Hotel Market Continues Recovery As The UAE Gears Up For Expo 2020 Dubai

The UAE hotel market is continuing to experience signs of recovery and will see an additional boost later this year with the delivery of new supply into the market and the arrival of tourists from all corners of the globe for Expo 2020 Dubai, according to JLL’s latest UAE Real Estate Market Performance report.

In readiness for the arrival of international visitors for the showpiece event, Dubai will add an additional 12,000 keys over the second half of the year to cater for increased demand and the gradual return of travel following the impact of the pandemic on the hotel industry.

JLL says the city’s new supply includes a host of four-star hotels, which makes up the majority of projects that are under construction (49%), along with a number of new five-star properties (37%).

“The balance between four and five star hotels comes as no surprise and is in line with Dubai’s expanding tourism base,” said Dana Salbak, Head of Research, MENA at JLL.

“Offering more mid-segment and affordable hotel stays without compromising on quality has been a part of Dubai’s strategy to attract visitors from various destinations and comes in light of the high visitation numbers that are anticipated for Expo.”

The report also shows how hotel occupancy levels in Dubai have steadily improved this year, recorded at 58% in year to (YT) May 2021, compared to 46% for YT May 2020.

Similarly in Abu Dhabi, occupancy levels have improved slightly from 60% in YT May 2020 to 61% YT May 2021. However, Average Daily Rates (ADRs) still face pressure in the capital, declining by 7% to reach USD 89 for YT May 2021.

UAE operators also continue to offer staycation deals to capitalise on domestic tourism demand, while international tourism remained limited due to the pandemic.

“We can expect this trend to continue for the short to medium term until further easing of travel restrictions are successful in opening key source markets, particularly ahead of Expo 2020,” said Salbak

In retail, the report highlights how in some cases retailers are turning away from the traditional ‘brick and mortar’ and are resorting to pop-up retail store concepts, partnering with online shopping and delivery platforms to increase revenue deals.

The move is an attempt to revive retail centres and ensures flexibility, with the market witnessing various pop-up stores and specialty, unique concepts across malls that brings benefits for customers, retailers and investors.

Meanwhile in residential, the month of June has turned out to be one of best months for transactions in Dubai. The month registered over 6,300 sales transactions with a value of AED 14.76 billion. This is the highest recorded transactions in a month in terms of volume since 2014, according to the Dubai Land Department (DLD).

As seen at the start of the year, the residential market continues to see increased demand for good quality villa stock, which has led to a 10% increase in prices for Dubai and 6% for Abu Dhabi when compared to the same period last year.

In office, an additional 70,000 sqm and 18,000 sqm is expected to be delivered over the second half of the year in Dubai and Abu Dhabi, respectively.

There has also been an increase in enquiries from international companies looking to set up their businesses in Dubai. The high demand follows the successful vaccination drive and relative ‘return-to-normal’, coupled with its more recent investor-friendly regulations.