7 September 2018

Dubai: Iconoclastic City

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Amongst a cornucopia of factors that influence price movement in real estate, architectural diversity plays a vital role in their performance. In the ready apartment space, buildings that are diverse and homogenous are equally split, whereas in the upcoming supply there is a larger concentration (79%) towards diversity. Whereas in the horizontal space we can witness an opposite composition to that of the apartment space. The bulk of the supplies in both ready and up-coming units are in the homogenous category. Homogeneity in the villa space is a function of achieving the maximum cost efficiency within the concept of gated communities.

An inter-community price performance analysis of an architectural diverse building (Global Green View) within a homogenous community (International City) reveals that the latter has outperformed by more than 20% in the last 8 years. Although there are a number of variables that come into play here (quality of building, size of apartments, location, etc.) this indicates that investors and end users alike value architectural diversity in a quantifiable and measurable way.

Given that investors value architectural diversity, developers are responding in the vertical space by creating more individualized developments. This implies that the build out period going forward will be a lot slower, allaying supply pipeline fears. The relative outperformance of iconoclastic structures is consistent with global real estate markets; given the superior return structure, communities (from mid income to trophy) will likely embrace this; investors and end users alike will be rewarded for embracing this factor.

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