Moving away from oil dependency — this has been one of the savviest executive decisions taken by the United Arab Emirates (UAE) government in the recent past, enabling it to shake off the effects of global slowdowns and propel the economy toward uniform growth and stability.
Gauging the limitations of an oil-backed economy in advance, the country instead focused on tourism and hospitality industries as its primary sources of revenue. This difficult decision proved to be a billion dollar move for the UAE, which saw the country making a strong impression on the international tourist radar.
The UAE has achieved economic growth in leaps and bounds, which has ultimately streamlined business activities in the real estate sector.
But the real turnaround of fortunes for the country has been made possible by its constantly transforming tourism and hospitality industries, which in turn, have propelled the UAE’s property market to new heights.
UAE property portal Bayut.com (where I am the editor) reported rental yields as high as 10 percent in some areas of Dubai and Abu Dhabi. These numbers work well for both investors, who gain from attractive rental income, and long-term tourists, who enjoy the perks of life in Dubai at a fraction of rental costs in other global cities.
Airport facilities supporting a growing tourist base
By the end of 2015, the Dubai International Airport hosted around 78 million passengers and expects to host almost 85 million passengers in 2016. To cater to a constantly growing tourist base, authorities recently inaugurated the Concourse D facility to enhance the airport’s capacity to host more passengers while managing 70 international airlines.
The facility is in line with the government’s decision to take initiatives to attract over 20 million tourists a year by 2020.
The rising number of tourists means that the government needs to provide proper accommodation facilities. Property developers have been quick to sense the future demand for facilitating such a large number of people and announced the launch of various hotels and residential units across the UAE, especially in Dubai and Abu Dhabi.
Settling down the visitors
On a global scale, Dubai stands shoulder-to-shoulder with famous international tourism destinations such as London, Singapore, Hong Kong and Bangkok. Still the Emirate leads by miles in one department — service quality. It has set itself apart by offering some of the most unimaginable hospitality standards and luxuries in the world, which leaves visitors craving more.
Recently, Dubai-based property developer Nakheel announced the launch of 10 new hotels across the Emirate to benefit from its tourism boom and the expected 25 million visitors due to arrive for Expo 2020.
By that time, the population of Dubai is also expected to swell up to 3.2 million people; more units have to be developed, which will ultimately benefit the realty sector.
New tourist spots proving healthy for Emirati real estate market
The UAE government has managed to extend the reach of its tourism and hospitality industry to other parts of the country, apart from only investing in Dubai.
Abu Dhabi will be building a Warner Bros-themed destination on Yas Island at an estimated cost of $1 billion, due for completion by 2018.
Dubai, as always, refused to be left behind in the development spree and will launch some amazing landmarks of its own. Two notable ones are the Dubai Opera and Dubai Frame. The latter will provide visitors with unmatched views of old and new Dubai from the top of a single building.
Moreover, Al Ain has also joined the elite Emirati list of tourist destinations by coming up with a mind-blowing development in the shape of the largest man-made Safari park. The park will be spread over 217 hectares of land and will have 250 animals.
Ras Al Khaimah has also made a mark on the tourist radar after the hill station got its own protected climbing route, via ferrata on Jabal Jais, the highest mountain in the country.
The upcoming tourist attractions will certainly lead to a flurry of development activity in the realty market and create jobs that attract expat talent from across the world. The eventual rise in working population will lead to a greater demand for housing units and help the real estate market ride another wave of value appreciation.
Azam Mahmood Butt is the editor at Bayut.com, the UAE’s leading real estate portal.