According to analytical research, hotel real estate in the UAE ranks 1st in the world in terms of construction rates, confidently surpassing even Turkey. Dubai, which is the most popular tourist destination, has a leading position. Abu Dhabi is in 2nd place in terms of the number of hotel rooms being built. Foreigners can own property in the UAE on an equal footing with local citizens. At the same time, not only houses and apartments in Dubai or other emirates can be considered as profitable investments, but also commercial real estate.
Introduction
Hotel real estate in Dubai remains a potentially profitable investment facility. The yield starts from 8% per annum. The final amount of profit depends on the specific building, its prestige and comfort. Let’s look at how to buy a hotel room in the property and what to consider when planning an investment.
The importance of hotel real estate for the UAE economy
Hotel real estate plays a significant role in the economy of the United Arab Emirates and influences the financial growth and development of the country. Here are a few basic aspects of significance:
- Hotels attract millions of tourists every year. This is an important source of income for the country, including money spent on accommodation, food, entertainment and additional services. Tourism contributes to the diversification of the UAE economy and promotes sustainable growth.
- The tourism industry is inextricably linked with the field of additional services. The business provides a significant number of jobs for the indigenous population and foreign specialists. These are not only vacancies in the service sector, but also employment options in management, construction and IT.
- The construction of hotels in order to attract tourists further stimulates the development of infrastructure. To ensure high-quality service for vacationers, it is necessary to scale roads, transport system and other facilities. This attracts investments in infrastructure and has a beneficial effect on the country’s economy.
The role of the hotel sector in attracting investments
The construction and operation of hotel facilities attract not only local but also foreign investments. For foreign investors, such a format is convenient due to its profitability. Not everyone can buy a hotel in the UAE, it requires significant injections of money and business control. But the purchase of a separate room within the framework of an actively working and well-established system does not require significant expenses and completely frees you from the need to take additional actions to look after housing. The management company of the hotel takes care of all issues. As a result, everyone benefits: the state receives third–party investments, and the owner receives a stable income.
The current state of the hotel real estate market
The hotel real estate market in the UAE is in continuous development. Popular resorts in Dubai, Abu Dhabi and other emirates attract tourists and investors. There is a constant demand for a variety of real estate categories in Dubai, ranging from hotel rooms to luxury villas. All types of residential and commercial stock are in demand. Demand is particularly high in popular tourist areas such as Downtown Dubai, Palm Jumeirah and Dubai Marina.
Analysis of current supply and demand
According to Faisal Durrani, head of Middle East research at Knight Frank, the UAE’s room stock continues to expand, helping to support cities such as Dubai and Abu Dhabi. According to the Tripadvisor portal, for two years in a row, the metropolis has become not only the most popular destination on the planet, it has also been awarded for the highest occupancy rate in the world in the first half of 2023, which amounted to 78%. The active interest in this industry from large companies opens up wide opportunities. Investors can choose not only a separate unit, but also buy a hotel in Dubai completely.
Significant players in the market
The giants of the construction industry are actively involved in the construction of units in the hotel sector. Accor is in a leading position, offering 71,820 existing rooms and planning to complete the construction of another 49,510 apartments by 2030. It is followed by Marriott International with 63,790 existing rooms and 52,790 planned ones. IHG Hotels & Resorts is in 3rd place with 35,140 current rooms and 22,120 under development. Also among the top 5 are Hilton Worldwide with 33,450 rooms and 39,860 design rooms and Radisson Hotels, offering 22,830 rooms and planning to build another 11,651 units.
Infrastructure projects and tourism development
Infrastructure projects play an important role in the development of tourism in the UAE and have a significant impact on the increase in the number of rental properties. Using the example of Dubai, one can clearly trace this relationship. In the last few years alone, many innovative projects have been implemented in the megalopolis, including:
- The Expo 2020 exhibition in Dubai (Dubai Expo 2020), which was postponed to 2021 due to the COVID-19 pandemic and has become one of the most anticipated events. A special exhibition complex was created in the city, which included pavilions from different countries and an infrastructure for events.
- Dubai Creek Tower. This project is a building that should become one of the symbols of the city due to its unprecedented height. While the tower is under construction, in the future it will attract the attention of tourists with its architecture and spectacular views of the city.
- Museum of the Future. It was created as a place to showcase the innovations and technological achievements of the future. The museum also promotes cultural and scientific tourism.
These are just a few examples of the city’s changes. The expansion of the metro and the public transport network of the megalopolis also indicates the development of infrastructure that has a beneficial effect on the tourism industry.
The impact of infrastructure projects on the growth of hotel real estate
The direct link between the development of infrastructure and the hotel sector is to increase the tourist flow. The more tourists there are, the higher the demand for housing. For investors, these are the prospects of stable income from renting out real estate.
Investments and opportunities in hotel real estate
Buying a hotel room in the UAE can quickly recoup costs. In large cities there are facilities of different classes: from luxury 5-star hotels to economical options. Investors can choose among different market segments depending on their financial capabilities and strategy.
The attractiveness of the UAE for investors in the hotel sector
- A stable source of income.The number of rooms is always in demand.
- Ease of making a profit. In this situation, the owner is free from any actions. The apartments are managed by the hotel administration, which eliminates the need for maintenance and tenant search.
- The opportunity to expand the investment portfolio. Investments in real estate are potentially profitable, as it is steadily becoming more expensive. You can buy a hotel room and resell it profitably in the future.
Various forms of investment and their features
For those who plan to buy a hotel in the UAE or a room, there are several strategies for generating income:
- A guaranteed return program. In this case, the hotel provides the buyer with a guaranteed return and undertakes to pay a certain percentage of the profit. Trust service is provided for a fee. For example, if the net profitability of a hotel is 12%, the management company can take 7% of the commission and guarantee the investor a 5% return.
- The non-guaranteed return may be higher, but it is associated with more serious risks. The market is directly affected by economic crises, natural disasters and world events.
Conclusion
Commercial facilities in the UAE related to the tourism sector have high investment potential. To all those who are thinking about how to buy a hotel room in the property, or are considering buying a house in Dubai, we recommend visiting our portal. Over 100,000 ads for the sale of residential and commercial stock are collected in one place. Managers are ready to advise on all issues related to the UAE real estate market and suggest how to buy apartments in a hotel most profitably.
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