
2014 percentage price change
4,000 30%
3,500
25%
3,000
20 20%
2,500 17.9
16.7
15%
2,000 12.5 12.5
9.5 10%
1,500 8.3 8.3 7.7
7.1
1,000 4.8 4.4 4.2 5%
500 0.0 -0.6 0%
0 -0.5%
Dubai Dubai Arabian Inter- JBR The The Discovery JLT Palm J. Palm J. Palm J. Down- Down- Business The
Marina Marina Ranches national Greens Views Gardens Apart- Apart- Villas town town Bay Springs/
(Primary) (Secondary) City ments ments (Primary) (Super (Primary) Meadows
(Primary) (Secondary) Prime)
Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 growth (RHS)
Note: Data comprises averages sales prices for a benchmark set of properties considered representative within each sub-market, compiled and tracked by Deloitte
Source: REIDIN, Deloitte
Predictions – Volumes Down, Prices Stable • We predict the prevalence of pre-sales in Dubai
• Analysis of sales data from the last four years to continue in 2015, particularly for reputable
shows an average monthly residential transaction developers. We are likely to see more creative
volume of approximately 1,000 in Dubai. We delivery vehicles, incentives and payment plans
consider that residential transactions have slowed offered by lesser known developers and/or
to a more sustainable level, reflecting the longer landowners in order to capitalise on pre-sales.
term trend, and we predict this level of • We predict that overseas investors will continue
transactions to continue for the remainder to drive demand but transaction volumes may be
of the year. impacted by events in other global residential
• Market wide, residential sales prices in Dubai markets and the financial and political issues
declined slightly towards the end of the year and affecting certain countries.
we predict that residential sales prices in Dubai
will continue to decline by 1% to 5% in H1 2015,
before stabilizing in the second half of the year.
• We predict that affordability, for both nationals
and expatriates, will gain more attention in 2015
and that areas such as International City and
Sports City, where more amenity is planned, will
continue to experience strong demand.
Middle East Real Estate Predictions: Dubai | 2015 | 5
Dubai’s hospitality market – 2014
performance and 2015 outlook
Dubai was ranked fifth in Mastercard’s 2014 Global Figure 7 – Hotel key growth by star rating, Dubai, 2011 to
2014
Destination Cities Index with an estimated 11.95 million
international overnight visitors, up 7.5% on the previous 53,385 56,941 61,578 67,487
year. According to the Mastercard report, in the event 70,000
5,256
that Dubai’s current growth rate continues, then the 60,000 5,069 5,085
4,512 4,961 9,333
Emirate could overtake both Paris and Singapore within 50,000 4,498 4,690
Hotel keys
5,198 9,016
five years to reach third place behind London and 40,000 8,714
8,387 18,614
Bangkok. During 2014, Dubai International Airport also 15,319 16,411
30,000 14,568
surpassed London Heathrow to become the busiest 20,000
international airport in the world with 70.4 million 26,121 29,199
10,000 20,734 23,706
passengers, up 6.1% from 2013.
0
2011 2012 2013 2014
During 2014, relative to other GCC cities, Dubai had
5 star 4 star 3 star 2 star Other
one of the highest RevPARs at approximately USD 190,
which is a function of high average occupancies (79%) Source: DTCM
and Average Daily Rates (‘ADRs’) (USD 242). Jeddah was
the only GCC city to perform better than Dubai in 2014, Compared to 2013, average hotel occupancy across
having experienced 9% growth in ADR to USD 258, Dubai was down 1.9% in 2014, although ADR increased
resulting in RevPAR of USD 192. by 2.5%, resulting in RevPAR growth of 0.6%. Dubai’s
Luxury and Upper Upscale sectors experienced the
Figure 6 – Hotel performance metrics, key sectors, Dubai, 2014 vs 2013 greatest pressure on occupancy, with a fall of 2.4% and
2.7% respectively, predominantly due to the significant
2014 average
occupancy: 76% 79% 76% 80% 86% 79% increases in supply. Conversely, supply increases in
Dubai’s Upper Midscale, Midscale and Economy sectors
2014 average
1,442 789 574 448 347 870 were marginal, which is likely to have driven higher
ADR:
ADRs due to increased demand from the growth in
16% visitor numbers. As a result of inflated land prices in
Dubai, the feasibility of Midscale hotel developments
14% has been challenging. However, with the introduction
12% of Municipality tax exemptions for Midscale hotels
and a wider tourism campaign to promote Dubai as
10% a destination to a diverse audience, heightened activity
8% in this sector is likely.
