Survey by real estate consultancy Knight Frank says that about USD 1.9 trillion hotel & residential projects are underway in the Middle East, with Saudi Arabia, United Arab Emirates and Egypt accounting for 90 pc or USD 1.7 trillion investment.

The Middle East has hospitality and residential projects worth USD 1.9 trillion underway, says survey by London-based real estate consultancy Knight Frank.

Within that, Saudi Arabia, United Arab Emirates and Egypt account for 90 pc or USD 1.7 trillion investment, says Knight Frank in a press statement.

The statement adds that the Kingdom of Saudi Arabia is top of the region’s project investment table, with USD 1.2 trillion worth of developments in the pipeline, followed by the UAE at USD 300 billion and Egypt at USD 200 billion, highlighting the Middle East’s continued commitment to reaching 160 million annual tourists by 2030.

“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,” says Turab Saleem, partner and head of hospitality, tourism and leisure, MENA, Knight Frank.

“The Middle East’s travel and tourism sector witnessed tremendous growth with a 46.9 pc increase in its contribution to Gross Domestic Product in 2023, which is the highest of any region in the world. This growth is being driven by a 14.5 pc increase in the number of jobs supported by the sector, and a more than USD 107 billion USD increase in its overall contribution to the GDP. Moreover, the sector has also created 0.9 million new jobs,” Saleem adds.

“We have experienced exponential growth over the last 15 years supported by a massive increase in hotel supply across different categories. The number of quality hotel rooms in the region grew fivefold from circa 100,000 in 2010 to 540,000 in 2022, with occupied room nights growing from 27 million to 135 million,” says Hala Matar Choufany, president, Middle East, Africa and South Asia HVS Middle East.

“An additional 180,000 keys are expected to enter the region over the next five years, which is forecast to increase occupied room nights to 184 million by 2028. Significant government budgets have played a key role in encouraging private investments and attracting foreign direct investment in the region. Today, the Middle East is expected to achieve higher growth compared to other regions, presenting attractive financial returns and providing long-term investment opportunities,” adds Choufany.

“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,” adds Saleem.

The report says a significant volume of hospitality related transactions is 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.

“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.” says James Wrenn, Executive Director and Head of capital markets, MENA at Colliers.

According to Wrenn, global sentiment remains subdued as the effects of high inflation, rising interest rates, and looming fears of recession have affected the confidence of investors and reduced activity levels.

“Buyers are now scrutinising transactions more closely and there remains a gap between buyer and seller expectations. Across many markets it is generally accepted that yields will need to soften further to enable pricing to stabilise in line with interest rates,” he says.