GCC Real Estate: Cyclical or Structural Conundrum

GCC Real Estate: Cyclical or Structural Conundrum

GCC Real Estate Update

Cyclical or Structural Conundrum

Industrial vs. retail antithesis to continue; newer models to drive future office space demand:The Covid-19 crisis has accelerated several emerging trends for GCC's real estate market, and introduced new structural drivers for the sector's demand outlook. The contrast between demand for industrial and retail spaces is set to continue, and represent the strongest and weakest segments of the market respectively. Demand for industrial spaces will continue to be driven by ecommerce, 3PL logistics, pharma, vertical farming and cloud kitchens. On the flipside retailers prefer to expand via omnichannel strategies, as consumers prefer to engage with the brand through many routes, thereby impacting demand for retail real estate. We expect entertainment and F&B tenants to remain the main drivers of incremental demand for mall spaces within the region, as against demand from retailers witnessed in the past. Commercial office spaces will likely need to be transformed to absorb the newer flexible and hybrid office models to generate incremental demand. Office spaces could also be repurposed as data centers, as Covid-19 has