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Mon 15 Jul 2019 02:59 PM

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The next evolution in real estate in Dubai

Opinion: Proptech is the future, but the role of the consultant is still paramount in ensuring its success, writes Simon Townsend, CBRE

The next evolution in real estate in Dubai
Dubai propertry: Technology is changing the way industries operate

We live in an increasingly digital world – one in which technology now touches every aspect of our lives.

Over the years, we have welcomed fintech, retailtech and martech – all of which have radically disrupted their respective industries, altering the status quo to empower the end-user through intuitive, personalised services backed by big data. And yet to date, the real estate industry has been, by and large, slower to adopt new technologies; despite the overwhelming number of advantages that such innovative solutions could bring to regulators, owners, landlords and tenants alike.

Proptech is defined by a wave of technological innovations that will revolutionise the real estate industry in the short to medium term. By bringing together digital innovation and data, the technology driving this change will ensure better efficiency and increased profitability across the entire sector.

Technology, including smart buildings, robotic process automation, machine learning, AI, internet of things (IoT), augmented reality and blockchain will play an instrumental role in advancing the industry: They will also play a crucial part in further enhancing Dubai’s reputation as a key investment hub, whilst enabling quicker purchases – supported by analytics, which is of particular interest to overseas buyers.

The real estate sector must too evolve to ensure that it is well positioned to take advantage of the digital transformation

Dubai is the epitome of a modern metropolis. It’s a smart city that utilises the world’s most innovative technology to provide the best possible quality of life. It is also a leading investment hub attracting the biggest multinationals from around the globe due to its strategic location and world-class business environment. Expo 2020 will bring millions of people to Dubai, who have not yet visited its shores.  And, in doing so, it will bring many new investment opportunities.

Proptech will prove instrumental in providing would-be investors with everything that they need to make informed, data backed business decisions to grow their organisations in the emirate. It will be a crucial tool for the entire real estate sector to show the world what Dubai has to offer businesses and residents alike.

Like with all technology, the success of proptech is entirely dependent upon the skill of those using it. When employing the use of new technology, it is important that the consultant is fully aware of the limitations of any solution, analyses the information that it provides, and constantly questions the findings.

There are many solutions on the market and whilst some will indeed provide unrivalled support, many will not prove quite so helpful. In addition, it is vital that when promising solutions are found they are fully integrated into the process by the whole industry as opposed to being considered as an afterthought. It is also important that the end-user understands the limitations of such technology: Human error must still be accounted for, even when using the most innovative solutions that the industry has to offer.

It will be a crucial tool for the entire real estate sector to show the world what Dubai has to offer businesses and residents alike

Ensuring that the needs of all stakeholders are met is an important factor in the success of a technology.  Proptech firms must ensure that they are completely aligned with the priorities of their end-user.

The real estate sector must too evolve to ensure that it is well positioned to take advantage of the digital transformation that is slowly infiltrating the industry. Proptech should be embraced, but that’s not to say that the role of consultant should in any way be diminished.

Residential property market in Dubai

Mainstream residential prices in Dubai fell by 4.1 percent over the year to November 2018, according to the latest Property Monitor Index.

Prices for villas continue to fall at a faster pace at 6.1 percent, compared to prices for apartments which fell by 4.8 percent over the same time period. On a community wide basis, data as at November 2018 shows that of the 61 communities and property types tracked in Dubai by Property Monitor, only one area has registered an annual increase in prices, this is down from Q1 2018, where five areas had registered increasing prices in Dubai.

The current gap between the top and bottom ranking communities, in terms of annual price performance, currently stands at 9.1 percent, up from the 7.6 percent registered in March 2018. These price movements show that we are continuing to see a fragmented market operate in Dubai.

Compared to the mainstream market, the prime market has performed better in relative terms, however there still has been pressure on prices, with prime residential prices in the year to November 2018 falling on average by 3.3 percent. Rental rates across Dubai fell on average by 7.7 percent in the year to November 2018 with apartment rents falling by 8.4 percent and villa/townhouse rents by 8.3 percent over the same time period.

Information courtesy of Knight Frank’s 2019 UAE Market Review

Simon Townsend, Senior Director and Head of Strategic Advisory at CBRE MENAT

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