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A total of 543 hospitality projects worth Dh262.77 billion ($71.6 billion) are currently under way across the UAE, thus reflecting the vibrancy of the leisure, tourism and the entertainment sectors, according to a report.
Of this, a total of 20 hospitality projects in Dubai worth $1.1 billion have moved to construction stage during the second quarter, stated the report by BNC Network, a key provider of project research and intelligence in the Middle East and North Africa (Mena) region.
The hospitality sector constitutes six 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, it stated.
Among these, three hospitality projects with a combined estimated value of $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.
Commenting on the report, Avin Gidwani, the chief executive officer of BNC Network, said: "The hospitality sector is on a roll as the countdown for Expo 2020 is closing in to three years within which all these projects will have to be ready for the massive influx of visitors."
As per 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, noted Gidwani.
"Tourism and entertainment sectors are major contributors to Dubai’s economy and remain a major focus in the government’s economic diversification plan," he stated.
According to him, four hospitality projects with a combined estimated value of $527.2 million were completed last month.
At the end of Q2, there are 367 active projects in Dubai's hospitality industry. The total estimated value of these projects is a whopping $43.7 billion, revealed Gidwani. “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,” he added.
In the second quarter, the number of hospitality projects across Dubai rose 4 per cent over the previous quarter and the total estimated value of the projects too 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," observed Gidwani.
"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," he added. “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.”
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 $108 million were completed during the second quarter in Dubai, it added.
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