The implications of the current global situation will lead to radical changes in the real estate sector in the long run, says Medallion Associates, a leading real estate investment advisory company. Furthermore, the ongoing market competition calls for more effective expenditure management and enhanced sustainability of operations in light of the change in profit rates due to the pressures on the real estate markets, which began to mount during the mortgage crisis.
In its analysis of the future prospects for the real estate sector in 2021, Medallion Associates stated that the property market in the post-Covid era will never be the same again, as the upcoming period will place more emphasis on enhancing the added value of services and products at the lowest possible cost. This will be in parallel with the accelerated pace of digital transformation and the adoption of advanced operations and marketing management strategies to keep pace with new and emerging trends. The company further explained that the excess supply is another factor that imposes pressure on the markets and lowers the prices, in terms of selling or renting units, which in turn confirms the need to adopt innovative mechanisms to compensate the decline in profits through reducing costs, including minimising the size of business units.
Masood Al Awar, Chief Executive Officer of Medallion Associates, said that the post-Covid phase will open up new prospects for real estate companies to develop projects in line with emerging and innovative concepts. This will lead to the introduction of several changes to existing projects to meet evolving customer preferences in terms of enhanced safety and air purification measures, not forgetting increased efficiency of automated services in real estate units, multi-purpose complexes, business headquarters and tourist and commercial facilities.
Al Awar added: “The UAE is currently spearheading innovation in the global smart cities market, and the global smart cities market is expected to grow at a compound annual growth rate (CAGR) of 23% to reach $546 billion by 2027, according to industry experts. Therefore, technological and digital innovations and specialised expertise have become the basic pillars in the new real estate landscape and effective tools that support the business continuity of companies despite all challenges. It also allows real estate companies to diversify their investment portfolios and enhance the flexibility of their operations to keep pace with rapid changes. Real estate developers should focus on the markets that can help them keep up with the competition and achieve customer satisfaction. Also, they must initiate the creation of investment tools that meet the needs of the investment community and develop sustainable financing models capable of achieving returns in the medium or long term and bearing new types of risks.”
Al Awar underlined the need to seize the current opportunities to invest in the sector in light of the distinguished offers and competitive prices witnessed by the market. In addition, he pointed out that buying real estate at this stage is considered a strategic investment and a successful proactive approach, especially when the real estate market and the various sectors are heading towards recovery and a gradual return to growth trajectory.
In its analytical reading, the company indicated that the developments it is witnessing today will change the nature of investment opportunities that are expected to be concentrated more in cities. This will open greater horizons for urban development projects and integrated complexes that use clean energy sources such as solar panels, and more sustainable ventilation systems and cooling because it is less expensive to maintain.
Medallion Associates recommends that the real estate developers conduct comprehensive economic analysis and take all possible scenarios into consideration before starting to implement projects. This is in addition to expanding the scope of partnerships within the government and private sectors, especially in infrastructure projects, and enhancing diversity and added value in services and products available to customers. At the same time, the controls and regulatory frameworks must also be updated to establish a more balanced relationship between the investor, the developer and the customer.
The Q3 figures from the Dubai Land Department indicate a buoyant prime residential market for investors with more than 2,297 apartments and 438 villas transacted in the Dubai prime residential market, recording a 24% growth in the overall number of units sold quarter-on-quarter. Apart from that, the volume of transactions in the prime residential market grew by 49% quarter-on-quarter to reach $2 billion in Q3, compared to $1.36 billion in Q2 this year.