Total value of 543 active hospitality projects in the UAE reached US$71.6 billion (Dh262.77 billion) at the beginning of September 2017, according to BNC Network, the largest and most comprehensive project research and intelligence provider in the Middle East and North Africa (MENA) region.
The hospitality sector constitutes 6 per cent of all active projects in the UAE’s urban construction sector and in dollar terms these projects account for 14 per cent of the total estimated value, as per BNC Construction Intelligence.
Among these, three hospitality projects with a combined estimated value of US$194.5 million moved to construction from other stages during August. The largest hospitality project in dollar terms to have moved to construction was Portofino Hotel located in Dubai’s Europe Main Island.
“The hospitality sector is on a roll as the countdown for Expo 2020 Dubai is closing in to three years within which all these projects will have to be ready for the massive influx of visitors,” Avin Gidwani, Chief Executive Officer of BNC Network, says. “According to Dubai Government’s stated projections, the emirate will need to add 40,000 hotel rooms in addition to the existing inventory of slightly more than 100,000 guest rooms and hotel apartments.
“Tourism and entertainment sectors are major contributor to Dubai’s economy and remain a major focus in the government’s economic diversification plan.
“In order to meet the growing demand, most project owners, developers are looking at completing building their projects before October 2020 when Dubai expects to receive 20 million hotel guests as well as 25 million visitors to the Expo site”.
Four hospitality projects with a combined estimated value of US$527.2 million (Dh1.93 billion) were completed during August 2017.
At the end of Q2 2017, there were 367 active projects in Dubai’s hospitality industry. The total estimated value of these projects is US$43.7 billion (Dh160.37 billion).
In Q2 2017, the number of hospitality projects in Dubai increased by 4 per cent as compared to Q1, 2017 and the total estimated value of the projects increased by 7 per cent.
“The beauty of investment in the hospitality sector is that it offers a higher rental return than the traditional residential properties. In some cases, hotel guest rooms or hotel apartments offer 50 per cent more rental income – thus providing a total return on investment in eight years, as opposed to 12-14 years in residential asset class,” Gidwani says.
“Also for a property developer, hotels and hotel apartment complexes offer a higher recurring income that helps the company and its business to withstand the shocks of economic slowdown and to become sustainable.”
A total of 20 hospitality projects with a combined estimated value of US$1.1 billion moved to construction from other stages during Q2 2017. The largest hospitality project in dollar terms to be awarded was Terhab Hotel and Residences located in Jumeirah Village Triangle.
Four hospitality projects with a combined estimated value of US$108 million were completed during the second quarter in Dubai.