2021_-JLL_UAE_Review_Property_Trends.pdf

© 2021 Jones Lang LaSalle IP, Inc. All rights reserved l For internal use & private use with clients only
A Year in Review &
2021 Property Trends
Looking ahead to the post-pandemic world
January 2021

A Tale of 2020
2
© 2021 Jones Lang LaSalle IP, Inc. All rights reserved l For Internal use & use with Clients only

Offices | Looking beyond the ‘negative’ headlines
3
Polarization of prime and
secondary stock.
Number of new enquiries
increased in the latter half of the
year – particularly for premium
office space.
Tenants requesting increased
flexibility both in terms of lease
length and adding/shedding
footprint during contract.
Requirements for office relocations
on hold. Companies focusing was
downsizing & reducing costs.

© 2021 Jones Lang LaSalle IP, Inc. All rights reserved l For internal use & private use with clients only 4
Offices | Demand dependent on industry
Demand for premium office space by sector
Source: JLL Premium Office Tracker, 2020
41%
66%
38%
48%
23%
11%
10%
4% 3%
16%
9%
4%
13%
8%
9%
4%
3% 19% 10%
10%
6% 4%
14%
9% 8% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
High-End Mid-Level Value All Markets
Note: Market categories defined based on
total occupancy costs:
• High-End: > USD 100 per sf, per annum
• Mid-Level: USD 60-100 per sf, per annum
• Value: < USD 60 per sf, per annum
Other
Retail and Consumer Goods & Services
Legal
Professional & Business Services
Technology – Hardware & Software
Technology – Online Platforms
Banking & Financial Services

Offices | Polarisation: Flight to quality
Focus on health, wellness & employee experience to drive demand for high quality smart buildings
Resilient assets will command a premium
50%
7%
43%
Increase Decrease Same
Future corporate demand:
Impact on Higher Quality Spaces
in the portfolio
Due to Covid-19 crisis, how will the quality of your footprint change in the medium to long term?
Sample : EMEA = 160
EMEA
Source: JLL, Covid-19 EMEA Occupier Sentiment Survey, September 2020.
ICD Brookfield

Residential | Generally resilient sector
7
Higher end-user activity as
developers offer favorable
payment plans & occupiers chase
space.
Tenants requesting increased
flexibility in terms of lease rates
and length => pressure on rental
rates.
Short-term delay in the
construction of schemes but
supply pipeline strong particularly
in Dubai.

Residential | Transactional activity buoyant
8
40
60
80
100
120
140
January,
2009
April,
2009
July,
2009
October,
2009
January,
2010
April,
2010
July,
2010
October,
2010
January,
2011
April,
2011
July,
2011
October,
2011
January,
2012
April,
2012
July,
2012
October,
2012
January,
2013
April,
2013
July,
2013
October,
2013
January,
2014
April,
2014
July,
2014
October,
2014
January,
2015
April,
2015
July,
2015
October,
2015
January,
2016
April,
2016
July,
2016
October,
2016
January,
2017
April,
2017
July,
2017
October,
2017
January,
2018
April,
2018
July,
2018
October,
2018
January,
2019
April,
2019
July,
2019
October,
2019
January,
2020
April,
2020
July,
2020
October,
2020
Index
2009=100
Dubai Residential Market Performance
Dubai Rental Rate Index Dubai Sale Price Index
In Q4 2020 vs. Q4 2019:
Residential sale prices in Dubai declined
8% vs. 4% in Abu Dhabi.
Rental rates in Dubai declined 12%.
Whereas rental rates in Abu Dhabi
declined 3%.
Investment activity remained resilient in
the latter half of the year.
By year-end 2020, 58% of sale
transactions in Dubai in secondary market.
In Abu Dhabi, active uptake in primary
market / investment-grade stock.

Retail | Acceleration of trends
9
Increased adoption of online
shopping and omni-channel
retailing. Operators eye expansion.
Significant supply, changes in
consumer habits challenging retail
sector before COVID 19.
Occupier demand for large fulfilment
centres, parcel hubs and local parcel
delivery centres, facilities for delivery
of larger items – white goods, furniture,
etc.

Retail | Release of pent-up demand
Prime retail destinations to benefit from release of pent-up demand
Retail sales to shift back
from online channels to physical stores in
H2 2021
Younger generation is
keen to socialise once
lockdown measures ease
Time spent with friends
Consumer hesitation
to visit retail places
lifted
Average time spent per person with
friends
Source: Google Covid-19 Community Mobility Report (December 2020), Euromonitor International (December 2020), American Time Use Survey (2017).
Forecast share of online retail sales
as a proportion of total sales
The concept of “prime” is also being revalued and shifted. This trend will continue.
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
10
15-Feb
29-Feb
14-Mar
28-Mar
11-Apr
25-Apr
09-May
23-May
06-Jun
20-Jun
04-Jul
18-Jul
01-Aug
15-Aug
29-Aug
12-Sep
26-Sep
10-Oct
24-Oct
07-Nov
21-Nov
05-Dec
19-Dec
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2019 2020 2021 2022 2023
Google UAE Retail Mobility Index

