Supported by increased interest in the final months of Expo 2020 Dubai as well as returning international visitors, the UAE’s hotel market reported strong performance in the first quarter of 2022, according to JLL’s Q1 2022 UAE market overview report.
The increase in overall performance was primarily driven by beachfront and luxury developments, which have been benefitting from strong leisure demand. Additionally, both upper-upscale and mid-scale hotels saw higher average daily rates (ADR), which represents the revenue made per room on average.
The head of Research for the Middle East, Africa, and Turkey region at JLL, Khawar Khan, said: “Post-pandemic, operators may look towards adopting a more robust revenue management strategy to help owners achieve a higher bottom line.
“The resultant short-term impact may see a small dip in performance, but it should ultimately lead to improvements in the longer term.”
Meanwhile, building on the momentum seen in the final quarter of 2021, rents in well-managed quality office buildings continued to perform well.
In Dubai, average Grade A rents in the Central Business District were up 9 percent year-on-year to about AED 1,840 per square metre per annum in Q1 2022.
On the same basis, Grade A rents in Abu Dhabi rose by 5 percent to an average of AED 1,650 per square metre per annum.
Financial and technology firms remain the main drivers of demand for Grade A office space, with a majority of leases being signed by occupiers active across those sectors.
“Flexible workspaces are seeing strong interest from new market entrants, as well as some corporates who are taking a “wait-and-see” approach before signing long leases elsewhere due to the evolving market situation,” Khan added.
Additionally, in the residential market, construction activity continued in earnest as improving sentiment and rising demand from investors and end-users alike provided developers with renewed impetus to deliver projects.
Over the remainder of this year, an additional 42,000 units are expected to be completed. Improving tenant demand for residential units broadly underpinned the annual increase in rents in February, of 11 percent in Dubai and 3 percent in Abu Dhabi
In the retail market, certain retailers, particularly in the F&B segment, reported robust revenues – exceeding the levels seen prior to the Covid-19 pandemic.
On the other hand, consumer spending on luxury goods remained constrained and this was reflected in a broadly flat performance for this segment in Q1.
Overall, the easing restrictions and ongoing recovery in tourism continued to provide some respite for the UAE’s retail sector.
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