The real estate industry is a significant pillar of the world’s economy, however, it is a vulnerable sector due to the constant changing nature and the impact of a wide variety of global and regional factors.
Forecasts for 2018 predict the market will mature and developers, investors, and brokerages will embrace enhanced technologies that will shape the way the industry operates. This year will also see real estate practitioners working together to re-establish trust in the market, creating opportunities for everyone, and putting more efforts towards adopting sustainable practices.
Following are five trends that are expected to affect the real estate industry during 2018.
The introduction of innovative technology, known as the Fourth Industrial Revolution, has a huge impact on the way the real estate industry operates. In 2018, real estate practitioners are expected to continue adopting and investing in technologies that give consumers more options, a clearer picture, and integrated data that help them make buying and selling choices. Examples of these are:
Blockchain: The technology behind cryptocurrencies that not only provides new payment methods that are shaping the real estate industry, but also acts as an effective tool to integrate market data anytime, anywhere.
Artificial intelligence: Processes data and offers advance notice on real estate related patterns that directly affect market prices (eg, population growth in specific areas).
Virtual reality: If efficiently used, it could become a great marketing tool that helps potential buyers discover properties before visiting them.
It is no secret that the real estate industry is going through challenging times, both regionally and globally. As a response, investors, developers and agents are expected to be more creative and more flexible in finding ways to do business together, create profitable opportunities, and revive the market.
2018 will see more creativity undertaken by all parties involved in real estate deals. Of course, innovative technology will play a huge part in this; however, creativity will also be demonstrated through human interaction, strategic partnerships, flexible deals and innovative financial solutions.
This also means that brokerage companies will have a growing role in facilitating the communication and deals between the sellers and buyers.
Overall, real estate investors will continue to be cautious in 2018. This is fed by the uncertainties reported in the latest industry surveys, but in the Middle East and GCC region, it is also related to the new tax introduction (although it does not have a big impact on prices), the political situation in certain countries and market saturation.
Cautiousness however, does not mean a freezing of investment plans, it just means that investors will be more hesitant and take a longer time to make purchase decisions, thus witnessing a slower flow of real estate related transactions.
A real estate market with low prices provides a great opportunity for individuals willing to invest in long-term profitable assets. Whether they are home buyers, or property investors, these people will have a wide range of options to choose from, across different property types.
Affordable housing is usually perceived as the safest option for individual investors with limited budgets; however, in the current market situation, serious buyers will be able to consider more sophisticated types of properties including the luxury segment.
In 2018, developers, agents, and financial institutions will provide attractive deals, smart solutions and convenient facilitations to attract long-term investors. This is a healthy trend that will help improve and resuscitate the market in the long run.
Governments, businesses, and individuals around the globe are more and more aware of the importance of building sustainable and eco-friendly infrastructures. This will continue emerging in 2018 both in developed and developing markets.
Although adopting sustainability is led by the world’s governments and responsible companies’ interest in and concern about climate change, it is also becoming a belief among investors that sustainable practices boost business performance. This provides more opportunities to facility and waste management companies as well as sustainability consultants to grow their footprint in the real estate industry.
6. An emphasis on creating ‘places’
The announcement in March of Abu Dhabi and Dubai’s largest and most prominent developers collaborating will have a significant impact on the real estate industry and urban development landscape in the coming years.
Both Aldar and Emaar have already played catalyzing roles in shaping their respective emirate, with the former’s projects in Yas Island helping transform it into a sought after tourist, retail and residential hotspot, and the latter’s continuous development of Dubai’s Downtown district and surrounding area affirming the city’s position as an international hub to rival its global counterparts.
With the merger kicking off by pooling the organisations’ assets for two developments, Saadiyat Grove in Abu Dhabi and Emaar Beachfront in Dubai, it’s likely we will hear more from the merger in the next few years on a range of developments encompassing the residential, office and retail sectors.
A merger of this magnitude between two trusted master-developers also sends clear signals to local and international stakeholders. It speaks to a larger trend of how developers are playing a more proactive role in the cultural evolution of Abu Dhabi through the planning and designing of projects.
There seems to be a growing emphasis on creating well-rounded urban and cultural environments rather than focusing on bricks and mortar, and with the developers’ track records in mind, it’s an exciting time to be in Abu Dhabi and Dubai to see what projects will be put in motion as a result of the merge.
7. Abu Dhabi’s industrial backbone
While the performance of Abu Dhabi’s residential sector is still in a state of recovery, the capital has found an unlikely hero in the industrial sector. Appropriately named the city’s ‘brightest star’ by Cluttons in their 2017 Property Report, the sector has proven to be healthy, holding stable rents over much of 2017.
With an estimated total value of Dhs6.4bn ($1.74bn) being pumped into Abu Dhabi’s new and existing factories, it’s clear a niche has been found to balance the capital’s books when it comes to the industrial property market.
Speculation into what the rest of 2018 holds for this sector has been directly tied to the capital’s economic performance. A solid and thriving industrial property market has opened new business channels with markets in the east and provided stability in a period of recovery for other sectors of the real estate market, however, should the economy suffer, rents will likely follow suit.
The UAE’s Khalifa Industrial Zone Abu Dhabi (KIZAD) has been a driving force for the sector with a number of planned facility expansions and investments for warehouse space. And more recently, China’s COSCO has been making moves to expand their presence with a new container terminal; more good news for trade between the UAE and China.
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