By Dana Salbak
How innovation in real estate can impact the future economic performance of Dubai
As a modern and relatively new city, Dubai has an advantage on the global property stage when it comes to embracing and employing innovation for future economic growth and evolution. It has been at the forefront of innovative firsts across the world’s real estate sector, from a cityscape topped by the tallest tower to featuring the first fully functional 3D-printed office.
The Dubai government has been bold with its strategy to be the world’s most innovative city by 2021. So why is innovation an integral part of the UAE Vision, and how can innovation in real estate impact the future economic performance of the city?
According to our recent ‘Innovation Geographies’ report, innovation plays a key role in driving cities’ economic growth by attracting investors and companies. The report findings point to a robust link between innovation, real estate performance and capital flows. This is why there is a wealth of opportunity for Dubai.
Innovation is now an explicit part of investment strategies with investors actively targeting innovation-orientated cities. This is good news for Dubai, a clear regional leader in innovation and a city where innovation is an integral part of the national agenda.
Whereas the vast proportion of commercial real estate investment globally was within the cities that performed strongly on both innovation and talent, Dubai featured as an ‘Emerging Innovator,’ a city with relatively strong innovation performance but lagging on talent.
Dubai as an innovation-economy is home to the largest number of multinational corporations in the region, attracts high-tech foreign direct investment (FDI), and has succeeded at fostering an active start-up and entrepreneurial culture. It is a city not shy of change - this in an attractive characteristic for investors and developers who can play an active role in shaping a city’s innovation economy and create lucrative returns.
The city is already home to a series of cutting-edge innovations in construction technologies. In addition to opening the world’s first fully functional 3D-printed office building in 2016, the government has announced plans to build the world’s first 3D-printed skyscraper. The city is aiming for 25% of its buildings to be 3D-printed by 2030, cutting construction costs by 80% and taking up to 70% less time to build.
Technology innovation is also shaping the real estate industry in Dubai across all asset classes. Developers are creating innovative consumer experiences that drive footfall across traditional and now challenged retail spaces - employing artificial intelligence, augmented reality and robotics. In the commercial sector, digitisation is giving landlords and building managers more insight into the performance of their buildings.
Big data is playing a major role in creating better communities, designing properties that better suit the end-user, providing insight to developers about who is buying what, offering easy information to home buyers.
Despite the rapid pace of development in technologies, the success of economies and organisations is dependent on people and their skills. As the ‘war for talent’ intensifies, corporates are focusing their expansions on talent hotspots.
While Dubai benefits from strong demographics, the proportion of the workforce employed in high tech industries (including life sciences, high tech manufacturing, and research and development) is relatively low.
While there is an appetite for change there are some challenges in embracing the innovation-economy and driving economic growth. Talent is key - the current mind-set of traditional working styles doesn’t make room for innovation, it’s integral for the public and private sectors to encourage creativity and experimentation.
With that in mind however, the government of Dubai has recently taken steps to attract talent through introducing a long-term visa system for investors, entrepreneurs, researchers and creative talents. The new scheme will allow eligible foreigners to renew visas for five or 10 years, with 100 per cent ownership of their businesses in the UAE. This is expected to expand and diversify the talent pool and drive the socio-economic growth of the city.
The UAE’s National Innovation Strategy aims for the UAE to be ranked among the top 20 countries on the UN Global Innovation Index by 2021. Given the UAE’s progress on moving up the ranking (from 41 in 2016 to 38 in 2018,) the country has an exciting future.
Driving innovation in real estate and enhancing the talent pool have the potential to propel the Emirate into one of the top performing cities in the world and in turn fuel future economic growth.
Dana Salbak is Research Associate at JLL MENA