Hotels | When the going gets tough
11
Domestic demand to continue
leading recovery (leisure, drive-to-
destinations) while group demand
to lag (need for reinvention?)
Double-digit RevPAR declines in
2020 to challenge recovery.
Oversupplied markets to add
pressure.
Higher priority placed on hygiene and
well being => demand shifting away
from non professionally managed
options

20%
30%
40%
50%
60%
70%
80%
90%
Dubai Abu Dhabi
12
Hotels l Lagging performance
Source: STR Global
Dubai: Occupancy rates decreased to 40% in YT Nov 2020
Abu Dhabi: Occupancy rates decreased to 60% in YT Nov 2020
USD 0
USD 50
USD 100
USD 150
USD 200
USD 250
USD 300
Dubai Abu Dhabi
Dubai: RevPAR declined by 55% on yearly basis to reach USD48.
Abu Dhabi: RevPAR decreased by 37% on yearly basis to reach
USD53.

2021 Property Trends
13

Sustainability | In the spotlight
Sustainability and ESG are a theme common across real estate
Source: JLL
ECONOMICS
OCCUPIERS
LOGISTICS
HOTELS
LIVING
Sustainability will take centre stage once
more as policy agendas turn green
Investors will battle to give ESG a commercial
underpinning
CRE will need to embed net zero strategies
as occupiers reimagine portfolios in 2021
Assets that do not reach sustainability
requirements risk becoming stranded
Retailers with sustainability at their core will
outperform in the years to come
Sustainability must be at the heart of
operating strategies and customer experience
ESG investment success will be better defined
and better measured in Living sectors
The ever growing importance of ESG will define
the shape of the real estate recovery
Corporate requirements are driving the agenda –
the pull factor is ever strengthening
Regulatory push will get stronger too, but is not in the
vanguard of change
The pandemic has thrown health & wellness into the
spotlight, where it will remain.
The pandemic has reminded us of the fragility of our
society and ecosystem, and will drive increased focus
on sustainability & ESG topics
INVESTORS
RETAIL

Capital Markets | Slow road to recovery
Next year will be framed by a combination of volatility and cautious optimism
Best of times,
worst of times
Capital flows
will diversify
‘Beds and
Sheds’ to
dominate
ESG will
transform the
narrative
Terrible 2020 will
give way to greater
scrutiny of new
opportunities
Capital flows will
continue to
diversify into real
estate
‘Beds and Sheds’
will continue to be
drivers of interest
Europe is leading
ESG globally, but
its ambition will be
challenged
Learning
from ‘flex’
Yields may rise in
connection with
assets that have a
greater share of
Flex Space
Lower (or
negative) rates for
longer will mostly
be beneficial for
real estate
Long WALTs,
prime
opportunities, and
new entrants will
remain as key
drivers of capital
Corporate
takeovers will grab
headlines, and
provide visibility on
the shape of the
industry through
the new cycle
Shift in the
narrative – ESG is
now demanded
more by investors
But investors may
find new value in
flexible office
solutions.

Offices
16

Corporate Occupier | A hybrid future
Remote work is here to stay. The question is how it’s integrated and optimised
Employee perspective: Remote work frequency after Covid-19*
2.4 days on average
“Hybrid” workplace ecosystems
Source: JLL Human Experience 2020 survey. Survey size = 2033.
*How many days a week would you like to work remotely
from home after Covid-19?
24%
Exclusively
in the office
50% Hybrid
Office + Remote
26%
Exclusively
outside of the
office
Exclusively at home 9%
In third-party places 1%
At home and other
locations outside of the
office 16%

Corporate Occupier | Future of office demand
The office is the preferred location for some crucial activities
70%
70%
69%
60%
52%
50%
49%
44%
25%
26%
24%
28%
21%
42%
42%
42%
52%
67%
4%
6%
3%
19%
6%
8%
9%
4%
8%
Better in the office Better at home Better in a
third-party place
To concentrate on a task and deliver individual work
Q15. After your recent homeworking experience, where would you prefer to do the
following tasks in the future? At home, in the office or in a third-party place?
Sample : All respondents n= 2033
To collaborate and run meetings
To create and innovate
To be inspired
To switch off after a hard task
To socialize
To manage or be supported by your management
To learn and grow
To solve work-related issues

Corporate Occupier | Health imperative
Employee health and wellbeing will be central to future CRE strategy and investment
Health & wellness
of employees is a #1 investment priority
for EMEA CRE directors in the medium
to long term
Source: JLL, EMEA Covid-19 occupier sentiment survey
(September 2020)
58%
of employees prioritise working in a
company that ensures their physical
and mental well-being.
Source: JLL, Human Experience (2020)
What kind of services would you like to have access to?
26%
35%
37%
38%
37%
40%
38%
37%
38%
39%
17%
16%
15%
17%
21%
20%
24%
34%
34%
34%
Childcare services
Beauty services
Cultural services
Service desks
dedicated to work
Mobility solutions
‘Life is easy’ services
Sports services
Health services
Advanced food services
Well-being services
This would be nice This would be wonderful
Source: JLL Human Experience 2020 survey.