6% For selected Dubai locations, 2014 average occupancy
4%
ranged from 74% on Sheikh Zayed Road (“SZR”) to 85%
in Deira. 2014 ADR was highest on the Palm Jumeirah
2% due to the high concentration of Luxury hotels and
lowest in the Dubai Creek Districts due to a relatively
0%
Luxury Upper Upscale Upscale Upper Midscale Midscale Dubai wide large proportion of unaffiliated and Midscale hotels,
and Economy
-2% particularly in proximity to Dubai International Airport.
-4%
Strong performance in the hospitality market in 2014
was reflected through keen investor interest. This was
Occupancy ADR RevPAR Supply
evidenced by a number of high profile transactions
Source: STR, Deloitte including the Movenpick JBR and Movenpick Bur Dubai.
6 | Middle East Real Estate Predictions: Dubai | 2015
Figure 8 – RevPAR, key Dubai submarkets, 2013 and 2014
1800 3
1600 2.3
2
1.7
1400 1.2
% Change in RevPAR
1
0.7
RevPAR (AED)
1200 0.5
-0.1 0
1000
-1
800 -1.4 -1.7
-2
600
-3
400
200 -4
-4.5
0 -5
Dubai Bur Dubai Deira & Downtown/ Dubai Jumeirah Jumeirah Media city/ Sheikh
aiport area Business surroundings Beach Palm Al Barsha/ Zayed
Bay Residence & Beaches Tecom Road
& Marina
2013 2014 % Change (RHS)
Source: STR, Deloitte
Predictions – Stable Growth, Midmarket sectors, based on limited completions planned this
Focus year.
• Dubai’s ambition is to attract 20 million visitors per • As a result of strong demand in the Midscale
year by 2020. Growth in international overnight sector, we predict developers will focus more on
visitors since 2010 averaged 9.2% per year, and if this segment in 2015. The Midscale sector offers
this rate of growth continues, the 20 million target potential to target transit passengers and forecast
will most likely be met. We predict that growth of growth in visitor numbers, particularly from China
between 7% and 9% in 2015 is realistic, driven by and Africa, and benefit from Municipality tax
ongoing expansion of Dubai’s tourism offer. exemptions on room rates. Notably, Emaar
• The hospitality market in Dubai performed strongly Hospitality Group has announced that it plans to
in 2014 and we predict that occupancy and ADR open 10 Midmarket lifestyle hotels in central
levels will be broadly maintained at current levels, locations in Dubai and across the region by 2022,
although they may decline slightly from Dubai’s under a new Rove Hotels brand. Meanwhile, the
recent high performance. We predict that growth Department of Tourism and Commerce Marketing
in the Upper Upscale and Luxury segments will be (“DTCM”) revealed that it received over 51
constrained by recent increases in the hotel key applications for three and four star hotels in
inventory and relatively strong growth will be seen November 2014 alone, indicative of continued
in the Upper Midscale, Midscale and Economy interest in this sector.
Middle East Real Estate Predictions: Dubai | 2015 | 7Dubai’s office market – 2014 performance
and 2015 outlook
Figure 9 – Office rents, key Dubai submarkets, Dubai, 2012 to 2014 2014 saw relatively limited new office supply come to
the market in Dubai, driving rental growth in some
25% 25% areas. The greatest rental increase was experienced in
250
TECOM, at 25%, followed by Sheikh Zayed Road,
20% 20%
Business Bay and JLT, where rents grew more than 10%,
albeit from a relatively low base.
2014 rental growth
200
16%
Rent (AED per sq ft per annum)
15%
14%
Dubai International Financial Centre (“DIFC”) achieved
150 9% 10%
the highest rents, which averaged AED 240 per sq ft per
7% annum, up from AED 225 per sq ft per annum in 2013.
5%
100 3% More central DIFC office buildings, such as Gate Village
0%
and Currency House, located in proximity to retail and
F&B outlets, reached near full occupancy in 2014. This
50
-5% -5% resulted in upward pressure on rents with landlords
able to command in excess of AED 300 per sq ft per
0 -10% annum. Strata stock in DIFC trades at a significant
Bur Dubai Business Internet Dubai JLT Sheikh TECOM DIFC discount to this.
