Hotel and Branded-Residence Transactions in the UAE in 1H2026

Dubai is home to approximately 800 hotels with around 150,000 hotel keys, and a development pipeline is projected to increase this to about 165,000 keys by 2030. Abu Dhabi, Ras Al Khaimah, and the Northern Emirates have also advanced distinct tourism strategies that have broadened the UAE's appeal to an increasingly diverse global market.

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Dubai is home to approximately 800 hotels with around 150,000 hotel keys, and a development pipeline is projected to increase this to about 165,000 keys by 2030. Abu Dhabi, Ras al-Khaima, and the Northern Emirates have also advanced distinct tourism strategies that have broadened the UAE's appeal to an increasingly diverse global market. The first half of 2026 has been challenging for the hospitality industry, given the regional geopolitical situation. However, our Tami Mian Co. has continued to be very active in this sector, particularly in the branded residence space, where construction completion usually lies a number of years in the future. We have completed multiple UAE branded residence projects in 2026, all of which have launched sales, amid robust investor appetite for such projects. We remain optimistic about the market's prospects in the second half of 2026 and in 2027. Beyond these immediate challenges, the rebalancing of relationships between hotel owners and operators, the structural sophistication of branded residence and hotel room investment products, and the maturation of secondary markets are all reshaping how hospitality investments are structured and managed across the UAE. Transaction structuring. The prevailing landscape. The depth of the market was underscored in 2025, which saw a number of significant hotel transactions in Dubai alone, with an aggregate value of approximately 4.7 billion UAE dirands. The vast majority of hotel transactions continue to be conducted on an off-market basis, with sales processes typically extending over 6 to 12 months and involving detailed due diligence and staged bidding procedures. For greenfield investments, Musatoha agreements remain the instrument of choice where a freehold title is not available, granting development and use rights for up to 50 years on a renewable basis. Key drafting considerations include renewal mechanics, compensation on expiry or early termination, permitted use restrictions, and the allocation of maintenance, insurance, and regulatory compliance obligations. For secondary transactions, shared deals remain the preferred acquisition structure, enabling buyers to acquire the entity holding the hotel asset rather than purchasing the underlying real estate directly. This reflects the unique nature of hotel assets, which require the transfer of both the relevant real estate interest and the underlying hotel business to the buyer. This approach preserves existing operational licenses and employment arrangements, avoiding potential disruptions that may arise during licensing and employee-related transitions. Land transfer fees continue to be triggered in most Emirates upon indirect changes of ownership, and these costs must be carefully incorporated into overall deal economics. The OCO slash Propco structure has emerged as the prevailing model for hotel investment in the UAE, separating the operating company from the property-owning entity. This bifurcation enhances operational flexibility, facilitates more efficient financing, and enables investors to calibrate risk and return profiles across distinct asset and operational layers. Acquisition financing typically involves leverage of 40 to 60% loan to value, with valuations based on 10-year discounted cash flow analyses. Given the complexity of Dubai land department documentation requirements, which remains a source of transactional friction, parties are well advised to engage specialist counsel early in the process. Branded residences. The UAE has cemented itself as a global leader in branded residences, and this momentum has gathered pace through 2025 and into 2026. The two most popular models are hotel-linked developments, where branded residences sit alongside a fully operational hotel, and standalone projects, where the residences carry the brand without an attached hotel. Dubai and Ras Al-Qaima have been particularly active, with many projects still completing and launching in 2026, despite broader geopolitical headwinds. A related model becoming more prevalent is the Condo Hotel, individual hotel rooms sold to investors who share in the room's revenue when it is rented out. Investors typically cannot reside in their units permanently, and such units are generally managed by a hotel operator pursuant to a hotel management agreement. As a general trend across the region, we also continue to see more franchising deals, including in the co-located branded residence space. The commercial appeal of branded residences is well established. For purchases, these properties offer prime locations, first-class design, superior build quality, and the assurance of professional management and security standards. Ownership confers not only prestige but, in hotel co-located developments, access to a suite of amenities and services, often with preferential rates on dining and facilities. The potential for rental income through hotel rental pools during periods of non-use, combined with strong resale value, reinforces the investment thesis. Developers, for their part, leverage the brand premium to command higher sale prices and utilize off-planned proceeds to finance construction. Hotel operators benefit from additional income streams, royalty fees for licensing their brand during the sales phase, and ongoing management fees once the project becomes operational. However, the model is not without risk. Purchasers should anticipate higher service charges than in unbranded developments, reflecting the cost of maintaining brand standards and funding operator management fees. There is also no guarantee of brand continuity. If service charge collections prove insufficient to maintain the required standards or to cover the operators' fees, the brand may ultimately be withdrawn. Although this is a scenario operators will seek to avoid given the reputational consequences. Developers must carefully assess their ongoing liabilities once the residencies are sold and operational, with the extent of that exposure varying by project type and jurisdiction. For operators, the primary concern is reputational protection throughout the project lifecycle. During sales and marketing, operators typically require approval rights over purchase agreements, via screening protocols, and controls to prevent misselling by the developer and appointed brokers. Post-completion, key concerns include restricting short-term lettings through platforms such as Airbnb, particularly with high-end luxury brands. This may be to avoid competition with co-located hotels and to preserve the residential character of standalone branded communities. Ensuring that the brand standards of the development are maintained is also a key concern and is usually addressed through various contractual safeguards. For standalone branded residences, where there is no attached hotel, the regulatory position and contractual structure continue to evolve. In other jurisdictions, developers would usually seek to exit projects upon construction completion and hand projects over to the operator and homeowners association to take forward. However, under the jointly owned property laws applicable in Dubai, there is no concept of a homeowner's association with its own legal personality. Instead, a building manager approved by the real estate regulatory agency, RERA, must be appointed to act as the representative of the unit owners, with the developer contractually remaining in C2 as the intermediary between the operator and the building manager. This creates certain challenges from a legal, practical, and structural perspective, such as the following. Hotel operators often seek to keep developers liable for service charge shortfalls, which include the operator's fees and the amounts required to ensure the development complies with the operator's brand standards. Building managers, which will usually be appointed much closer to project opening after the main suite of agreements have been entered into, may have their own contractual requirements, which may not align with what has already been agreed between the developer and operator. Developers may not wish to incur the expense of obtaining the relevant licenses to provide hotel-like services to the development, or such licenses may be difficult to obtain, particularly for smaller developers without a track record in carrying out such licensed activities. Third-party providers with requisite licenses may start to step in to take on this role for developers. These issues can be particularly problematic where, for example, the developer is a fund with a fixed exit date, beyond which it can no longer remain involved with the project. We therefore expect contractual structures to continue to evolve as the standalone branded residence market matures. Conclusion The UAE's hospitality sector and branded residence space continue to demonstrate resilience and innovation, even amid challenging market conditions. As transaction structures evolve and regulatory frameworks mature, stakeholders across the value chain, from developers and operators to investors and purchasers, must remain attentive to the shifting legal and commercial landscape. With careful planning, specialist legal guidance, and an adaptive approach to deal structuring, the UAE is well positioned to maintain its status as a leading global destination for hospitality investment.