Corporate Occupier | Digital leap
Real Estate technology investment will accelerate into new areas in 2021
10%
10%
24%
37%
43%
61%
Proptech/Medtech to monitor people and
social behaviours
Robotics and Automation
Data Science Solutions to capture CRE
metrics
Proptech to enhance Real Estate
performance and management
Collaboration tools in the office
Remote working / work from home
solutions
Top CRE tech investment areas*
Technology is #2 investment growth
area for CRE directors in EMEA
#2
59%
of executives say Covid-19 has accelerated
digital transformation at their organisations
Source: JLL, EMEA Covid-19 occupier sentiment survey, September 2020 Source: IBM 2020
Covid-19 has caused companies to skip
a cycle of digital transformation
*In future, CRE will invest in technologies that enable or enhance (multiple answer question –
totals will not add up to 100%); Sample: EMEA = 160, % of CRE leaders who answered the survey

Offices | Office adaptations drive space need
Adaptations likely to offset some homeworking-related demand falls
Relaxing seating
densities
More formal & informal
collaborative spaces
Adaptive space
management to allow for
peak usage
Amenities/ spaces
supporting
sustainability, health &
wellbeing focus
Office adaptations are likely to mitigate some of the reduction in office demand arising from higher levels of homeworking.

Offices | Flex: short-term pain, long-term gain
2021 to see operator failure, but long-term demand for Flex likely to soar
Significant drop in
demand for all office
space, including
flexible office space
Short-Term
High demand for agile
portfolios, de-densified
workspaces and more
corporate control/oversight
of flexible space solutions
Long-Term
Focus on management
agreement models and
greater scrutiny over Flex
operator covenants.
Widespread consolidation
of underperforming centres
and handing locations to
landlords
Increase in landlords self-
performing & managing
flexible space solutions as
operators hand back space
Near-Term
Strong demand for flexible
space, particularly de-
centralized and accessible
by private transport
Increase in demand for
pre-built spaces and
lease flexibility. Plus from
changing personal
preferences
Medium-Term

Retail
28

Retail | Flexible leases
Flexible leases and retail formats are on the rise
Consumers
• Social media
• Consumer values
• Inspiration
• Affordability
• Accessibility
• Convenience
Investors
Retailers
• Understand demand
• Drive innovation
• Accelerate growth
• Limit risks
• Physical contact point
• Seasonal peaks
• Drive footfall
• Place making
• Future winners
• Flexible
• Effective asset management
• Maximise income
Source: JLL
Stakeholder benefits of flexible retail space
Pure-play operators have grown 3x
faster in revenue than online sales,
supported by social media, venture
capital and lean business models
Social-media is also a threat to future
performance and diversification,
including physical retail space, and is
key to mitigate risks and drive growth
Flexible space offers retailers and
pure-play operators the options to
test product demand, drive brand
awareness, and manage costs
Flexible leases and formats are
increasingly important for retailer and
investor real estate strategies in a
progressively dynamic environment.

Hotels
30

Hotels | Urban hotels will be the destination of choice
Co-working will reboot urban hotels as a one-stop shop
Live
Work
Play
Why?
Large corporate occupiers
will increase demand for
coworking space and
mobile workers will utilize
touch-down space in hotels
How?
Maximize real estate by
redesigning under-utilized spaces
including the conversion of
meeting and event space
Benefit?
Strengthen hotel branding
and boost income

Hotels | Significant changes to hotel lease contracts
Lease contract terms will be adapted following the Covid-19 pandemic
The number of hotel operators offering fixed rents are down
considerably against pre-Covid-19 levels
Most operators are now seeking to offer a mix of a lower base rent
and variable rent that is linked to trading
It is highly likely that leases will include conditions that if there is a
future pandemic the tenant can move to a rental payment plan
Why? What’s the impact?
• Forward funding hotel transactions will
continue to be impacted and institutional
investors are likely to only back the strongest
covenants
• Hotel operators will seek greater ability to
manage cashflow through rent relief should
another pandemic arise
• The perceived safety of hotel leases may be
impacted and further encourage non-specialist
investors to consider other operating
structures such as hotel management
agreements
• The track record of tenants’ actions through
Covid-19 and their trading performance in the
post-Covid-19 recovery period may become
key considerations for investors.

Thank you
For internal use and private use with clients only

2021_-JLL_UAE_Review_Property_Trends.pdf

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