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Dubai welcomes over 1.47 mln tourists in Jan, setting a positive pace of growth: JLL


Fueled by a steady influx of tourists from three top source markets, namely, India, Russia, and Oman, the UAE’s hospitality sector witnessed a strong growth trajectory in the first quarter of 2023, according to the latest JLL UAE Real Estate Market Overview Report.
Dubai welcomed around 3.1 million tourists in the first two months of 2023, representing a 42 percent increase as compared to the same period last year. The rise in inbound tourism also benefited the lower and mid-tier hospitality segments, which saw gains between 7-8 basis points (bps) in occupancy and RevPAR (revenue per available room) of 15 percent for the first two months of the year. Moreover, Dubai and Abu Dhabi hosting events such as Gulf Food and IDEX further aided operators in delivering a formidable performance.

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Faraz Ahmed, Associate, Research at JLL MENA, said: “While all sectors continued to build on the performance of 2022, the year’s well-planned calendar of events coupled with the continuous increase in tourist numbers, have firmly placed the hospitality sector on a growth track, reaffirming its position as one of the strongest pillars supporting the UAE’s economic acceleration. However, macroeconomic volatilities continue to influence global travel trends, making it critical for operators to employ effective revenue management strategies to boost topline revenues, particularly those in the luxury segment.”
Dubai’s hotel stock climbed to 150,000 keys with the delivery of around 2,000 keys. Moreover, propelled by increased demand, around 8,000 keys are expected to be delivered in the year. In comparison, Abu Dhabi’s hotel supply completions were limited, with around 200 keys added to the existing inventory, bringing the total stock to 32,500 keys. The capital’s future supply pipeline for the year remains modest at around 200 keys.

Retail sector remains stable

Within the retail sector, around 34,000 sq. m. of space was added in Dubai in the form of community retail developments, raising the total stock to around 4.7 million sq. m. in the first quarter. Over the same period, Abu Dhabi saw the delivery of a super regional and community retail development totaling 212,000 sq. m. of retail GLA (Gross Leasable Area) which subsequently pushed the capital’s total stock to 3.11 million sq. m. In the forthcoming months, around 213,000 sq. m. of retail space is scheduled to be delivered in both emirates combined, of which, approximately 194,000 sq. m. is projected for Dubai and 19,000 sq. m. for the capital.

In Dubai, well-located primary malls outperformed the overall market in Q1 2023, with average rents increasing by 1 percent year-on-year, while city-wide average rents for primary and secondary malls decreased by 1 percent year-on-year.

Some key developments within the sector included landlords tightening lease terms with tenants, moving away from previous revenue share models, and offering little CAPEX (capital expenditure) support unless in highly exceptional cases. On the other hand, malls with near-full occupancy are restructuring spaces to accommodate more tenants and generate additional revenue. Some are also dividing large anchor stores as well as utilising other common areas to lease out additional space.

Average rents in Abu Dhabi remained stable in annual terms in the first three months of 2023. In comparison to Dubai, landlords in the capital continued to showcase flexibility, offering incentives to attract and retain tenants. Depending upon the brand, property managers are also able to negotiate offers on revenue-based deals and extended fit-out periods.

Off-plan transactions in residential sales

In the residential sector, off-plan sales began to recover in third quarter of 2022 in Dubai, propelled by new launches late last year. The trend has continued for the third consecutive quarter, with off-plan transactions outperforming existing properties in terms of value and volume, accounting for 56 percent of total value and 59 percent of total volume. This strongly indicates that both developer and investor confidence has returned to the off-plan market.

Similarly in Abu Dhabi, off-plan transactions have also been leading the market since the second half of last year, supported by a number of new project launches. According to data from Quanta, off-plan property transactions accounted for around 74 percent of the value of total residential sales. With residents preferring to relocate to developments offering modern amenities on the new islands, pressure on the prices of outdated projects on the main island continues to build. As a result, average city-wide sale prices and rental rates increased modestly by 1 percent each.

When viewed in annual terms, rents in Dubai increased by 28 percent in February 2023 with demand for large units, especially villas, continuing to push up rentals. Furthermore, in Q1 2023, a 52 percent increase in value and 50 percent in volume of residential sales activity compared to the same quarter last year have impacted sales prices, demonstrating a 12 percent Y-o-Y increase from 2022.

Residential supplies in Dubai rose by 9,800 units in the first quarter, raising the total stock to 690,000 units with an additional 32,000 units scheduled to be delivered in the year ahead. In the capital, around 1,800 units were added, bringing the total residential stock to 281,000 units. In terms of upcoming supply, Abu Dhabi has an additional 4,000 units in the pipeline for 2023.

