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Dubai: The UAE has 55,000 luxury four and five star hotel rooms that will be completed in the next five years, according to a leading real estate investment and consulting firm.
The hotel division of Jones Lang LaSalle, a Chicago-based firm that recently created a presence in Dubai by purchasing local firm RSP Group, said Dubai is leading the market with the confirmed development of more than half of all projects, followed closely by Abu Dhabi.
"Last year, the confirmed pipeline of projects that were under construction or in advanced stages of planning stood at approximately 35,000 rooms," said Arthur de Haast, CEO of Jones Lang LaSalle Hotels. "During the course of 2006, we have seen an increase in new development schemes emerging to meet the rising tourism and business travel requirements in the country.
Fundamentals
"This activity is being driven by an abundance of capital seeking real estate, strong market fundamentals, significant growth in intra-regional travel, and greater awareness of Dubai and Abu Dhabi as tourist destinations," said Thierry Loué, managing director of Jones Lang LaSalle Mena.
The planned growth in the UAE hospitality industry ranks as the dominant centre of hotel development worldwide. By comparison, Las Vegas has the world's second largest hotel development pipeline with 42,000 rooms, Macao follows with 27,000 rooms and China's Shanghai and Beijing with just 11,000 and 12,000 respectively.
In addition to the significant investment being made within the country, rapidly increasing outbound capital flows from the Middle East are also expected.
"Traditionally, Middle Eastern investors were attracted to iconic trophy asset hotels, but now the more sophisticated Middle Eastern investor is competing for assets across the hotel spectrum and sometimes teaming up with international private equity firms to acquire large portfolios of assets," he said.
Many Asian hotels under development are being financed by Gulf investors and Jones Lang Lasalle, is gearing up to serve this clientele. The company foresees further investment by Gulf investors into Europe and Asia, notably in China and many of the Muslim countries in Southeast Asia.
Stepping out
Middle Eastern investors, primarily from the UAE, invested just under $1 billion in European hotels in 2005, according to Jones Lang LaSalle.
In 2006, the same level of investment in the first half of the year alone has been observed, with Middle East investors eager to explore opportunities in Asia and Europe, according to Arthur de Haast, CEO of Jones Lang LaSalle.
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