UAE’s interior design market is emerging stronger from the pandemic
The UAE real estate sector was quite resilient against the pandemic headwinds. Later, the sector made a swift recovery to pre-pandemic levels. It follows, therefore, that associated sectors, such as interior design, have been quite resilient too. This is precisely how it has panned out — a large number of properties have since reached the handover stage of development, resulting in a boom in the fit-out and interior design markets.
The tailwinds behind the boom
Reputed interior designers and architects are seeing runaway growth, with a rebound fuelled by the highest property sales in 12 years(1). Everywhere you see, new offices, hotels, ultra-luxurious residences, and so forth are being developed and remodelled, with interior designing constituting a sizable portion of the total activity. But what is causing this boom?
It is mostly the buoyancy in the real estate market that is setting up the interior design sector on a steep upward trajectory. So good is the going that this level of frenzied activity — high demand for interior decorators, architects and associated personnel, stiff competition among decorators, and rampant poaching of staff — has not been witnessed since 2014 when the last boom happened. Interior decoration firms are, literally, hiring people on a weekly basis, but are still understaffed, leading to delays in turnkey handover.
Another reason is that the UAE has handled the COVID-19 crisis really well, reassuring construction companies to continue their activity. In fact, several companies are migrating to Dubai, as they recognise the potential of the city and the benefits it has to offer — which include a burgeoning economy and an entrepreneurial zeal in the business ecosystem.
The interior design market is closely tied to the overall health of the economy. The UAE was hailed as the most competitive economy in the Middle East and North Africa (MENA) region in 2022, as per the IMD World Competitiveness 2022 Report released last month(2). The Emirates was ranked 12th globally in the latest report, ahead of the world’s major economies such as Canada, Germany, China, Australia, Austria, UK, South Korea, France, New Zealand, Japan, and others.
Several construction projects across the GCC region are set to be completed in the coming months. These include commercial sector projects related to retail, education, wellness, and hospitality. Many of these are expected to fuel the demand for interior design.
An increase in office CRE supply in the two major cities, Dubai and Abu Dhabi, is expected to account for the majority of the demand. Besides, residential construction is seeing a major uptick, further adding to the demand economics of the interior design and fit-out market. The heightened awareness of liveability and optimum spatial utilization, developed following the pandemic-induced lockdowns, has necessitated interior design in the residential sector.
Overall, the interior design market is expected to register an annual average growth of 3.9% between 2022 and 2025. Interestingly, before COVID-19 hit the world, UAE’s interior fit-out market was estimated to reach $973 million by the end of 2022, as per the Index Interiors Market Report(3) by Ventures Onsite. The trends indicate that the market is going to exceed the projections.
Governmental efforts, too, have been consequential in driving the sector’s growth. Developments such as the Expo City Dubai — the repurposing of the Expo site — are a good case in point. When the development of full-scale cities is underway, the growth in the interior design segment is a naturally accompanying aspect. In addition, the timely emergence of PropTech has further led to new value propositions and possibilities.