KSA leads the pack, with pipelined developments valued at $1.2tn, in a region where GDP has increased by 47% in 2023
Hospitality and residential projects worth $1.9tn are under development in the Middle East, with Saudi Arabia, UAE and Egypt accounting for 90% ($1.7 tn) of the investment, according to new research by global independent real estate consultants, Knight Frank.
The data reveals that KSA is at the top of the region’s project investment table, with $1.2tn of developments in the pipeline, followed by the UAE ($300 bn) and Egypt ($200bn), highlighting the Middle East’s continued commitment to reaching 160 million annual tourists by 2030.
Turab Saleem, Partner and Head of Hospitality, Tourism and Leisure – MENA, at Knight Frank, said: “The Middle East was the first region globally to make a complete business recovery after the pandemic. While much of the world still faces challenges in its return to normality, this region is set to surpass pre-Covid levels in terms of hospitality and tourism-related revenue and employment. The Middle East’s travel and tourism sector witnessed a tremendous growth with a 46.9% increase in its contribution to GDP in 2023, which is the highest of any region in the world. This growth is being driven by a 14.5% increase in the number of jobs supported by the sector, and a more than $107 billion increase in its overall contribution to the GDP. Moreover, the sector has also created 0.9 million new jobs.
“The influx of new hospitality and tourism-related projects in the region is also fostering new trends that add value and efficiency and yield better investment returns. Simplified visa processes, aggressive marketing campaigns, green initiatives, innovation and technology, increased connectivity with new players in the airline sector, personalised guest interaction and a booming holistic health and wellbeing industry are all playing a key role in the growing success of the Middle East’s tourism industry.”
Continuing Turan Saleem’s point, a substantial volume of hospitality-related transactions are currently at an advanced stage of negotiation, with high profile properties expected to change hands in the coming months, according to global real estate consultancy Colliers.
James Wrenn, Executive Director and Head of Capital Markets, MENA, at Colliers, said: “There’s a strong appetite for the hospitality asset class – particularly in Dubai and Ras Al Khaimah – from regional and international investors, buoyed by strong operating performance last year and the continued enhancement of the UAE as a top-tier international tourism destination.”
According to Wrenn, by contrast, global sentiment remains subdued as the effects of high inflation, rising interest rates and looming fears of recession has affected the confidence of investors and reduced activity levels.