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RAJA ALAMEDDINE

LOOTAH REAL ESTATE DEVELOPMENT

Sustainable developments in the region have become mainstream

Urbanisation and economic growth go hand in hand, especially in the UAE where real estate plays a key role in the local economy. The Middle East’s real estate industry is continuously developing and evolving and there is an increasing concern for sustainability within the region as well as worldwide.

According to a recent report, buildings account for around 40% of energy use, 25% of water consumption and one-third of global greenhouse gas emissions. With such a staggering footprint, real estate holds immense economic, social and environmental impact.

Sustainable real estate development is not a novel idea, rather it is currently gaining prominence in the country and region. Combining eco-conscious design, materials, construction practices, and technologies in buildings is rapidly becoming commonplace and the new generation of property owners and renters expect it.

With the growing energy needs of the MENA region, concepts such as green buildings present the opportunity to rethink how homes are built.

The UAE has emerged as a leader to bring about the energy transition within MENA.

It has shown promise in delivering stateof-the-art green buildings, while the UAE

Energy Strategy 2050 aims to increase energy efficiency across the country by 40%. The country has also made a commitment to achieve net-zero emissions by 2050. The UAE ranked 14th globally for the number of sustainable buildings in a survey of 373 corporate real estate professionals undertaken by Knight Frank. It was also the only country from the GCC to feature in the top 30, with 869 green-rated buildings. Saudi Arabia too has ushered in a new era with its Sustainable Vision 2030 and aims to reach net-zero emissions by 2060.

From policy development and investment to planning and infrastructure, sustainability is at the heart of the region.

Experts observe that the spotlight will shine on community-based sustainable developments over the next few years in line with global sustainability goals and those companies that are quick on the uptake will reap the rewards

Along with the drive for sustainability comes the need for technologies to support it thereby creating a burgeoning segment in the real estate sector — smart buildings. A report by Technavio predicts that the global smart buildings market will increase 13% in annual value, reaching $19.17 billion by 2024. Dubai and Abu Dhabi are two of the top-ranking smart cities for technology in the IESE Cities in Motion Index 2020.

Amid the Covid-19 pandemic, interest in smart buildings has surged. Consumers are keen on technologies that make their life smoother such as smart cooling and lighting systems, smart elevators, app-driven maintenance and more.

Millennial spending is the key driver for many sectors’ future growth and for this demographic, lifestyle and technology are intertwined. FinanceOnline found that millennials will remain the biggest real estate buyers worldwide with a forecasted rise in 2022 comprising around 55% of global real estate market sales.

As the new generation of homeowners and renters become key players within the market, developers are evolving to fulfil their preferences. Especially when it comes to sustainability and environmentally friendly practices, millennial loyalty and spending habits tend to veer towards companies that are eco-conscious. As with any shift, companies have had to reevaluate their strategies and adapt to millennials as the majority customer dictates the market.

There is a clear pathway for real estate development, and it is sustainable design.

Industry insight

ANKITA RAO

FREELINE ENGINEERING CONSULTANTS

The key challenges facing the completion of projects

Construction, as an industry, has always been fascinating and volatile in equal proportions. It is very exciting to witness the metamorphosis from scribbles on a drawing board to a full-fledged constructed project. The current turbulent times have magnified the volatility across all industries and brought it to the fore, but specific to our industry, we are no strangers to the ebbs and tides. Specific to these current times, we have noticed the following challenges leading up to the completion of projects:

1. METEORIC RISE IN THE DEMAND FOR RESIDENTIAL DEVELOPMENTS SPECIALLY VILLAS: This market curve is both a boon and a bane for us. Boon because we now have a higher influx of Villa projects and bane because this seems to be the only sector where investors seem to have confidence in.

In some cases, this has resulted in redirection of commercial project capital towards private residential investments thus resulting in delay until a new influx of capital comes in. If there was ever a time when homes were perceived as the safest haven in true sense of the word, it is probably now. With many businesses moving off-site towards home offices, there

seems to a strong inclination and renewed unprecedented interest to invest in either upgrading current homes or building new ones.

