Middle-income development projects will be a key trend in 2018 according to Perkins+Will. The global architecture firm notes that population growth, urbanisation and tourism will put more pressure on the UAE to accommodate the evolving needs of residents and visitors.
According to Euromonitor International data from 2017, 20% of adults in the UAE accounted for bottom-income, while ‘top income’ residents formed 32% of the country’s adult population, which left the middle-income group at 48%.
“This trend emerging in the market primarily encapsulates the residential and hospitality sectors. It’s important to make clear this growth area will not supplant existing high-end projects, it is simply evolving to include a previously underserved market,” said Roger Wilson, managing director at Perkins+Will Dubai.
Wilson says that 2018 will continue to see high-end luxury development announcements but notes that developers will be looking to deliver more investment and leisure opportunities catering to the middle-income market.
“This trend emerging in the market primarily encapsulates the residential and hospitality sectors. It’s important to make clear this growth area will not supplant existing high-end projects, it is simply evolving to include a previously underserved market. We expect residential developers to increasingly target mid-income investors with one bed and studios around the $136,000 to $163,000 mark,” added Wilson.
A similar focus is also expected in the hospitality sector, as operators look to cater to a wider range of price points for travelers who visit the region.
“We expect to see the gap between luxury travelers and those travelling for experiential purposes increasingly satisfied in the coming year, with an increase in three and four-star properties. That said, we have not experienced a decline in our pipeline of top-end developments, so hospitality will remain strong, especially across branded residential and resort developments. According to MEED Projects, hotel construction contracts awarded during 2018 are expected to reach US$14 billion, with the UAE being the largest market for these contracts, so growth here is inevitable for us,” Wilson concludes.
He concluded: “Whilst we have seen a shift toward the inclusion of this uprising of a mid-income market, the UAE retains its affluent demographic. It is not a shift from one to the other, but an expansion to respond to an emerging demographic, one which indicates a maturing of the economy. We still retain a high number of ‘luxury’ projects in next year’s pipeline.”