1. UAE Inflation rate is rising even though there is increasing government incentives to buyers is driving the residential real estate market of UAE, despite the rise in prices
Trends and Developments in UAE on-demand home services
- Average prices of houses in Dubai increased by 9.3% in 2021, while average rents increased by 8.3%, as compared to 2020. In 2021, a total of 37,403 new units were delivered. Average prices in Abu Dhabi increased by 1.6% in 2021 while rents in the residential market fell by 1.4%. A total of 5,435 new units were delivered.
- Reasons of increasing demand for residential real estate in UAE despite of increasing prices of properties:
- Government incentives such as special investor and retirement visas, golden long-term visas, as well as the reduction of the loan-to-value (LTV) for first time homebuyers to 20% by the UAE Central Bank, low interest rates and competitive mortgage products gave a boost to the industry.
- Increase in the number of transactions in the residential real estate market, indicates an increase in the demand for On-Demand Home Services in UAE. Cleaning, Repair and Maintenance, Moving in/out services would be in high demand with shift in the number of households.
Industry has evolved from offering home services through classified platforms to providing on-demand home services through marketplaces.
2. 70% marketplaces have adopted Lease type business model to ensure quality services to its customers
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Types of business models adopted by Marketplaces to partner with Service Providers
- Lease Model –. Around 70-80% of marketplaces are taking up this business model, for example Justlife and Urban Company.
- Open Market Model –The marketplace charges a commission to the service providers on each booking made by the customers. For example, Mr.Usta.
Benefits to service providers for partnering with On-Demand Home Services
- They get to promote and sell their services to a huge network of buyers.
- Expand their business and grow as a company and earn extra revenue.
Benefits to customers for using On-Demand Home Services
- Access to services at home, when there are no local service providers in the vicinity; multiple payment options with data security and safety.
- In-app chat with local vendors and get local vendor details.
3. Impact of COVID on demand and user preferences in the On-Demand Home Services Industry in UAE
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Pre-COVID Scenario
- Around 70% of households had full time maids/cleaners who would take care of the entire house cleaning.
- Individuals preferred going to salons/beauty parlors for beauty services.
- Less than 20% of people actually availed these services online through marketplaces.
- Repair and Maintenance services contribute only ~10% to the industry.
- Majority of the apartments in UAE have fixed maintenance contracts with a particular service provider.
- Other services were not that popular in the pre-COVID times. Moving/Packing services has always been in demand but the number of bookings for these services is very low.
Post COVID Scenario
- Number of full time maids reduced post COVID; people preferred getting cleaners on demand through marketplaces or service providers.
- Also, with increase in the awareness of hygiene and sanitation, demand for cleaning services rose post COVID.
- The scenario for Repair and Maintenance services has not changed much as compared to the pre-covid scenario.
- Due to the fall in residential house prices/rents during COVID, people have started shifting to bigger houses; leading to increasing in moving/packing services and other home services.