2. INABILITY TO DETECT LIGHT AT THE END OF THE TUNNEL: With regards to current times, at least for now, there seems to be no finite end to the situation, with new curveballs emerging every now and then. Financially, the inability to accurately formulate projections seems to translate into a higher degree of cognisance towards investments. This uncertainty seems to be directly proportional to the decision making viz-a-viz under construction projects and reluctance to start new projects. Again, directly impacting project completion and indirectly impacting the growth of the construction footprint.

3. OVERSUPPLY OF REAL ESTATE FROM PRE-COVID-19 TIMES: We are seeing an increased spotlighted interest in considering existing built real estate options and customising it towards internal requirements. For some investors where time equals money, this seems to be a viable opportunity wherein they have readily available options at possibly subsidised rates due to the over-supply and current times. It seems to be an acceptable trade off to compromise on not having a tailormade facility but having a ready unit with acceptable level of customisation.

4. INCREASED COSTS OF BUILDING MATERIALS, SPECIALLY, STEEL: Steel, as a key construction material specially in this part of the world, recently saw a huge jump in price. This has caused some sort of a disproportionate balance in the project costings either from the investors’ side or contractors’ side or both. Moreover, prices have increased to such an extent that it is creating pressure on preexisting contracts with steel rates locked in at earlier prices. In the pandemic world where most have been affected financially, this increase has been challenging to absorb.

In view of the above, there is a challenge completing projects in current times with almost everything boiling down to two commodities: money & time.

PRODIPTO GHOSH

CALLISONRTKL

Key trends for the Middle East’s hospitality market

According to a recently published CallisonRTKL (CRTKL) report forecasting the future of hospitality and the key factors that will shape guest expectations in 2022, guest expectations have shifted.

The most prioritised luxury is personal wellness with an increased linkage to holistic health and the sustainability of places visited. Guests in 2022, more likely to be domestic than international, will mix business with pleasure and favour places that allow them to work when needed during their stay.

While many had expected business travel to lag behind leisure, business travel expenditure in the Middle East is forecast to rise by 32% in 2022, following a predicted 49% increase during 2021.

As these lines continue to blur, a different set of hospitality amenities are emerging and bringing with them buildings that will play a more active role in facilitating this new hybrid lifestyle.

With hotel demand across the majority of Middle East and North Africa (MENA) markets expected to achieve parity with 2019 levels of performance in 2022, hospitality assets and experiences must be refreshed in line with new guest expectations. The demands placed on the sector have changed - guests now have a stronger environmental and ethical conscience, they are making more sustainable travel choices, investing in local tourism and seeking authentic cultural experiences that provide a true sense of place.

At CRTKL, we are transforming hotels and resorts with designs that introduce new revenue streams, monetise underutilised space and advance upon Environmental, Social and Governance (ESG) criteria.

As such, here are three new concepts that we believe are driving the hospitality market forwards this year:

SHIFTING GUEST EXPECTATIONS The guest of 2022 will come seeking experiences and activities, not just views. With guests expecting to Work From Anywhere (WFA) and commercial real estate under stress, new demand is being created for hybrid hospitality/ work spaces in central locations. Guests now also expect all hospitality services to be accessible via smartphone and to have the option of a completely contactless experience.

OPPORTUNITIES FOR REVENUE GENERATION BEYOND GUESTROOMS More than just ‘heads in beds,’ there are many opportunities for revenue generation beyond guestrooms. Hospitality in 2022 is about monetising-underutilised portions of the property with dual purposes for lobbies, F&B areas, conference rooms and leisure centres. Introducing flexibility into the rental model will also attract new audiences. Daytime room rates can appeal to those looking for private workspaces, while longer-term leases for serviced and branded apartments will create a more blended residential offer.

FOOD AND BEVERAGE (F&B) AS A CATALYST FOR HOTEL RECOVERY F&B offerings are recognised as an essential contributor to a hotel’s positioning within the market. While consumers are becoming increasingly discerning, F&B presents hotels with unlimited opportunities for additional revenue sources. While bars often lack underutilised space, kitchens have far more capacity than most would think. There is usually enough space to create other food programs and integrate ghost kitchens into the existing kitchen area. Kitchen takeovers, culinary classes, and pop-up collaborations with local institutions and chefs can also strengthen community ties and create stronger referral business.