Increased preference for Grade A office spaces

In a move to encourage employees to return to the office in the UAE, as well as attract and retain the best talent, corporates are increasingly looking to upgrade their real estate assets with a subsequent focus on sustainability and wellness. In addition, significant growth in enquiries from new market entrants and strong demand for flexible offices were also recorded in the first quarter of 2023.

Building upon the strong momentum of last year, the segment continued to perform well on the back of robust demand for high-quality Grade A spaces that can provide a healthy, vibrant, and experience-driven environment. As a result, in the first three months of the year, average Grade A rents in Dubai’s CBD rose by 16 percent year-on-year (Y-o-Y) to AED 2,140 per sq. m. per annum. Likewise in Abu Dhabi, a combination of high demand and limited stock for quality space pushed Grade A rents up by 9 percent Y-o-Y to an average of AED 1,800 per sq. m. per annum.

In addition, resolute demand has led to the fast absorption of available space within the central business district (CBD) in Dubai resulting in a drop in average vacancy to 11 percent while city-wide vacancies in the capital reached 23 percent.

The report further highlights that occupiers looking for high-quality office space are expected to face continued competition in the coming quarters, with landlords less likely to negotiate rates and CAPEX contributions.

With no noteworthy office completions across both cities in Q1 2023, the stocks remained stable at 9.1 million sq. m. in Dubai and 3.9 million sq. m. in Abu Dhabi. However, over the next three quarters, approximately 100,000 sq. m. of office space is scheduled to be delivered in Dubai and 35,000 sq. m. in the capital.

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Abu Dhabi Overtakes Oslo for Sovereign Wealth Fund Capital in Global SWF’s First City Ranking

Today, industry specialist Global SWF published a special report announcing a new global ranking of cities according to the capital managed by their Sovereign Wealth Funds (SWFs). The findings show that Abu Dhabi is the leading city that manages the most SWF capital globally, thanks to the US$ 1.7 trillion in assets managed by its various SWFs headquartered in the capital of the UAE. These include the Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company (MIC), Abu Dhabi Developmental
Holding Company (ADQ), and the Emirates Investment Authority (EIA). Abu Dhabi now ranks slightly above Oslo, home to the world’s largest SWF, the Government Pension Fund (GPF), which manages over US$ 1.6 trillion in assets. Abu Dhabi and Oslo are followed by Beijing (headquarters of the China Investment Corporation), Singapore (with GIC Private and Temasek Holdings), Riyadh (home to the
Public Investment Fund), and Hong Kong (where China’s second SWF, SAFE
Investment Corporation, operates from). Together, these six cities represent two thirds
of the capital managed by SWFs globally, i.e., US$ 12.5 trillion as of October 1, 2024.
For the past few decades, Abu Dhabi has grown an impressive portfolio of institutional
investors, which are among the world’s largest and most active dealmakers. In addition
to its SWFs, the emirate is home to several other asset owners, including central banks,
pension funds, and family offices linked to member of the Royal Family. Altogether, Abu
Dhabi’s public capital is estimated at US$ 2.3 trillion and is projected to reach US$ 3.4
trillion by 2030, according to Global SWF estimates.
Abu Dhabi, often referred to as the “Capital of Capital,” also leads when it comes to
human capital i.e., the number of personnel employed by SWFs of that jurisdiction, with
3,107 staff working for funds based in the city.
Diego López, Founder and Managing Director of Global SWF, said: “The world ranking
confirms the concentration of Sovereign Wealth Funds in a select number of cities,
underscoring the significance of these financial hubs on the global stage. This report
offers valuable insights into the landscape of SWF-managed capital and shows how it is
shifting and expanding in certain cities in the world.”

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AM Best Briefing in Dubai to Explore State of MENA Insurance Markets; Panel to Feature CEOs From Leading UAE Insurance Companies

AM Best will host a briefing focused on the insurance markets of the Middle East and North Africa (MENA) on 20 November 2024, at Kempinski Central Avenue in Dubai.
At this annual regional market event, senior AM Best analysts and leading executives
from the (re)insurance industry will discuss recent developments in the MENA region’s
markets and anticipate their implications in the short-to-medium term. Included in the
programme will be a panel of chief executive officers at key insurance companies in the
United Arab Emirates: Abdellatif Abuqurah of Dubai Insurance; Jason Light of Emirates
Insurance; Charalampos Mylonas (Haris) of Abu Dhabi National Insurance Company
(ADNIC); and Dr. Ali Abdul Zahra of National General Insurance (NGI).
Shivash Bhagaloo, managing partner of Lux Actuaries & Consultants, will his present
his observations in an additional session regarding implementation of IFRS 17 in the
region. The event also will highlight the state of the global and MENA region
reinsurance sectors, as well as a talk on insurance ramifications stemming from the
major United Arab Emirates floods of April 2024. The programme will be followed by a
networking lunch.
Registration for the market briefing, which will take place in the Diamond Ballroom at the
Kempinski hotel, begins at 9:00 a.m. GST with introductory comments at 9:30 a.m.
Please visit www.ambest.com/conference/IMBMENA2024 for more information or to
register.
AM Best is a global credit rating agency, news publisher and data analytics
provider specialising in the insurance industry. Headquartered in the United
States, the company does business in over 100 countries with regional offices in
London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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Future of Automotive Mobility 2024: UAE Leads the Charge in Embracing Digital Car Purchases and Alternative Drivetrains

