Dubai, UAE – In a strategic move to redirect tourism and real estate development, Dubai authorities have announced attractive tax incentives for investors. These incentives are aimed at those wishing to build new hotels in the southern regions of the emirate, given the scarcity of prime coastal land required for beach resorts.
According to a report by Josh Corder on the AGBI website, this initiative is part of Dubai’s efforts to expand hotel investment beyond traditional areas. Additionally, it aims to boost infrastructure growth in key locations such as Dubai South, Palm Jebel Ali, and Dubai Parks and Resorts.
Details of tax incentives
Approved incentives include:
Full exemption from municipal fees on room revenues, which are usually 7%.
Exemption from the tourist dirham fee, which ranges between 7 and 20 dirhams per night.
These exemptions will be in effect for two years after the new hotels open, in an effort to encourage developers to invest in the less developed southern regions.
Challenges of the hotel sector
Dubai is experiencing a slowdown in the pace of hotel openings. While the emirate used to open dozens of hotels annually, it has opened only four new hotels since 2023. This is due to the limited availability of ready land and attractive coastal locations.
Philip Waller, regional director of the hotel data platform STR, said that projects like Palm Jebel Ali represent long-term investments. He also stressed that government incentives are essential to attracting investors to the southern regions and making them a strategic priority for the emirate.
Target areas and future centers
Authorities are focusing on strategic areas in the south. These areas are close to:
Al Maktoum International Airport, planned to become the main airport after the closure of Dubai International Airport.
The new Dubai Exhibition Centre, which has attracted major events such as GITEX.
The Expo 2020 site, which is undergoing continuous redevelopment.
Developers’ perspective
Despite the incentives, developers have yet to make any real progress. Maya Ziadé, CEO of development at Accor Group, confirmed that the group has not yet initiated any talks. Discussions are currently focused on developing hotels in the southern regions. She added that rising land prices will likely lead to projects primarily being luxury hotels, which could limit the variety of options available to tourists.