Bay City Investment Zayed
Park Road
Vacancy rates vary between different key office areas in
2012 2013 2014 Growth 2013 to 2014 (RHS)
Dubai. One factor influencing take up trends is tenure.
Note: Data comprises average rents for benchmark office schemes in each district Office buildings with strata title are considered
Source: REIDIN, Deloitte
impractical by many large occupiers seeking an entire
floor, or multiple floors, and consequently strata owned
Figure 10 – Office supply, Dubai, 2008 to 2015 buildings do not tend to attract the larger requirements
in the market. The leasing of office space in Business
90,000,000 30% Bay, which is mostly strata title, was relatively subdued
in 2014, whilst TECOM and DIFC free zones experienced
80,000,000 27% 26%
25% a relative supply shortfall.
70,000,000
Percentage supply growth
A number of new Grade A office schemes were
Office supply (sq ft)
60,000,000 20%
announced in 2014, and together with some schemes
50,000,000 already under construction, should ease current office
15% supply constraints in key markets. Approximately 1.4
14%
40,000,000
million sq ft is expected to be delivered to the market
30,000,000 10% in 2015 in key international Grade A schemes such as
8% Central Park, One JLT and C1 Dubai Trade Centre District
20,000,000
5% (“DTCD”) and a further 3.8 million sq ft by 2018 based
10,000,000 on confirmed pipeline for a basket of key benchmark
2%
1% 1% quality office schemes, which does not represent total
0 0%
2008 2009 2010 2011 2012 2013 2014 2015 pipeline office supply in Dubai.
Office supply Supply growth (RHS)
Source: REIDIN
8 | Middle East Real Estate Predictions: Dubai | 2015Figure 11 – Major international Grade A office confirmed
pipeline, Dubai, January 2015
89,000
Schemes which are located centrally
88,000 1,549 with good access to public transport, a
87,000 397
competitive car parking ratio, high quality
GLA (sq ft, 000’s)
86,000
1,861
85,000
84,000 1,372
88,599 specification and a range of amenities will
83,000
84,792
86,653 87,050
achieve the highest occupancies and rates
82,000 83,420
81,000
80,000
2015 2016 2017 2018 2019
Predictions – Increasing Supply, Greater Polarisation
Existing stock Confirmed pipeline* • We predict that there will be increasing polarization between
office areas in Dubai during 2015, as well as a greater
*Confirmed pipeline refers to a basket of key benchmark international
Grade A office schemes and does not represent total pipeline office divergence within districts, as a result of planned supply
supply in Dubai increases and competition to attract occupiers.
Source: Deloitte • In addition to the known supply pipeline, we predict that
a number of additional schemes will be announced during
2015 in prime locations such as DIFC where relatively
The average office area acquired in Dubai during 2014 strong demand was experienced in 2014.
was approximately 1,320 sq ft, at an average price of • In DIFC and DTCD there is nearly 2.5 million sq ft of office
AED 1,200 per sq ft. This represents an annual capital GLA planned between now and 2018, equating to
value increase of 24%. In 2014 there was also evidence approximately 58% of major international Grade A pipeline
of strata offices seeking to consolidate their share of office schemes across Dubai. We predict that this will result
ownership in a building to gain greater control and drive in a more pronounced differentiation between prime and
higher investment returns. more peripheral stock in DIFC and DTCD. We predict that
schemes which are located centrally with good access to
Due to the prevalence of strata title in Dubai’s office public transport, a competitive car parking ratio, high
market, there are few assets which meet the quality specification and a range of amenities will achieve
requirements of institutional investors and restrictions the highest occupancies and rates.
on foreign ownership of real estate are likely to continue • Across Dubai we anticipate that incentives, particularly in
to inhibit greater levels of investment activity, particularly Free Zones, will become more competitive. We predict that
for assets in excess of AED 500 million. Consequently, flexibility of licensing will be considered a key differentiator,
we predict that investment transaction activity is likely whereby those schemes which can accommodate both
to remain predominantly GCC onshore. onshore and offshore requirements are likely to benefit
from the consolidation of major occupiers.
• We predict that pre-lets for office space will be more
prevalent in 2015, following a period of virtually no pre-let
transactions since 2009. Office schemes delivered by
reputable developers are likely to attract the most interest,
as occupiers demand assurance of quality and delivery. For
occupiers who are prepared to commit to pre-let agreements,
we predict that there will be attractive deals available as
developers compete to secure tenants with good covenant
strength.
