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Real estate and the challenges ahead

Muhammad Al-Mutawa

March 14, 2021

Emirates Today newspaper informed us in its issue dated February 25, 2021, on two important reports, the first: on buildings completed in Dubai during the year 2020, and the second: on hotels under construction in the UAE during 2020.

With a closer look at the two reports, we notice the tremendous development in the numbers. The buildings completed in Dubai during the past year are estimated to be worth 40.5 billion dirhams, with a growth rate of 12.2%.

As for the number of "under construction" hotels, it reached 218 new hotel projects in all the Emirates, with a total capacity of 65 thousand hotel rooms. The largest percentage is in Dubai by 153 projects (70%) and with a capacity exceeding 48 thousand hotel rooms.

There is no doubt that the numbers are large, despite the major global crisis represented by the Coronavirus pandemic, and if they indicate anything, they indicate global confidence in the economy of the Emirate of Dubai, its great attraction to investors from all over the world, and optimistic expectations for it, which are rising numbers for years. The previous one, at a time when we do not overlook the holding of the Expo 2020 Dubai during the coming period, is one of the main reasons for this large percentage.

This is from a positive perspective, but we must not overlook that this amount of construction work, both at its residential and hotel sides, needs a huge number of residents for its buildings, and tourists visiting its hotels, bearing in mind the great economic difficulties facing the global economy from the Corona pandemic, And the abundance of real estate units in the market now, which led to a significant decrease in rental values ​​and hotel room prices, and therefore, we are at an important turning point, and everyone must work to find solutions to these challenges.

Therefore, I wish the responsible authorities to anticipate plans and solutions, to prevent the problem of the abundance of units in the market from escalating in residential groups and hotels, and it is imperative to involve all specialists from real estate developers, the Dubai Municipality, the Land and Property Department, "Residency and Immigration", the Department of Tourism, and those with them. Related to this, and organize a brainstorming process to exchange ideas and find appropriate solutions.

Real estate and hospitality are two basic tributaries of the national income and the local product, and their balance and stability are the "pomegranates" of the balance of any economy.

There is no doubt that preserving the previous successes needs new creative ideas, and the facilities and incentives approved by the UAE government related to the amendments to naturalization, permanent residency, and full ownership of commercial companies, all of this will be in the interest of the real estate and hospitality sectors.

But anticipation for the upcoming is necessary, especially since the numbers show a large and huge amount of new units entering the market, which puts more pressure on prices in the real estate market in Dubai and the UAE as a whole.

To summarize all this, and with a simple calculation to simplify the matter, the concerned authorities must work to increase the population, by no less than 15% in the next few years, to balance the real estate market, and work to increase the number of tourists to the state by not less than 30%, To work the balance in the hospitality sector, by introducing innovative ideas, taking into account the precautionary measures imposed by the current health situation, which expectations indicate that it will soon and significantly decline.

It's a time to be creative, and to think outside the box.

CEO of «Alwaleed Real Estate Company»

To read the previous articles of the writer please click on its name.