Over the past few months, Dubai has seen a steady increase in the number of tourists and business travelers to the city, spurred on largely by Expo 2020 which recorded shy of one million visitors in its first month.
This, along with the loosening of restrictions on travel and freedoms in the UAE as compared to other popular tourist destinations across the globe, has contributed to a rise in consumer confidence in the region, JLL’s Q3 2021 Real Estate Market Overview report found.
What does this mean for the region’s real estate market? Aside from the obvious boost to the retail sector, increased consumer confidence in the region is also benefitting the hospitality, hotel, and residential markets as more visitors are attracted to the area, the report suggested.
“The cooler weather and the opening of Expo 2020 Dubai will see a gradual return of tourists that will provide much relief for landlords and retailers alike,” said Khawar Khan, Head of Research for the MENA region, JLL.
OCCUPANCY RATES ON THE RISE
According to the report, occupancy rates in hotels and apartments in Dubai reached 58% in the year-to-date August 2021. This is a notable increase as compared to the corresponding period in 2020, which recorded 38% occupancy levels. Likewise, over the same year-long period occupancy rates in Abu Dhabi rose by 63%; a 3% increase on 2020’s levels.
With an additional 10,000 keys in Dubai projected to be delivered in Q4 of this year, the hotel market in the UAE is progressing well on its path to post-pandemic recovery.
The hospitality and tourism sector in Dubai in particular is benefiting from being one of the few luxury tourism destinations globally to welcome international visitors, as many countries worldwide continue to grapple with COVID-19 related restrictions. This increase in demand can be seen especially in the luxury hotel space, as tourists whose travel plans may have previously been affected by the pandemic are seeing Dubai as a good location to enjoy some leisure time.
Another factor drawing visitors to the region, the Dubai Expo 2020 is expected to attract 25 million business and tourist travelers over the 6-month period from October to April this year.
The number of recently completed hotel projects across the UAE and Abu Dhabi should be in a strong position to benefit from the forecasted inflow of visitors.
YEAR-ON-YEAR PRICE INCREASES FOR RESIDENTIAL PROPERTIES
Where the residential space is concerned, Dubai’s residential stock increased by 11,000 units in the last quarter, totaling 629,000 units. A further 23,000 units are expected to be delivered before year end.
In the same period in Abu Dhabi, 2,900 residential units were delivered with an additional 2,000 expected to be completed by the end of the year.
In both Dubai and Abu Dhabi, strong demand for townhouses and villas are continuing to drive forward the recovery in villa sales prices, the report noted. In terms of both demand and price, the past three months have marked increases for the apartment sector in Dubai. While in contrast, apartment prices in Abu Dhabi have remained stagnant.
In a broader sense, residential prices in both Dubai and Abu Dhabi have increased by around 4% year-on-year in Q3, showing signs of positive rebound.
As COVID restrictions continue to loosen, large-scaled events such as Expo 2020 progress, and leisure demand from domestic and international visitors persists, there is much evidence to suggest that consumer confidence and investment in the real estate market will remain on the rise across the region.