By Ranju Warrier
Dubai's commercial gross leasable area is forecast to increase to 9.18 million square metres by 2021
Residential market sales in Dubai continued to remain strong despite the economic crisis caused by the global outbreak of Covid-19 and the reduction in oil prices, according to a new report by KPMG.
According to the report, Dubai will continue to be a buyers’ and sellers’ market, with prices expected to remain soft throughout 2020 due to Covid-19.
The report notes that attractive incentives may prompt residents to explore investment opportunities despite transactions being significantly disrupted at the end of Q1 2020.
However, future handovers may be impacted by several factors including the duration of the pandemic, buyer sentiment, the easing of restrictions and supply chain issue, the report said.
With remote working arrangements becoming increasingly common as a result of the Covid-19 pandemic, office space requirements are expected to shrink, according to KPMG. Dubai’s commercial gross leasable area (GLA) is forecast to increase to 9.18 million square meters by 2021.
The report also said that travel restrictions put in place to contain Covid-19 reduced average occupancy to 27.7 percent in May, a year-on-year decline of 46.1 percent.
The report also found that with recovery dependent upon international and local travel restrictions and traveler sentiment, Dubai hotel operators believe their FY 2020 revenue may shrink by more than 50 percent and anticipate it will take 18 to 24 months to reach pre-pandemic levels of profitability.
According to the report, the UAE’s brick-and-mortar retail, especially malls, were directly impacted by the pandemic, including food and beverage (F&B) outlets, high-end retailers and entertainment venues.
However, businesses that adopted e-commerce options have been staying connected to their consumer base, with grocery stores and pharmacies seeing an uptick in online sales.
Additionally, the report found that companies which had not previously invested in technology were forced by the pandemic to reevaluate their IT strategy, with digital transformation having become a critical business requirement.
According to the report, timely initiatives adopted by the UAE government made the sector more resilient in 2020.
Sectors such as tourism, aviation and retail are expected to recover at a slower pace than others. However, by the end of 2022, activities in these industries are expected to return to pre-Covid-19 state.
“As Dubai’s economy gradually reopens, the emirate’s world class infrastructure and emphasis on innovation is likely to place it in a relatively strong position with investors and consumers, and may strengthen business confidence,” said Sidharth Mehta, partner, head of building, construction and real estate at KPMG Lower Gulf.
“We can expect Dubai’s real estate and hospitality sectors to remain resilient and continue to play a critical part in the nation’s economic growth.”