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Middle East’s $1.9 trillion hospitality sector led by KSA, UAE, and Egypt By Investing.com

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Hospitality and residential projects worth $1.9 trillion are currently under development in the Middle East, with Saudi Arabia, United Arab Emirates and Egypt at the helm of these investments, accounting for 90% ($1.7 trillion) of the total, according to research released on Monday by global independent real estate consultants Knight Frank.

Saudi Arabia (KSA) tops the region’s project investment table with $1.2 trillion worth of developments in the pipeline. Following closely are the UAE and Egypt with investments valued at $300 billion and $200 billion respectively, highlighting the Middle East’s 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,” Turab Saleem, Partner and Head of Hospitality, Tourism and Leisure – MENA at Knight Frank, said on Monday. He added that 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 significant growth with a 46.9% increase in its contribution to GDP in 2023. This growth is being driven by a 14.5% increase in the number of jobs supported by the sector, resulting in a more than $107 billion increase in its overall contribution to GDP and creating 0.9 million new jobs.

Saleem also highlighted that new trends are emerging due to the influx of new hospitality and tourism-related projects in the region. Factors such as simplified visa processes, aggressive marketing campaigns, green initiatives, innovation and technology, increased connectivity with new players in the airline sector, personalized guest interaction and a booming holistic health and wellbeing industry are all contributing to the growing success of the Middle East’s tourism industry.

However, the global sentiment remains subdued due to the effects of high inflation, rising interest rates and looming fears of recession, which has affected the confidence of investors and reduced activity levels, according to James Wrenn, Executive Director and Head of Capital Markets, MENA at Colliers. Despite this, he pointed out that 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.

In line with this development, a significant 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. The Future Hospitality Summit (FHS) taking place in Abu Dhabi from 25-27 September 2023 will further spotlight these investment opportunities in the region’s tourism sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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