Global architecture firm, Perkins+Will, identifies the inclusion of middle-income market development projects as a key trend for 2018.
According to Euromonitor International, in 2017 20 per cent of adults in the UAE accounted for ‘bottom-income’ while ‘top-income’ residents formed 32 per cent of the country’s adult population, leaving a growing middle-income group of 48 per cent.
In the comment piece below, Roger Wilson, managing director at Perkins+Will’s Dubai studio, explains that although 2018 will continue to see high-end luxury developments, however developers will also be looking to deliver more investment and leisure opportunities for 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 under-served market.
We expect residential developers to increasingly target mid-income investors with one bed and studios around the Dh500,000 to Dh600,000 mark.
A similar focus is also predicted in hospitality, where operators see a need 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.
In aviation, the number of travelers is continuing to increase, with a continued consolidation of Dubai’s role as the leisure capital of the region. While budget travel continues to grow and is increasingly catered for by airlines, exclusivity is also being redefined.
Airports are working to fill the need for exclusivity and privacy with new travel classes, higher specification lounges and faster immigration and baggage processing systems.
We definitely expect to see a move toward an increasingly passenger-framed experience. We are looking at some key aviation terminal projects next year which will encapsulate these new requirements. It’s an interesting time for this space.
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.