What has been the greater impact of the current pandemic on the field of property development as a whole?
I believe that every challenge can be an opportunity for businesses to flourish and grow even during and post Covid-19. We have seen businesses innovate, refocus and prioritize the utilization of resources and employees. A lot of day to day business challenges and bureaucracy has vanished from companies, following the reduction of face to face to meetings and the prioritization of work and effectiveness.
We are witnessing a cyclic response, where the market deteriorated both internationally and locally, global cities, across the financial sector and real estate. International demand dropped and the total value was greater than their GPP. Covid-19 did accelerate this drop, within three months we reached rock bottom, so the only way is up and recovery.
Prices have been progressively dropping down, however, during the last month, we are starting to see evidence of recovery. The recovery after any crisis can take many shapes, however, after Covid-19, evidence suggests it will take a V shape. Which is of course the best-case scenario after any downturn/recession. We have already seen the steep fall and are now starting to see an early indication of a quick recovery.
In the UAE specifically, people want to go back to how their lives were before the pandemic, governments have responded rapidly to try to protect the economy as far as possible in terms of both testing and returning to business as usual. These are all early predictors that there will be a quick and total recovery of the market.
We may even see some new markets boom quickly and have great opportunities, one example of this would be food safety and aerospace. It is one of the emerging industries that has been catapulted into demand.
How do you see developers changing the way they plan and build cities?
From a developer perspective, there will be great change in terms of how individual cities and communities can be sustained. There will be a shift towards designing and planning communities that have local supplies and resources. Developers will seek long-term solutions that offer self-sufficient living such as greenhouses and localizing food supplies to be more sustainable.
How will developers’ priorities change in terms of how and where they invest?
There is no blanket answer since different developers have different priorities and are often responding to conflicting market demands. For example, over the last 5 years, we have seen an increase demand for office space, however the value and price has reduced which contradicts logic.
I do predict a general shift away from building single-use office spaces and communities and a move towards mixed-use developments that allow people to live, work, play and shop in one place. People want to move away from vehicle dependency and have the option to be more environmentally friendly by having the option to travel on foot mixed-use developments is the most efficient way to achieve this.
We will see this increased demand for mixed-use designs spill over into residential buildings, homes, and apartments, Designs will incorporate office space as standard. Just as we always expect to see a kitchen, bedroom, bathrooms, dedicated office space will become normal.
Even as the world returns to work and offices, many businesses will adopt new flexible ways of working and almost all roles, will be able to work from home. The pandemic provided a unique opportunity to show the world they did not have to be face to face, digitalizing channels of communication now opens up the entire world and connects us with clients globally.
In addition, there has been a shift towards villas over the last 2 years, we no longer see peoples’ first choice as being an apartment, people are looking for a townhouse or villa. Most of the new big developers’ residential developments are villa communities, that trend will be enhanced by this pandemic with so many people crazing more space particularly outdoor living areas in less dense communities.
Across all designs, there will be a focus on sustainability, not just from a material perspective but also from designing communities that enable local supplies to meet all needs through investing in farms and agriculture locally.
These changes together with businesses realizing they can work extremely effectively from home will see lasting changes in how we work but also how we design homes and residential spaces. People will have their house, their office, and their own local food supplies or plantations.
What has been the most significant global impact that Covid-19 has had on the real-estate market?
It is an incredibly rare and unprecedented situation where we have the opportunity to compare the best and worst countries' responses on a global scale in order to learn, grow and better prepare as a result of the pandemic. Countries have handled their response very differently. Those countries that have prioritized their people even if it is on the expense of the economy, will recover the fastest in my opinion. Take the UAE for example, they put protecting lives as their biggest priority, which is why we saw such a quick reaction in terms of lockdowns and testing numbers. A country’s response can have a long-term lasting impact on the international demand, we see a number of international developers and businesses exploring the UAE as a viable option to invest and relocate to, based on their response to the pandemic. I predict this will escalate further and we will see huge international demand for businesses wanting to live and establish companies here.
The UAE government recognizes this and is working to eliminate barriers of entry by reducing the costs of establishing companies, providing support for SME’s and ensuring gold standard infrastructure and facilities. It is one of the safest cities in the world, its response to Covid-19 has further secured it’s position in holding that title. Making it an extremely attractive prospect to investors.
What do you see being the short vs long term impact on the industry?
Delaying Expo 2020 is very positive and beneficial to the industry and economy. Next year I imagine, we will have a greater footfall than previous years because of the international interest predicted. Many investors are focussing on the UAE based on their Covid-19 response and as such are revisiting their marketing approaches and realigning agreements to create more awareness and opportunity locally. We will see a lot more Europeans and Chinese investors coming to Cityscape next year. The first market to start doing business again in the UAE will be China. They have already started opening their channels ready to buy in UAE
China has stopped buying in the USA and has earmarked Dubai in their top three prospects. The market is a living entity, it gets sick it recovers. You have to take care of it, motivate it. We need local business owners and CEO’s to come together to demonstrate the prospects and potential. The market is self-fulfilling, now is the time to show a united front and be optimistic in order to continue to attract international business. People need to find their confidence and remember what makes this city unique. Safety, education, investment, zero taxation, sustainability, internal and external policies, the architecture of the city. All those aspects make the UAE a unique investment opportunity. We need market leaders to remember why they started investing in UAE, to order to accelerate the growth.
From the outbreak of this pandemic, what do you think the biggest takeaway has been for this generation?
Now is the time to think way outside the box, it is not business as usual anymore. We need to re-evaluate ourselves, employees and investors in order to demonstrate that the real estate market in the UAE is still one of the best options across the globe. We have to come together to show confidence to all international investors. People will be influenced, and trust will come back a lot faster than expected, but it starts with us here on the ground locally.