How hospitality is reshaping Dubai’s real estate landscape

The UAE’s real estate market remains a subject of keen interest to investors, owing to its continuously ambitious expansion and advancement.

Over recent years, the sector has garnered global attention, leading Henley & Partners’ new global real estate index in 2022 accounting for factors including investment attractiveness and quality of life.

In Dubai, the real estate sector accounts for 8.2 per cent of the emirate’s gross domestic product (GDP).

Further growth potential is underway as Dubai’s 2040 Urban Master Plan comes to life, coupled with incoming flows of foreign direct investment (FDI) to the Emirates in 2023, a major share of a $66bn flow targeting the Middle East, North Africa and Pakistan (MENAP).

A thriving city for long-term residents and a prime investment for domestic and international investors, Dubai has also cemented itself as an inspirational global tourist destination.

Part of the wider ‘Experience Economy’, hospitality across the emirate has flourished, registering the highest hotel occupancy rate in 15 years by the end of the EXPO and booming into $29.4bn in 2022.

Driven by iconic tourist attractions including urban marvels like the tallest building in the world, mammoth aquariums, and indoor ski slopes, bustling cultural districts and reimagined lost cities, the emirate continues to make its mark in real estate development.

Dubai’s vision

The emirate’s vision to be the most visited city in the world by 2025, targeting over 23 million visitors per year, is set to be another ambitious milestone for the city’s hospitality sector. Developers have been quick to respond to the surge in demand across the country with investments amounting to $32bn queuing in 2023 to drive the sector and, in turn, reshape the real estate landscape.

These investments will target the addition of more than 48,000 hotel rooms across the country, around 25 per cent of current inventory, ideally positioning the Emirates to achieve its goals.

In Dubai, developers have increasingly shifted their efforts into developing hotel rooms and vacation rentals across a diverse range of accommodation options, from budget-friendly hotels to luxurious resorts.

The hospitality industry’s impact on the emirate’s real estate can also be seen in the number of properties being developed for short-term rentals driven by new work-place policies and increasing demand for staycations and affordable luxurious private vacation rentals.

While a number of developers have pursued construction, others have refurbished existing prime location rental units, converting them to fully serviced holiday rentals.

The growing stature of Dubai as a tourist destination is redefining developers’ strategies, from focusing on hotels and vacation rentals to ensuring the new releases are fit-for-future, equipped with the latest technologies, to accommodating customer preferences and adhering to the country’s sustainability agenda.

Industry leaders have continued to develop a stronger understanding of the market’s needs as they navigate the future, accounting for evolving customer demographics and preferences, taking into consideration the various reasons that attract travellers to the emirate from leisure to business – demanding personalised experiences – while also seeking opportunities within infrastructure development to accompany the boom.

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai has repeatedly iterated the importance of the emirate’s ability to develop a compelling value proposition backed with innovative new offerings as the emirate basks in the success of the recently hosted Expo but also as it prepares to host numerous events and exhibitions including COP28 and more.

Ultimately, property investment across the emirate is attracting more interest than ever before, rapidly evolving to reflect the underlying sectors’ performances as the emirate and nation become strategic business, trade, innovation, and tourist hubs and for developers, insight, readiness and agility in execution will be paramount.

Anwar Atari is the acting chief executive officer at Al Ghurair Properties Residential & Commercial

Also read: Dubai receives 14.36 million international visitors in 2022