Middle East Real Estate Predictions: Dubai | 2015 | 9Dubai’s retail market – 2014 performance
and 2015 outlook
Figure 12 – Retail sales and consumer price inflation, UAE, 2013 to 2018 Demand for Dubai’s retail sector was strong in 2014
driven by growth in resident spend, a relatively large
7% 300 demographic of young affluent adults, increasing tourist
6.5% demand and growth in GDP. The Dubai Mall attracted
a record 80 million visitors in 2014 and retailers
Inflation/Retail sales volume growth
6%
250
experienced 14% growth in sales compared to 2013,
5% accounting for approximately 5% of Dubai’s GDP.
Retail sales (AED bn)
4.7% 200
4% Data from H1 2014 shows that Wholesale, Retail Trade
150 and Repairing Services was the industry that contributed
3% 3.1% most to Dubai’s GDP, generating 28.4% of total GDP
during this period. Initial estimates show that retail sales
2.3% 100
2% 2.0% 2.1% are expected to have grown by 4.7% in 2014 up from
AED 191.3 billion in 2013, despite rising Consumer
50 Price Inflation.
1%
0% 0 Activity in the retail market during 2014 showed a
2013 2014 2015 2016 2017 2018 heightened focus on community retail and diversification
Retail sales (AED bn, RHS) Consumer price inflation (av %, LHS) of traditional retail formats in Dubai, in response to
higher expectations from consumers and greater
Retail sales volume growth (%, LHS)
demand for convenience. The Beach, at Jumeirah Beach
Source: EIU Residence, launched in 2014, and City Walk (Phase One)
saw a number of new outlets open during the year,
Figure 13 – Average retail rents according to catchment profile, Dubai, 2014 including brands from outside of the GCC. Both of these
schemes are outdoor lifestyle destinations offering a mix
of retail, F&B, wellness and entertainment. Nakheel also
Super Regional announced the development of a number of community
retail centres in 2014, with Discovery Gardens and
Regional
Jumeirah Park Pavillion now open.
Community
Neighbourhood Figure 14 – Confirmed retail supply pipeline, Dubai, 2015
to 2017
Convenience 4,000,000
3,530,600 3,315,300
0 100 200 300 400 500 600 700 800
Rent (AED / sq ft / annum)
Planned retail GLA (sq ft)
3,000,000 2,664,100
Source: Deloitte
2,000,000
1,000,000
More than 50% of consumers surveyed
anticipate more disposable income in 0
2015 2016 2017
2015 than they did in 2014 Note: Confirmed pipeline comprises projects where construction has
commenced and includes expansion to existing malls
Source: Deloitte
10 | Middle East Real Estate Predictions: Dubai | 20152014 saw super prime inline rents in Dubai reach more Figure 16 – Popularity of retail locations for tourists and residents, Dubai, Q4 2014
than AED 700 per sq ft per annum as a result of
40%
increased visitor numbers, significant demand from
retailers and constrained supply. In response, a number 35%
of major prime malls are currently undergoing expansion
30%
to accommodate a waiting list of occupiers. This
includes The Dubai Mall and Mall of the Emirates, as 25%
well as other locations including Ibn Battuta Mall and 20%
Dragonmart, following relatively subdued supply
15%
increase during 2014.
10%
Figure 15 – Expectation on disposable income levels in 2015
compared to 2014, Dubai, Q4 2014 5%
0%
Dubai Mall Mall of the Deira City Dubai Mirdif City Other Malls Non Mall
Emirates Centre Festival Centre
City Mall
40.3%
52.9% Tourists Residents
Source: grmc Advisory Services, Q4 2014, 729 tourist respondents; 2,339 resident respondents
More
Less
Predictions – Retail Destination Focus, Further Global Traction
Same • Retail trends witnessed in 2014 show that consumers are demanding more
than just shopping amenity from malls. Retail environments have evolved to
6.9% integrate wellness, leisure, F&B and lifestyle to enhance the visitor experience
and appeal to wider demographics. We predict this trend will continue in
Source: grmc Advisory Services, Q4 2014, 683 respondents
2015 and will differentiate further between prime and secondary malls,
especially in the context of large planned increases in supply.
