What impact is tourism having on the UAE real estate market?

What impact is tourism having on the UAE real estate market?

The easing of COVID-19 restrictions and increase in international visitors are two of the key drivers of growing consumer confidence in Dubai and Abu Dhabi.

In the recent months Dubai has witnessed a steady increase in the number of tourists and business travelers driven largely by Expo 2020 which recorded about one million visitors in the first month after its opening.

This, coupled with the ease of travel restrictions 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, Q3 2021 Real Estate Market Overview by JLL revealed.

How does it affect the region’s real estate market? Apart from the obvious boost to the retail sector, hospitality, hotel, and residential markets are also benefitting from increased consumer confidence as more visitors are attracted to the area.

Occupancy rates in hotels and apartments in Dubai reached 58 percent in the year-to-date August 2021. This is a notable increase compared to the same period in 2020, which recorded 38 percent occupancy levels. Likewise, over the same year-long period occupancy rates in Abu Dhabi rose by 63 percent, up by 3 percent from 2020’s levels.

An additional 10,000 keys are projected to be delivered in Q4 of this year, which indicates that the hotel market in the UAE is progressing well on its path to post-pandemic recovery.

In particular, the hospitality and tourism sectors in Dubai are benefiting from being one of the few luxury tourism destinations globally to welcome international visitors, as many countries worldwide continue to grapple with restrictions related to COVID-19. This increase in demand can be seen especially in the luxury hotel segment, as tourists whose travel plans may have previously been ruined by the pandemic are now seeing Dubai as a good location to spend their vacation.

Another factor drawing visitors to the region is Expo 2020, which is expected to attract 25 million business and tourist travelers over the six months' period from October 2021 to April 2022 it will be open.

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.

As for residential s property, Dubai’s residential stock increased by 11,000 units in the third quarter, totaling 629,000 units. 23,000 units more units are expected to be delivered before the end of 2021.

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, townhouses and villas are still in strong demand, which is continuing to drive forward the recovery in villa/townhouse sales prices. The past three months have seen increases for the apartment segment in Dubai both in terms of demand and value. In Abu Dhabi, in contrast, apartment prices have remained stagnant.

Year-on-year residential prices in Dubai and Abu Dhabi have increased by around 4 percent in Q3, showing signs of positive rebound.

As COVID-19 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.

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