Overview

Interior design and fit out is closely tied to the overall health of the economy, and particularly the property market and hospitality sector.

The industry’s business tends to come from four markets. In order of importance, revenue value and market share, these are: hotels and restaurants; retail environments; residential interiors; commercial spaces.

Size

In 2013, the total GCC market for interiors and fit-outs was AED 33.8bn, a 28% increase compared to the previous year. (Source: Ventures Middle East)

The UAE saw the second highest share of this. Saudi Arabia overtook the UAE in 2012 as the region’s biggest market, and now has a 38 per cent share of the market compared to the UAE’s 36 per cent. (Source: Ventures Middle East)
Here in the UAE, the proportion of this spend on hotels, a key part of the market, was AED 5.5bn.

On residential projects, fit out typically constitutes around 11% of the development value. So in 2014, when around AED 102.8bn worth of residential units were completed across the GCC, approximately AED 11.3bn was spent on interior contracting and fit-outs. This reflected a strong increase in demand, as this area of the market had been static for the previous few years. (Source: Ventures Middle East)


Growth

Due to its significant for the sector, projections on the number of hotel rooms across the UAE are a key indicator of the likely health of the interiors and fit-out industry. There is obviously a huge plan to promote tourism in Dubai in the run-up to Expo 2002, with the vision of 20 million visitors by 2020. Abu Dhabi and the Northern Emirates are all also targeting significant increases in hospitality provision.

According to the latest figures, Dubai will add 4,700 rooms to its current total of 64,200 this year. This rate will jump substantially during 2016 and 2017, adding 8,400 and 8,000 rooms respectively, followed by another 5,900 rooms in 2019. (Source: JLL)

Likewise Abu Dhabi has 3,065 rooms underway for 2015. (Source: STR Global)

Opportunities

That growth is seen across all sections of the hotel market, with diversification away from the dominance of 5-star properties into more 4- and 3-star developments one particularly strong trend. As this may not require the ‘big budget’ lavish interiors so much (often provided by global brands), it does represent a strong opportunity for regional SMEs able to provide cost-effective and appealing solutions.

Similarly the residential market is seeking to widen its nature again, after a period when the focus has been on high-end villas. More affordable accommodation is now seen as in demand, again leading to opportunities for SMEs whose reputation is less about superlative design and more about successful delivery.

Finally many of the plans in the pipeline are for mixed-use developments. Fit-out companies that can combine all four areas – hotel/restaurant, retail, commercial and residential – may well be able to secure contracts across an entire development.

 

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“The opinions expressed within this article are generic. Mashreq is not responsible for the accuracy, completeness, suitability or validity of any information on this article. The information, facts or opinions appearing in this article do not reflect the views of Mashreq. Mashreq does not assume any responsibility or liability for the same.”

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