UAE on Course for 9.8bn EUR Hotel Revenues by 2020
Profits for the UAE hotel sector are expected to increase almost two-fold over the next four years, ahead of the 2020 World Expo being hosted by Dubai, in preparation for which the Emirates have invested heavily in tourist infrastructure in recent years.
The UAE’s considerable investment in tourism has led to predictions that annual revenue is set to increase from €5.3bn in 2013 to a whopping €9.8bn by 2019.
Visitor attraction revenues are also forecast to double from €465m recorded in 2013 to more than €1.07bn over the next four years, according to a report published by Euromonitor International ahead of The Hotel and Leisure Shows in Dubai 2015 , which both opened this week.
In 2015, UAE hotel revenues are forecast to reach €6.5bn, while visitor attraction revenues will hit €570m. The UAE is the number one market in the Middle East and North Africa in terms of hotel room revenues, with over three times the amount recorded for Saudi Arabia and Egypt. The UAE also leads the region in new hotel construction, according to Christine Davidson, group event director of DMG events, organisers of the Hotel and Leisure shows.
Saudi Arabia currently leads the market for visitor attractions with €4.1bn in revenues forecast for 2015 compared with €569m for the UAE. " But with massive leisure development currently underway across the UAE including five theme parks, three major museums and two safari parks, UAE’s visitor attraction revenues are forecast to almost double to €1.07bn by 2019. As more developments enter the pipeline, including last month’s announcement of the record-breaking Meydan One project featuring the world’s largest indoor ski slope, the UAE’s future for leisure and entertainment tourism looks exceedingly good, " said Davidson.
According to a study by investment bank Alpen Capital, the UAE’s hospitality industry is expected to grow at a compound annual growth rate of 10% between 2013 and 2018. In the GCC, the sector is forecast to grow to €32bn by 2018 from €20.3bn in 2013, at an annual rate of 9.5%.
With much of UAE’s investment in tourism infrastructure taking place in Dubai, hosts of the 2020 World Expo, the outlook for the Emirate’s property market is bright and all fears that a property bubble is forming have diminished considerably. Mario Volpi, managing director of Prestige Real Estate in Dubai said: " Dubai will be heading for very positive growth between now and 2020. Predicting a property bubble is difficult but assuming all the fundamentals are in place – interest from property buyers (not just flippers), population growth, job opportunities and a continuation of infrastructure improvements, I do not believe Dubai will suffer another large-scale downturn. Corrections may come but at present there is no real threat ".
Hotel rooms are the most popular investment vehicle in Dubai’s real estate market. When asked where best to investment in the Emirate, Volpi responded: " The hotel market, as there will be a shortage of rooms, even with all the new hotels being built. The target of 20 million tourists per year will have to stay somewhere, so this new investing concept should bring about a good return from rent and capital appreciation ".
Developers are buoyed by the prospect of continued growth in Dubai’s property market. Mahesh Tourani director of Indigo Properties , a developer based in the Emirate with a number of completed developments and more in the pipeline said:
" Securing rights to host World Expo 2020 has set in motion faster-paced sale and resale activity in Dubai. This trend is expected to slowly accelerate and plateau somewhat towards the end of 2019 into early 2019. Keeping in mind the overall improvement in the world economy as well as its projected growth, the inflow of funds into the UAE from surrounding troubled nations and with Expo 2020 in the bag, the next few years are expected to see sustained growth in the city led by hotels, serviced apartments, commercial and residential buildings ".
Development activity across the UAE is presenting plenty of investment opportunity for those seeking high-quality income-generating property assets and its significantly improving tourist sector is set to underpin the security of real estate investments in the Emirates even further in coming years.
Article by +Roxanne James on behalf of Propertyshowrooms.com
