Dubai hotel demand forecast to rebound after sluggish 2019

JLL says pro-growth government initiatives, Expo 2020 set to lead to strong visitor growth this year

Initiatives by the government and an increased number of pro-growth initiatives over the past year will boost sentiment and drive demand in the UAE’s hospitality market in 2020, according to JLL.

Its new report said that while most sectors across the real estate market remained challenged in the UAE during 2019, pro-growth government initiatives, rising investment ahead of Expo 2020 Dubai and expansionary fiscal stances by the federal and local governments will further improve the broad economic backdrop this year.

Last year saw the introduction of several government initiatives to boost the hospitality sector, such as the exemption of the visa fee for transit passengers and a focus on increasing the popularity of Dubai in the cruise industry.

Overall, the hotel sector witnessed subdued performance in 2019, but demand is expected to recover considerably with the government initiatives set to take effect this year, and the expected strong visitor growth associated with Expo 2020 Dubai.

Other popular events such as the annual Formula 1 Etihad Airways Abu Dhabi Grand Prix in Abu Dhabi will also continue to attract international visitation to the UAE, JLL said.

“Large-scale projects, new visa rules and Expo 2020 Dubai will boost tourist arrivals in the coming months,” said Dana Salbak, head of Research MENA at JLL.

“Around 25 million visitors are expected in Dubai from 192 countries during Expo 2020 Dubai alone. These factors have ensured the hotel market, specifically, will maintain healthy performance levels, continuing the UAE’s status as a major global tourist and business destination. That said, in the year ahead, market performance will also heavily depend on how quickly some of the newly announced initiatives take effect.”

UAE GDP grew at around 1.9 percent in 2019, higher than 1.7 percent in 2018 and is expected to grow 2.2 percent in 2020. Dubai also recently announced a budget of AED66.4 billion for 2020, the largest ever annual budget approved.

“Both Dubai and Abu Dhabi, which comprise the lion’s share of the UAE GDP, are embarking on major stimulus plans to facilitate doing business, whilst continuing to attract foreign direct investment, retaining human capital and improving the overall business environment,” added Salbak.

JLL’s report also said the office market remained in favour of tenants for all of 2019 and the trend is expected to continue in the year ahead as well.

JLL highlighted that steps taken by the government to attract new tenants, such as making business conditions favourable by reducing costs and restrictions on ownerships, are expected to improve demand in the long run.

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