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The business and investment drivers of hotel markets across the Middle East and North Africa (MENA) region are diverse, reflecting the
divergence of cultural and economic backgrounds as well as differing stages of market maturity. Despite these differences, a common theme
that is emerging is a renewed focus on market fundamentals.
As with other asset classes, hotel owners and developers are adopting a ‘back to basics’ approach with more attention being focused on
things that may have been forgotten in the boom of the last few years. This includes a concentration of management energy on items such
as value recovery, the maximisation of cash flows and ensuring loan to value ratios are kept at conservative levels.
The global economic crises has impacted on both leisure and business travel across the region. While its impact has not been uniform
between all markets, some common threads can be identified:
Achieving sustainable levels of performance. Hotels in the Middle East have enjoyed a spike in performance over recent years.
These trading levels were not sustainable over the longer term, with prices becoming uncompetitive relative to more mature global
destinations. 2009 is likely to see a contraction of hotel cash flows in most MENA markets, with performance returning to long-term
sustainable levels.
MENA markets remain relatively healthy compared with other regions. While most markets across MENA have experienced a
contraction in hotel cash flows and asset pricing over the past 6 months, performance has held up relatively well compared with other
global regions.
New supply levels are declining. Planned developments are being reviewed across the MENA region, with many being either
cancelled or delayed. Many projects are likely to be refocused from their current high end positioning, to incorporate a broader
tourism offering in line with other established tourism destinations. Lower cost hotels are likely to comprise the majority of newly
planned projects.
Refinancing but few firesales. While increased financial pressure will lead to the refinancing of recently completed projects
undertaken at high capital cost, we do not anticipate a large volume of distressed asset transactions. The regular cashflow provided
from hotel investments will continue to attract available equity. Investment interest will be more locally focussed, with restructuring of
assets occurring at a corporate level.
Pulse • MENA House View • May 2009 2
Lebanon
KSA
Kuwait
Syria
Bahrain
Qatar
Morocco
Egypt
Oman
Jordan
Tunisia
UAE
Source: STR – Hotel Market Benchmark Data, Jones Lang LaSalle Hotels
Dubai $203
Dubai $244
Berlin $61
Berlin $90
Madrid $70
Madrid $106
Rome $84
Rome $149
London $108
London $173
Paris $134
Paris $209
Beijing $39
Beijing $83
Sydney $102
Sydney $133
Hong kong $121
Hongkong $151
Tokyo $149
Tokyo $153 Los Angeles $74
Los Angeles $91 Toronto $60
$0 $50 $100 $150 $200 $250 $300 Americas Asia - Pacific Europe MENA
Leading Indicators
The following table summarises changes in a series of leading indicators of real estate market conditions in Dubai. This data will be updated
on a monthly basis and will be reported in future editions of the JLL Mena House View. For more detail on these indicators please contact
our research team.
CURRENT PREVIOUS
INDICATOR CHANGE
MONTH MONTH
ECONOMIC INDICATORS
Oil Price (Brent Crude) - 26/04/09 $51.55 $50.82
EIBOR (%) – 26/04/09 3.16 3.53
EUR : USD (26/04/09) 1.32 1.36
REAL ESTATE MARKET INDICATORS
DFM Real Estate Index 2,723 2,124
Value of registered property transactions (M-o-M Change) -52% -26%
Number of registered property transactions (M-o-M Change) -43% -15%
Value of construction tenders (existing and new) (millions) $27,000 $57,000
Value of projects cancelled / on hold (millions) $26,000 $166,000
Construction cost index (Jan 08 = 100) 119 124
HOTEL & TOURISM INDICATORS
Occupancy (Dubai – All Hotels) 77% 71%
Revenue per available room (Dubai – All Hotels) $217 $224
Source: Various
Jones Lang LaSalle MENA offices:
Dubai Abu Dhabi Riyadh Jeddah
Emaar Square Al Niyadi Building Al Hoshan Building Enso Offices
Building 1, Office 403 10th Floor, Offices 1003/4 Level 3, Western Tower Saudi Business Centre
Sheikh Zayed Road Airport Road Al Ehasa Street Office 122
PO Box 214029 PO Box 36788 PO Box 9629 PO Box 13711
Dubai, UAE Abu Dhabi, UAE Riyadh, Saudi Arabia Jeddah, Saudi Arabia
t +971 4 426 6999 t +971 2 443 7772 t +966 1 472 8309 t +966 1 472 8309
f +971 4 365 3260 f +971 2 443 7762 f +966 1 472 9478 f +966 1 472 9478
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This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been based
on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report is accurate or complete. Any views expressed in
the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may cause future
realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from the views expressed in this report. No
investment or other business decisions should be made based solely on the views expressed in this report.