-UAE scores show highest percentage among the region in willingness to purchase a car
completely online
– Openness to fully autonomous cars has grown to 60% vs previous 32%.
– More than half of UAE respondents in the survey intend to move to hybrid cars during
next car purchase, while less than 15% intend to move to fully electric car.
– UAE sees strong use of new mobility services such as ride-hailing (Uber, Careem, Hala
Taxi)
– The perceived future importance of having a car is not only increasing in UAE but is
higher than any other major region globally, even China

Arthur D. Little (ADL) has released the fourth edition of its influential Future of Automotive Mobility (FOAM) report, presenting a detailed analysis of current and future trends in the automotive industry. This year’s study, with insights from over 16,000 respondents across 25 countries, includes a comprehensive focus on the United Arab Emirates (UAE). The report examines car ownership, electric vehicles,
autonomous driving, and new mobility services within the UAE.

“The UAE is at the forefront of automotive innovation and consumer readiness for new mobility
solutions,” said Alan Martinovich, Partner and Head of Automotive Practice in the Middle East
and India at Arthur D. Little. “Our findings highlight the UAE’s significant interest in
transitioning to electric vehicles, favorable attitudes towards autonomous driving technologies,
and a strong inclination towards digital transactions in car purchases. These insights are critical
for automotive manufacturers and policymakers navigating the evolving landscape of the UAE
automotive market.”
Key Findings for the UAE:
1. Car Ownership:
o Over half of UAE respondents perceive that the importance of owning a car is
increasing, with the study showing the increase higher than any other major
region, including China.
o Approximately 80% of UAE respondents expressed interest in buying new (as
opposed to used) cars, above Europe and the USA which have mature used
vehicle markets

2. Shift to Electric and Hybrid Vehicles:
o While a high number of UAE respondents currently own internal combustion
engine (ICE) vehicles, more than half intend that their next vehicle have an
alternative powertrain, with significant interest in electric and plug-in hybrid
(PHEV) options. Less than 15% plan to opt for pure battery electric vehicles
(BEVs).

3. Emerging Mobility Trends:

o Ride-hailing services are the most popular new mobility option among UAE
residents, with higher usage rates than traditional car sharing and ride sharing.
The study indicates a strong openness to switching to alternative transport modes
given the quality and service levels available today.

4. Autonomous Vehicles:
o UAE consumers are among the most open globally to adopting autonomous
vehicles, with a significant increase in favorable attitudes from 32% in previous
years to 60% this year versus approximately 30% in mature markets. Safety
concerns, both human and machine-related, remain the primary obstacles to
broader adoption.

5. Car Purchasing Behavior and Sustainability:
o The internet has become a dominant channel for UAE residents throughout the car
buying process, from finding the right vehicle to arranging test drives and closing
deals. UAE car buyers visit dealerships an average of 3.9 times before making a
purchase, higher than any other region in the world, emphasizing the need for
efficient integration of online and offline experiences.
o Upwards of 53% of respondents from the region would prefer to ‘close the deal’
and complete the purchase of their car online, which is the highest for any region
in the world.
o Sustainability is a key factor cited by UAE consumers as influencing car choice.
The UAE scored among the top half of regions, highlighting the importance of
environmental considerations.

“Our study confirms the promising market opportunities for car manufacturers (OEMs) and
distributors in the UAE” commented Philipp Seidel, Principal at Arthur D. Little and co-Author
of the Global Study. “Consumers in the Emirates show a great and increasing appetite for cars
while being among the most demanding globally when it comes to latest vehicle technologies
and a seamless purchase and service experience.”
The comprehensive report, “The Future of Automotive Mobility 2024” by Richard Parkin and
Philipp Seidel, delves into global automotive trends and their impact on various regions,
including the UAE. This study is an invaluable tool for industry stakeholders seeking to navigate
and leverage the dynamic changes driving the future of mobility.

 

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