Future of UAE hospitality: luxury or mid-market accommodation?
The UAE and Dubai in particular, has become synonymous with opulence, five-star hotels and luxury living. Looking towards 2025 and beyond, the narrative around the UAE's hospitality market is evolving, marking a potential shift from luxe living towards a more balanced and authentic travel experience, according to Anna Skigin, CEO and Founder, Frank Porter.
This aligns with global traveller trends, as travellers seek more authentic cultural experiences. While Dubai's luxury appeal remains strong, the growing appeal of the mid-market segment is reshaping the emirate's hospitality landscape.
Reflecting the current demand for short-term accommodation in the market, Frank Porter's portfolio of properties consists of 80% mid-market and 20% luxury properties.
Mid-market properties in strategically located areas like Jumeirah Village Circle, Dubai South and Dubai Sports City enjoy constantly high demand and provide strong ROI for investors in the short-term property space. These neighbourhoods enjoy year-round demand appealing to travellers who prioritise affordability, flexibility and location.
The luxury segment performs well during peak seasons, attracting high-net-worth-individuals who are happy to pay more for premium amenities, prime locations and more. These luxury properties command higher rents appealing to wealthy travellers seeking exclusive experiences.
Locations like Palm Jumeirah and Downtown Dubai are some of the most in demand neighbourhoods during peak seasons like New Year's and other popular holidays. As mentioned, when it comes to year-round demand the mid-market segment has seen consistent growth, especially from families, business travellers and international tourists looking for quality at a more accessible price. This growth is having a significant impact on the UAE hospitality market.
When it comes to projected growth across the segments, its anticipated that mid-market properties seeing more growth due to increased demand from millennial and Gen Z travellers specifically. As Dubai continues to attract business travellers and digital nomads, mid-market properties are well placed to cater to their needs.
In some neighbourhoods, the mid-market segment is projected to see steady demand, with rental prices expected to rise by up to 18% in 2025. By comparison, the luxury segment is expected to see price increases of 8-10% in 2025, particularly in areas like Downtown Dubai, Dubai Hills, Palm Jumeirah and Jumeirah Golf Estates.
While luxury accommodation in Dubai will always have its place, there is a definite shift toward more affordable accommodation and experiences as a wider trend. There is a huge focus on diversifying offerings to cater to a broad audience. This is evident by the number of new mid-market developments under construction and newly built projects that provide guests with quality accommodation, modern amenities, flexible workspaces and other bleisure traveller needs.
For those looking for luxury short-term rentals, brands such as Address Boulevard, Bulgari Resort Dubai, Six Senses Zighy Bay, The Ritz-Carlton, and One&Only Resorts, continue to dominate the high-end market with new residences and apartments launching in Dubai with stunning views, private pools, and beautifully designed interiors.
In conclusion, while the luxury segment will continue to thrive and put Dubai on the global stage, one must not underestimate the impact that the mid-market segment is having on the UAE hospitality industry.
As Dubai appeals to a wider audience of traveller, accommodation, dining and leisure activities that remain affordable yet attractive will experience high growth.
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