The hotel sector continues to be the best performing of the Dubai real estate market as increasing tourist arrivals lead to higher occupancy and RevPAR levels (revenue per available room), according to Jones Lang LaSalle’s latest report ‘Dubai City Profile – September 2011’.
While the hotel sector has been the major beneficiary of the Arab Spring, the retail and residential sectors have also received a positive boost over the past 9 months. The regional upheaval has re-enforced Dubai’s position as a global destination with many tourists rescheduling their holidays to the UAE due to volatility elsewhere in the region. Dubai Airport is now the fourth busiest in the world, reporting a year-on-year growth in arrivals of 9.5%, equating to around 12 million visitors in the first half of 2011. Tourism was particularly strong in July, with Dubai hotels achieving an average occupancy rate of 78% – a significant improvement on the 60% recorded in July 2009. This was driven by a major increase in the number of GCC nationals visiting Dubai, up 80% compared to the same period last year.
The retail sector has also benefitted from the unrest with major malls reporting an increase in foot traffic and sales activity. GCC guests spend more on average than other visitors, although this was largely focussed in the major centres frequented by tourists such as Dubai Mall and Mall of the Emirates. The residential market has also seen an increase in demand particularly from those concerned with stability and security elsewhere in the region. However this has yet to translate into increase in rents or prices but some locations are stabilizing. The office sector has been the least affected although there has been some interest in the DIFC from international banks currently based in Bahrain.
Alan Robertson, CEO of Jones Lang LaSalle MENA said: “The Arab Spring has had a positive impact on the hotel, retail and residential sectors of the Dubai market. We believe this has helped push the hotel and retail sectors into the recovery stage and that selected sectors of the residential market are also improving. The question now is how long this impact will last before broader international issues undermine this upturn. While the Arab Spring contributed to improved sentiment and stronger performance over the first half of the year, these benefits could be limited by the fluctuating financial concerns emanating from Europe and the US over the last few months.”
He added: “The ongoing political and economic stability of the UAE is likely to continue to bring in longer term benefits for the Dubai property market. However a more sustainable recovery requires this upturn to be converted into broader economic activity that helps to boost employment, but there is little sign that this is happening yet.”