New research commissioned by INDEX estimates that the value of interior design contracting (IDC) and fit-outs within the GCC will grow by almost 90% between 2009 and 2010, with a total value in that period of US$22 billion. Two thirds of this spend will be within the UAE.
The research was carried out by leading independent research company Ventures Middle East, on behalf of dmg World Media, the organizers of INDEX, the leading interior design show in the region.
Ventures Middle East estimates that the total value of new construction projects for all sectors (hospitality, commercial, retail and residential) in the GCC with completion dates within 2009/2010 is some US$149 billion. Despite the economic recession, the UAE remains way ahead of the rest of the region, accounting for 66 percent of all new construction projects, followed some way behind by Saudi at 15 percent and Qatar at 10 percent.
IDC is the works of hard finishes – flooring, ceilings, walls etc – and is an average of 15-20 percent of the total project value. Fit-out is the furniture and fixtures, electrical, kitchen, laundry etc, estimated at an additional 5-8 percent of the total project value. The research indicates that there will be higher spending on IDC and fit-out in 2009/2010 than in 2008 – and will be worth some US$22 billion in total over the two years.
Residential construction projects are the drivers of the IDC and fit-out spend, accounting for 49 percent of the total estimated value, followed by hotels at 27 percent, offices at 19 percent and the retail sector just 6 percent.
Speaking about the research, Lu Buchanan, INDEX Show Director, said, “The research by Ventures shows that there are good prospects for the interiors industry, as we start to move out of the economic downturn. The UAE continues to be a driver for the industry, and this supports our belief that Dubai is ideally placed to become the global hub for interior design. In view of these prospects, INDEX comes at a good time, bringing together the interiors industry from across the globe.”
The report considers the four construction sectors as follows:
•Hospitality – the total value of hospitality projects within the GCC between 2009 and 2010 is almost US$20 billion, with fit-out and IDC spend at US$6 billion. The UAE takes the lion’s share, accounting for 69 percent of the value, and is entering a phase of sharp growth, with spending on IDC and fit-out set to increase by a 69% from US$1.5 billion in 2009 to US$2.6 billion in 2010. KSA hospitality projects are worth some US$2.3 billon, with estimated spending on IDC and fit-outs at US$690 million. In Bahrain, over 10 five star hotels are expected to come online between 2008 and 2010, with total IDC and fit-out value of over US$412 million.
•Commercial Sector - according to leading interior design and consulting contractors, an average of 10-12 percent of the total commercial/offices projects value is allocated for interior design and contracting and major fit-outs for office space. The total value of new commercial projects within the GCC is US$34 billion, with IDC and fit-out estimated at US$4 billion.
•Retail sector: shopping centres – the analysis includes spending of IDC and fit-out for general requirements, and not the retailers’ own spending on their outlets. Total value of retail projects with completion dates between 2009-2010 in the GCC is US$5 billion, with spending on fit-out and IDC at US$1.3 billion. Within the UAE, the most recent addition to Dubai’s retail sector was Dubai Mall, which opened in 2008 with a GLA of 344,000 sqm.
The Mall of Arabia is due to open in 2010 with a GLA of 400,000 sqm. Total value of UAE retail projects is US$2.6 billion, with fit-out and IDC estimated at US$644 million. In Qatar, Doha currently has 700,000 sqm of retail space, which is expected to increase by 1.1m sqm in the next 5-6 years. It is likely that a sizeable amount of that new supply will enter the retail market between 2009 and 2010, with projects valued at US$313 million, and IDC fit out at US$79 million. The KSA’s estimated GLA of 2.4 million sqm is expected to be complemented by another 4 million over the next 5 years. Retail sector projects worth over US$1.4 billion are expected between 2008 and 2010, including the mega Central Park Mall in Jeddah costing around US$1 billion.
Estimated spend on IDC and fit-out on KSA is US$362 million. In Bahrain, around 18 malls supply the market, with 280,000 sqm of GLA, and retail mall space is expected to double between 2008 and 2012. The value of new malls in 2009/2010 is US$113 million, with fit out worth US$28 million.
•Residential Sector - Project Developers typically do not spend generously on IDC for residential projects, as this is something usually covered by the end-user. According to industry experts, 10-12% of total project value can be estimated for interior design. In the GCC, total residential construction projects in 2009/2010 are estimated to be worth US$90 billion, with US$10.8 billion on IDC and fit-out.
In the UAE, Dubai has an oversupply of residential units, but Abu Dhabi is estimated to require over 120,000 additional units by 2012. It is thought that the period 2008-2012 will see the supply of high end residential properties that will require high end Interior design, with the middle income segment remaining unmet until 2012. Total residential developments in the UAE are worth US$60 billion, with an estimated US$7 billion spent on interior design. In the KSA, project spending is expected to pick up significantly in 2010, and the estimated total value of residential projects is US$13.1 billion, with US$1.6 billion on IDC and fit-out.
In Qatar, Doha will continue to experience strong residential demand over 2009 to 2012, and it has US$9.3 billion projects to be completed between 2009 and 2010, with a conservative US$1.1 billion estimated spend on fit out. Kuwait has US$1.4 billion worth of projects, with US$166 million spend on interior design; total residential projects in Bahrain are expected with a value of US$5.5 billion, with IDC and fit-out at US$656 million; and Oman has residential projects worth a total of just under US$1 billion, with US$128 million fit out.