Dubai, located in the United Arab Emirates (UAE), has been experiencing tremendous growth in its tourism industry over the past few decades. The city has become an extravagant destination for tourists worldwide due to its luxury shopping, luxurious hotels, stunning beaches, and impressive infrastructure. As the tourism industry continues to grow in Dubai, it has significantly impacted the city's real estate sector.
This article will explore the growth of Dubai's tourism industry and its impact on the real estate market.
Dubai's Tourism Industry
Dubai's tourism industry has proliferated over the past few decades, with visitors increasing yearly. As per the Department of Tourism and Commerce Marketing (DTCM), Dubai welcomed 16.73 million international overnight visitors in 2019, an increase of 5.1% compared to the previous year. This growth has been driven by several factors, including the city's world-class infrastructure, excellent transport links, and attractive tax policies.
Dubai is known for its luxurious hotels, which cater to a wide range of visitors, from business travellers to families.
Dubai is home to some of the most impressive hotels in the world, including the Burj Al Arab, considered one of the most luxurious hotels in the world. Dubai's hotels are not just luxurious but also offer a wide range of amenities, including spas, restaurants, and recreational facilities, making them ideal for tourists looking to relax and unwind.
Dubai is also known for its shopping malls, which are among the largest and most impressive in the world. These malls attract visitors from all over the world who come to shop for luxury brands and enjoy the many recreational facilities on offer. The Dubai Mall, for instance, is one of the largest malls in the world, with over 1,200 retail outlets, a cinema, an ice rink, and an aquarium.
Dubai's tourism industry is also driven by its stunning beaches, attracting millions of visitors annually. The city has over 50km of coastline, with several beautiful beaches, including Jumeirah Beach and Kite Beach. These beaches provide a range of activities, including swimming, sunbathing, and water sports.
Dubai's infrastructure is also a significant factor driving the growth of its tourism industry. The city has an excellent transport system, including a modern metro system, which makes it easy for tourists to get around. The city's airport, Dubai International Airport, is one of the busiest airports in the world, with over 86 million passengers passing through it in 2019.
Impact on Real Estate
Dubai's tourism industry's growth has significantly impacted the city's real estate market. The demand for hotel rooms has increased as the number of visitors has grown, leading to a boom in the hotel industry. Developers have responded to this demand by building new hotels and expanding existing ones. According to the DTCM, Dubai has over 700 hotels with over 118,000 rooms. The city is also home to several luxury hotels, including the Burj Al Arab and, the Atlantis, The Palm, which cater to high-end tourists.
Dubai's tourism industry's growth has also significantly impacted the residential real estate market. The demand for residential properties has increased as more people move to Dubai to work in the tourism industry or to take advantage of the city's tax policies. This has increased property prices, with many investors looking to buy properties in the city.
According to the Dubai Land Department (DLD), the total value of real estate transactions in Dubai in 2019 was AED 72.5 billion ($19.7 billion). Most of these transactions were for residential properties, with the DLD reporting that residential transactions accounted for 64% of the total value of transactions.
The demand for residential properties has also increased the number of new developments being built in Dubai. Developers have responded to this demand by building new residential properties, with many of these developments targeting high-end buyers. According to a report by property consultancy firm JLL, around 70% of residential projects launched in Dubai in 2019 were in the luxury segment.
The impact of the recreational or tourism industry on the real estate market is not restricted to the residential sector. The growth of the tourism industry has also led to increased demand for commercial properties, including office and retail spaces. Developers have responded to this demand by building new commercial properties, with many of these developments targeting the tourism industry.
One example is the Dubai Creek Harbour development, built by Emaar Properties. The development will include residential, commercial, and leisure properties, including hotels, retail outlets, and entertainment facilities. The development is being built on Dubai Creek, a popular tourist destination, and is expected to become one of the city's main attractions once completed.
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Future of Dubai Tourism
Looking at the future, the growth of Dubai's tourism industry is expected to continue, with the DTCM targeting 25 million visitors by 2025. This growth is expected to be powered by several factors, including the Expo 2020, postponed due to the COVID-19 pandemic and scheduled to occur in 2021. The Expo is expected to attract millions of visitors to Dubai, with the DTCM estimating it will generate over AED 120 billion ($32.7 billion) in economic activity.
The growth of Dubai's tourism industry is also expected to be driven by several new developments being built in the city. One of the most significant developments is the Dubai South project, built near the Dubai World Central airport. The project will include several new residential, commercial, and leisure properties, including hotels and theme parks. The project is expected to be completed by 2030 and generate over AED 500 billion ($136.1 billion) in economic activity.
The impact of the growth of Dubai's tourism industry on the real estate market is also expected to continue. According to a report by property consultancy firm Knight Frank, the demand for residential properties in Dubai is expected to increase by 12% between 2020 and 2024, while the demand for commercial properties is expected to increase by 11% over the same period.
Conclusion
Dubai's tourism industry's growth has significantly impacted the city's real estate market. The demand for hotel rooms has led to a boom in the hotel industry. In contrast, the demand for residential and commercial properties has increased property prices and the number of new developments in the city.
Looking at the future, the growth of Dubai's tourism industry is expected to continue, driven by several new developments being built in the city and events such as the Expo 2020. The impact of this growth on the real estate market is also expected to continue, with the demand for residential and commercial properties expected to increase over the coming years.
