Across the region, the luxury residential segment is steadily growing in demand, as we see a shift from an investor to end-user dominated market. Various giga-projects such as those in Saudi Arabia’s Red Sea area are transforming previously untapped locations and creating new opportunities for global real estate investment. As more people seek rental properties, the GCC is increasingly considered a profitable market for investors who are looking to buy and lease properties.
“In Dubai, 70-75% of people are renting instead of buying. With yields of 5-7% and no taxes, compared to 2-3% in Europe. It’s certainly a good place for investors,” George Azar, Chairman & CEO of Luxhabitat Sotheby’s International Realty said during the Cityscape GCC Summit 2021.
Branded residences are particularly popular as buyers seek fully equipped, serviced, quality accommodation such as Sotheby’s latest Four Seasons Private Residence which sold out within three months of launch, Azar said.
THE ROLE OF TECHNOLOGY
The COVID-19 pandemic undoubtedly affected the global real estate market and caused many real estate companies to shift their strategies. Due to the tangible nature of real estate, marketing properties has traditionally been caried out in-person, yet COVID-19 restrictions rendered this impossible over the past year. This forced many companies to adopt new technologies such as digital twins, which allow buyers to search, view and compare properties online.
“This has been an interesting learning curve for the industry tech is no longer a siloed topic,” Can Turkan, COO at Ayana Holding noted.
Improved data insights and new technologies are helping real estate companies to better understand customer demands and interests from a sales perspective and are modernizing the way business is conducted.
Where HNWIs are concerned, more important than technology is the quality of the relationship between buyer and broker. For companies like Sotheby’s where the average ticket size in the region is over USD three billion, relationship and trust building between the two parties is essential.
“[Brokers] often have more intel than developers and designers as they work very closely with high-net-worth individuals to understand their demands,” Azar noted.
Increased availability of customer data over the past decade has also been useful for architects and developers in informing future builds. Yet even with this data, it is the sales process which remains key.
“From the very beginning, it’s all about the romance of the sales process forming a positive experience and level of trust,” is most important, Elisa Orlanski Ours, Chief Planning & Design Officer at Corcoran Sunshine Marketing Group said.
In Saudi notably, the government is investing heavily in touristic real estate to diversify the economy and limit the kingdom’s reliance on oil. Giga-projects such as NEOM and Amaala, and large-scale events are set to attract high levels of foreign investment and tourism to the region over the coming years.
When weighing up opportunities in the region, investors value market environments that are stable, secure, and relatively tax-free.
“Dubai is the monocle for many other countries security is the base that makes Dubai more attractive than any other place on the planet,” Azar said.
THE ROAD AHEAD
With strong pipelines and demand not showing signs of slowing down, the near future looks generally positive for the region’s real estate market.
“Sotheby’s recently sold a $34 million plot of land in Jumeriah for $61 million, and rents in certain areas have doubled in the past few months,” Azar noted.
Going forward there is a greater requirement across the GCC for developers to cater for the end-user market, which means ensuring that properties are built to a high standard and quality.
It is also important to recognise the differing requirements between regions and develop unique solutions for each.
“Development and R&D are key if you’re able to develop the right product, it will sell immediately,” Turkan said.
Finally, setting objectives for the future and predicting future trends is essential to staying ahead of the curve when it comes to real estate development in the GCC.
“Real estate professionals in the GCC must always think ahead and create a thesis for development,” Orlanski Ours concluded.
Photo credit: https://www.luxhabitat.ae/the-journal/the-four-seasons-private-residences-sells-out-in-3-months/
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