Strong real estate leads to growth of travel industry, says Dr Martin Berlin of PwC Middle East

The fast development in the true property and journey trade has offered alternatives for one another, as the true property market facilitates simpler entry to new locations, while the journey trade will increase demand within the residential sector.

Navigating this panorama is Dr Martin Berlin, companion for world offers and actual property chief for PwC Center East. Primarily based in Dubai, Berlin leads the corporate’s actual property and building practise within the Center East. 

With over 12 years of expertise working in senior technique and operational positions at actual property growth corporations within the Center East, Berlin can be actively concerned within the International Deal Origination (GDO) initiative. The GDO goals to current customised deal alternatives to a focused listing of world buyers.

As a decide for the upcoming Travel Trade Excellence Awards 2024, Berlin mentioned the expansion of the true property and journey industries within the Center East and the way their connections profit one another’s success.

How would you assess the efficiency of the Center East actual property trade prior to now yr? In flip, how does this have an effect on the efficiency of the journey trade within the area?

The efficiency of the Center East Actual Property markets continues to be strong with important development throughout numerous sectors. In keeping with the Dubai Land Division, we now have seen a 30% enhance in transactions within the Dubai residential actual property market from 2022 to 2023, reaching a price of AED 19.7b with off-plan transactions dominating the market indicating sturdy investor confidence in future developments. 

Regardless of challenges corresponding to excessive rates of interest, inflation, geopolitical tensions, and indicators of recession in main world economies, the Center East actual property market is experiencing a optimistic pattern. Different Center East markets like Saudi Arabia additionally present sturdy development within the space of growth and are making ready laws to additional open their markets for broader international direct funding. 

The hospitality sector additionally exhibits sturdy development, with important growth exercise in Saudi Arabia with initiatives just like the Pink Sea International, the Diriyah Gate growth, NEOM, and others. All sectors, from resorts and resorts to serviced residences and branded residential properties, are experiencing strong growth exercise, with quite a lot of new merchandise getting into the market. 

The exercise in actual property growth will definitely result in additional development within the journey trade within the Center East, which is additional supported by further and simpler visa rules. Furthermore, the expansion of Center Japanese airways and their world networks is facilitating simpler entry to those new locations. With the enlargement of their routes and bettering their providers, they’re making the area extra accessible to world travellers. 

How can the Center East actual property and journey industries guarantee a extra mutually helpful relationship? What can they contribute to one another’s success?

To reiterate, the sturdy growth exercise in the true property market is in flip resulting in the expansion of the journey trade, which exhibits the linkage between each sectors; vice versa, the residential sector can even profit from the expansion within the journey trade as a result of the rise in employment within the journey and hospitality sectors will result in elevated demand within the residential sector, with further helpful results on different actual property sectors like workplace and retail as properly.

One other vital contribution to the expansion of the Center East journey trade is the event of the leisure & leisure trade, offering increasingly more points of interest and locations for travellers. Dubai Park & Resorts, Yas Island Abu Dhabi, and AlUla as locations and the rise of worldwide sports activities and leisure occasions are proof of this development.

Having labored on feasibility research for hospitality growth initiatives within the Center East, what are a number of the most typical areas for enchancment do you discover amongst these initiatives, and the way can corporations work round these? 

With the fast development of the true property and hospitality sectors within the Center East over the previous twenty years, growth exercise and investor curiosity have elevated exponentially. This has put the highlight on effectivity and governance. Sure facets  of environment friendly growth and good governance that hospitality builders and operators can concentrate on are as follows: 

Know-how: Technological developments in building have eradicated a number of development-related dangers. Builders want to include the usage of expertise of their planning and implementation to keep away from dangers associated to high quality, timeline for supply and governmental approvals. 

Venture financing: Get venture financing in place earlier than commencing building.  Over-leveraging is one other problem that must be averted. Stalling initiatives as a consequence of mismanaged venture financing is dangerous for builders, buyers, and the hospitality sector at massive. 

Interact stakeholders early within the sport: Venture stakeholders corresponding to operators,  contractors, financiers, advisors, and so forth. must be engaged through the early phases of growth. Their skilled enter may turn out to be the deciding issue between the success and failure of a venture. 

Environmental, Social, and Monetary Sustainability: There’s a concentrate on making actual property/hospitality developments environment-friendly. While this theme is anticipated to develop and turn out to be mainstream sooner or later, builders and operators should interact with native communities and take part in social initiatives to garner neighborhood help for the venture. Monetary sustainability could be attained by means of environment friendly operations, money circulate administration, and capital construction administration. 

One dimension doesn’t match all: Determine your goal clients and incorporate their wants and sensitivities into your growth and operations. Joyful clients are repeat clients; repeat clients price much less to acquire than new clients.

Personalised providers: The idea of personalisation of providers within the hospitality trade is as previous because the trade itself. Nevertheless, some builders and operators haven’t totally leveraged expertise and prioritised cost-cutting over buyer expertise. The usage of expertise to chop again on wasteful expenditures and improve again workplace effectivity is fruitful; nonetheless, when such practices infringe upon buyer experiences and luxury, the general influence on the venture’s sustainability is damaging. Be even handed in the usage of expertise. 

Asset Administration: A devoted concentrate on asset and property administration can enhance the asset’s life and investor returns. This important facet of worth optimisation is commonly uncared for. Interact skilled asset managers to attain your growth and monetary targets. 

Together with your in depth expertise in consulting and technique, what alternatives do you see for the Center East journey trade within the close to future, and the way ought to corporations maximise these areas? 

The businesses in the true property, hospitality and journey sectors within the Center East are already properly established and on high of their growth initiatives. Nevertheless, there’s room for development within the residential market, significantly relating to worldwide investments. To draw extra world investments, these markets have to refine their rules. This is applicable to each institutional and retail investments, that are already exhibiting sturdy development. Institutional buyers, specifically, are searching for a bigger choice of high-quality belongings that meet their requirements. Increasing this portfolio of investor-grade properties is essential for enhancing market liquidity. 

As a decide on the TDM Journey Excellence Awards 2024, what particular qualities are you going to search for within the entries by way of potential and influence on the journey trade? 

On this yr’s journey excellence awards, I’m significantly searching for three particular qualities: 

Innovation – The journey trade wants extra innovation to make sure a seamless buyer expertise and journey adjusted to all totally different goal teams, from particular person travellers to households and enormous teams. 

Providing – The providing must be a complementary addition to the at present obtainable providing, offering the journey viewers with an enchancment of their journey expertise. 

Sustainability – The facet of sustainability will turn out to be extra vital within the journey trade; subsequently, new ideas in addition to present choices have to combine the standard of sustainability into their choices to make sure long-term influence throughout all dimensions.