The potential long-term impact of COVID-19 on the GCC housing landscape
The potential long-term impact of COVID-19 on the GCC housing landscape
August 24, 2020
In the recently released report on the potential long-term impact of COVID-19 on the GCC housing landscape, CBRE highlights for key points:
Growing preference for larger housing products (villas & townhouses) versus apartments among end-users
Change in home layouts to accommodate demand for extra and versatile space, driven by evolving preferences for flexible working beyond COVID-19
COVID-19 may accelerate the growth of smart home industry, future homes are expected to adopt various app-enabled technologies that enhance end-users’ lifestyles
COVID-19 is expected to further accelerate the shift towards green energy, with end-users increasingly motivated to reduce utility costs as they spend more time at home
Stay-at-home measures and enforced lockdowns, as a response to COVID-19, have begun to shape end-user behaviour and preferences when it comes to their homes. The world’s largest Work-from-Home (WFH) experiment has encouraged homeowners and occupiers to reimagine their dream home, with a greater focus on health, comfort and privacy within a post-COVID lifestyle. As life slowly begins to come back to normal across most GCC cities, many companies across the region are drafting new WFH policies for their employees to support a more flexible work environment, while ensuring a happier and more productive workforce. Moving forward, professionals are expected to continue a flexible workstyle, working from home if not full-time at least once a week, meaning additional time spent at home.
To highlight this trend, on June 2020, CBRE Global Research has conducted a survey titled ‘The Future of the office: 2020 Global occupier sentiment survey’ of 126 senior-level global real estate executives from Fortune 500 and 100 firms, to determine how the COVID-19 pandemic will change the use of office space. It resulted that 70% of respondents indicated that some portion of their workforce will be allowed to work remotely full-time and 61% indicated that all employees would be allowed to work outside the office at least part-time. The WFH trend is here to stay, if not for all industries and sectors then for majority and this will translate into re-imagining the way homes are built and utilised.
To understand this trend from an occupier or rather a WFH employee perspective, ‘Hana’ has conducted a recent survey with +1,000 employees who experienced WFH to understand the benefits of remote working. Majority of employees prefer to work from home for several reasons including saving money, ability to dress freely, no commuting needed, better work-life balance, and it provides more control over work schedule. Hana is wholly-owned subsidiary of CBRE that offers flexible workspace solutions, operating in both UK and the U.S.
End-users may migrate from apartments to villas in line with their affordability
The GCC is expected to see a growing preference for larger, stand-alone housing units. End-users may migrate from apartments to villas in line with their affordability, seeking private amenities including swimming pool, garden or BBQ area.
Gabriella De La Torre, a Director in CBRE’s Consulting division, commented, “Residents living in smaller apartments are now looking to move to a larger stand-alone villa or townhouse to have more space, as well as enhanced amenities. This trend is also driven by greater levels of affordable pricing across the GCC market, encouraging end-users to upsize where possible.”
End-users may now consider moving from apartments to villas, in line with their affordability, seeking amenities such as:
Private swimming pool
Private garden / courtyard
Office or study space
Larger living area
Private outdoor BBQ area
CBRE have also seen instances, for example, of working couples based in the GCC choosing to leave their 1-bedroom units to larger, 2-bedroom units to be able to convert the second bedroom to a dedicated office space.
Change in home layouts to support more flexible lifestyles
CBRE expects that end-users will look for housing that offers extra space to set up a home office, home gym or play area for children. Incorporating flexibility in a physical way is expected to become more and more important. Architects around the world are identifying cost-effective ways of doing just that. One way to accommodate the multiple responsibilities of today’s lifestyles is the incorporation of movable walls or partitions which support the creation of separated areas for work, school and play.
Beyond providing extra space, incorporating flexibility in a physical way is expected to become more and more important. Architects around the world are brainstorming and identifying cost-effective ways of doing just that. One way to accommodate the multiple responsibilities of today’s lifestyles is the incorporation of movable walls or partitions which support the creation of separated areas for work, school and play.
Abdullah Altheraawi, an Analyst in CBRE’s Consulting division, commented,“In a post-COVID-19 era, the GCC housing market is anticipated to witness an accelerated pace for green and smart housing developments like The Sustainable City in Dubai and Aljada’s Misk Apartments in Sharjah, which are expected to be demanded products by end-users.”
Increasing demand for smart homes as households spent more time at home
The continuous increase in the number of internet and smartphone users across the GCC is expected to boost the popularity of Internet of Things (IoT) amongst households via the adoption of smart home products including but not limited to smart thermostat and smart lighting control.CBRE expects the increase in demand for smart applications within the home to be driven by:
Need to reduce household utility bills via the adoption of smart / energy-efficient technologies
WFH trend driving demand for user-friendly, technology-equipped spaces to support work activities
Growing prevalence of smart surveillance systems, video doorbells and voice assistants (i.e. Alexa)
Popularity of on-demand streaming services (i.e. Netflix) supporting demand for smart entertainment systems
COVID-19 may accelerate the growth of green housing developments
With most households spending increasing amounts of time at home, end-users are witnessing higher utility bills. As agile working becomes more prominent beyond COVID, it is expected that end-users will become more conscious about their homes’ energy efficiency. To support this trend, Dubai has launched various initiatives and regulations to further promote green energy:
Developments must comply with minimum energy requirements outlined in the ‘Green Building Regulations & Specifications.’
Under the Dubai Clean Energy Strategy, Dubai is committed to generate 75% of Emirate’s energy from clean sources by 2050.
DEWA has started transforming energy users to energy producers under ‘Shams Dubai Initiative,’ which encourages real estate owners to install solar photovoltaic panels. As of late 2019, more than 1,300 buildings benefit from solar power.
COVID-19 is expected to further accelerate the shift towards green energy, with end-users increasingly motivated to reduce utility costs as they spend more time at home. In addition to demand from end-users, Government initiatives are expected to encourage GCC real estate developers to think green at a faster pace.