UAE's 'build it and they will buy' days are over
Consumers are steering clear of core and shell developments
Developers in the UAE are being warned to pay closer attention to consumer demand if they hope to sell or rent off the space in the multitude of new projects coming online in the country, senior industry observers say.
"Developers have been building 'outside in' - that is, for the look of the property rather than the efficient use of the interior floorspace," Cluttons Abu Dhabi associate director Harry Goodson Wickes told Arabian Business during the Cityscape Abu Dhabi exhibition.
"This was all fine when supply is limited and demand is high, but as more discerning occupiers look at the new supply line in the market, they will be attracted by more functional usage."
The Cluttons director added that if a building has been built more efficiently, the service charge is likely to be lower, which is again an attractive proposition for occupiers.
"What we are saying to developers is that you need to cut up your floorplate to match demand in the market," Colliers International regional director Ian Albert pointed out.
"You have to provide a service and a product that people want; it's no longer a 'build and they will take it' market."
Albert indicated that the abundance of shell and core office space available to consumers was fine in a cash-rich market, but that occupiers were now looking to save the money they would once have spent on fitting out.
"The advice to clients is that it's better to take the cost of fit-out and put it into the building itself, as the finance loan for that building is over ten-fifteen years and is a lot easier to swallow," Albert said.
For their part, developers argued that they were listening to the new market dynamic.
"Things are changing - people don't just want three or four bedroom properties, they want one or two bedrooms maybe," said Aldar marketing director Ousama Ghannoum.
"We are definitely listening to demand."