Dubai’s hotel and retail sector expansion strategy that overlooks short-term growth concerns is spot on — the city will need all of the extra capacity once the visitor numbers start heading up again.
Overseas visitors who had an overnight stay spent an estimated $4.7 billion in Dubai’s restaurants and cafés, while the corresponding spending on retail amounted to a whopping $9.7 billion, the research finds. These numbers easily overwhelm those racked up by the F&B and retail sectors in 11 other global cities. The closest any city came to Dubai in terms of retail spending by overseas visitors was London with $9.23 billion and New York ($4.57 billion). On F&B related transactions, New York’s came in second with $3.5 billion.
“Every year, $36.75 billion of revenue flows into the accommodation sector of just nine cities from international visitors alone,” the “12 Cities” report notes. “The biggest recipients of this revenue is Dubai, followed by London, Paris and New York.
“These fundamentals point to where the healthiest revenue levels and growth might be found in cities where supply is limited.”
Dubai recorded an average of 160,649 overnight visitors a day, but the runaway leader in this category is New York with 573,699, London (416,193) and Tokyo (390,411). Dubai had 15.27 million overnight visitors coming through this yeaR.
So, for developers and investors alike the message is clear — keep adding to those hotel rooms and retail outlets in Dubai, according to CORE.
Based on recent market activity, developers do not seem to be holding back — Nakheel, Emaar, Damac and Deyaar have kept expanding their hospitality portfolio in recent months, either through pure-play hotels or via serviced apartments. The residences at the latest Address hotel (the high-end brand owned by Emaar) went on sale recently, while Nakheel is expected to announce its hospitality partner for the super-premium Palm 360 shortly. The launch of the multiphase Jumeirah Central cluster will create its own requirements for a range of hospitality options. Plus F&B and retail offerings.
“It’s not just the market for hotels and hotel land upon which international visitors have an impact,” said Yolande Barnes.
“Across nine top global cities, annual food and beverage spend by international visitors totals at least $21 billion a year and shopping accounts for $38 billion.
“Restaurants, bars, cafés and shops are significantly impacted by these revenue inflows so ensuring that there is enough space to accommodate visitors is therefore not just imperative for the hotels sector, but also for the wider city economy.”
Hotel investors follow the money
DUBAI: There is a shift in investor appetite for hotel assets, with a lot of it coming from Asia and directed at deals in Europe over the last 12 months, Saville says. “The three transactions to have concluded in London post the EU referendum have all gone to Asian domiciled money, while China Life has just invested nearly $2 billion into a select service portfolio of hotels in the US alongside Starwood Capital,” said George Nicholas.
“We continue to receive significant interest from Asian investors, particularly those from China and Hong Kong, for hotels in London and across Europe’s gateway cities.”