Primary research undertaken by grmc Advisory Services • Dubai’s status as a leading retail destination globally is predicted to continue
reveals generally positive sentiment regarding to drive demand from world renowned retailers. Apple has announced that
disposable income in 2015. More than 50% of it will open a new regional store in Dubai in 2015, which is expected to be
respondents expect to have a higher disposable income their biggest outlet in the world. We predict additional demand from
in 2015, compared to 2014. Trends regarding retail leading retailers for flagship stores, who have not yet debuted in Dubai.
destination preferences show that tourists • Given the size of Dubai’s retail industry, e-commerce penetration to date
predominantly prefer the super prime malls such as has been relatively low. With widespread access to the Internet and the
Dubai Mall and Mall of the Emirates for shopping, whilst prevalence of smart phones, PCs and tablets, we predict gradual growth in
Dubai residents tend to prefer non-mall and more local this sector is likely as internet payment security improves, the number of
retail formats. retail websites increase and retailers establish appropriate logistics and
supply chains. We predict that the impact of increased online retail will
Two significant retail IPOs took place in 2014 in Dubai. result in a growth in retail revenue (predominantly from electronic goods),
The first of these was Marka, the UAE’s first public which is unlikely to draw revenue from malls, as these will remain a key part
joint stock company focused on retail and hospitality of lifestyle in the region for shopping, socialising, dining and entertainment.
investment, and secondly, Emaar Malls Group. These • With rising disposable incomes expected, we predict that retail sales in
listings mark a key change in retail market sentiment, Dubai will continue to grow. We predict super prime malls will experience
evidence by significant investor interest in the IPO and further growth in tourist numbers whilst residents will drive demand for
oversubscription, following a five year IPO lull since the convenience retail and non-mall retail concepts.
onset of the global financial crisis and political unrest in
the region.
Middle East Real Estate Predictions: Dubai | 2015 | 11Key contacts
We are members of Deloitte’s real estate industry group that brings together teams with global knowledge and local
experience to provide customised solutions for clients across the full spectrum of the real estate community.
Robin Williamson MRICS Martin Cooper
Managing Director Director - Advisory
Tel +966 (11) 2888 611 Tel +971 (0) 4 506 4945
Mob KSA +966 (0) 54 154 3725 Mob +971 (0) 50 657 9028
Mob UAE +971 (0) 50 656 4969 marcooper@deloitte.com
rwilliamson@deloitte.com
Grant Salter Nick Witty MRICS
Director - Travel, Hospitality Director - Bahrain -
& Leisure Kuwait - Qatar
Tel +971 (0) 4 506 4778 Tel +974 (0) 4 4434 1112
Mob +971 (0) 50 658 4558 Mob +974 (0) 3 3397 4511
gsalter@deloitte.com nwitty@deloitte.com
Dorian Reece Bruce Allan MRICS
Director - Airports, Director - Valuation
Transport & Infrastructure Tel +971 (0) 4 506 4760
Tel +971 (0) 4 506 4849 Mob +971 (0) 50 455 8758
Mob +971 (0) 50 658 1374 bruallan@deloitte.com
dorreece@deloitte.com
Oliver Morgan MRICS Annika Prince MRICS
Director - Advisory Author
Tel +971 (0) 4 506 4978 Assistant Manager
Mob +971 (0) 50 813 7861 Tel +971 (0) 4 506 4975
omorgan@deloitte.com Mob +971 (0) 50 455 2312
annprince@deloitte.com
12 | Middle East Real Estate Predictions: Dubai | 2015Middle East Real Estate Predictions: Dubai | 2015 | 13
This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte Corporate Finance Limited would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte Corporate Finance Limited accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication. Deloitte Corporate Finance Limited is a Company limited by shares, registered in Dubai International Financial Centre with registered number CLO 748 and is authorised and regulated by the Dubai Financial Services Authority. A list of members is available for inspection at Al Fattan Currency House, Building 1, Dubai International Financial Centre, the firm’s principal place of business and registered office. Tel: +971 (0) 4 506 4700 Fax: +971 (0) 4 327 3637. Deloitte below refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Deloitte Corporate Finance Limited is an affiliate of the UK and Middle East member firms of Deloitte Touche Tohmatsu Limited. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. © 2015 Deloitte Corporate Finance Limited. All rights reserved.
You can also read
