Your Guide For Hotel Room Investment in Dubai 2021
The concept of hotel rooms for investment purposes is relatively new. In the last decade, various Dubai hotel investment opportunities have risen for potential investors for adding this investment type to their portfolios. The option to invest in hotel rooms is available across the world, including in Dubai by the UAE government
Hotel Investment Explained
Investment in a hotel room could be defined as a buy-to-let investment in UAE. You can purchase the unit and also have the option to let it to guests in return for a specified payment. A hotel also acts as a management company by overseeing the process for the investor, specifically in a hotel apartment investment.
What is meant by hotel room investment?
In simple terms, hotel room investment means purchasing a hotel room and putting it up for let so that potential customers can rent it out. Hotel guests pay high rates for a short-term stay that also includes various amenities.
For the purpose of investment, hotels will provide various options to investors, including personal usage and payment terms and Mortgage calculation. Some of these options are mentioned below:
Guaranteed rental options
There are some investments that provide a guaranteed rental scheme. This also means that they can help to provide potential investors with a safe source of income for a specific amount of the investment period. However, in some cases, it could be for life. As a result, the buy hotel room investment Dubai is a viable investment opportunity for potential investors.
There are some investments that provide personal use of the room by investors. It is usually limited to a specific amount of days in a year. After decreasing the number of nights, the investor is allowed to use the room. This helps to maximize the income of hotels.
It also helps to maximize the overall rental returns for potential investors. The ultimate strategy for investment is letting out a room throughout the year without taking advantage of the personal use allowance.
Split income and split profits
In many investments within the hotel industry, income derived from a unit is split between the hotel management and the investor. This provides a financial incentive for the hotel management team by gaining income from various amenities they provide in a hotel.
There are many hotels that can pool the income derived from rooms between investors. The primary aim of this strategy is to make sure that only one room would generate less profit when compared with the other in the same hotel.
Moreover, if a hotel does not share its profits this way, the room usage would be rotated. This will ensure that no room remains unused. Therefore, every room will generate income to buy hotel room investment Dubai.
How to Buy Hotel Apartments for Investment in Dubai?
Investing in hotel apartments is becoming increasingly popular among foreign investors in Dubai. Since hotels rarely get affected by changes in the economy, it is one of the most preferred options for many. Hotel investment is usually free of a hassle since it is managed by a specialist team. The investor gets a share in the revenue, and a fully furnished, serviced and managed room. Here are the basic steps to making a hotel room investment in Dubai:
Do your research and find an apartment that fits your budget. Also, check the hotel’s reputation, location, and annual returns before shortlisting.
Negotiate with the hotel management about the offer. Get clarification on the terms and conditions of the contract before finalizing anything. Once you settle on a price, sign the agreement, and the real estate will get registered in your name in full ownership.
You can watch the money flowing into your account as the hotel rooms get occupied, and you earn your share. Hotel guests pay high amounts for spending time at a hotel, and the returns are shared between the hotel and the investor.
DAMAC can help you ease the process by guiding you every step of the way. We offer a wide array of different investment options. You can register yourself with DAMAC and get more information on offers and updates regarding hotel room investment in Dubai.
What are the advantages of investing in hotels in Dubai?
From an investor’s point of view, the nature of hotel investments in UAE will allow potential investors to have a hands-off approach for investment in Dubai hotels. An organization will manage as well as market the room on an investor’s behalf. This is because it is mainly in their interest to enhance revenue. The investor would reap benefits from several industry professionals that promote and manage hotel units for them.
One of the biggest benefits for individuals that want to invest in hotel rooms of Dubai is that this mode of investment is regarded as commercial rather than residential. This allows investors to have tax-free earnings and capital growth.
As a result, investors tend to be relatively less exposed to long-term vacancy when compared with a conventional buy-to-let property investment that could remain empty for several months at a time.
On average, the yield generated through investment in Dubai hotels is usually higher as compared to buy-to-let investments. Gross yields of nearly 12% per annum can be achieved when compared with the average gross yields from conventional buy-to-lets of nearly 5% per annum.
The stream of income that has been placed on the yield could help to increase the overall value of hotel buildings. Investors in Dubai have the option to gain benefits from a quality development that would have useful amenities for the guests. This will increase the chances of obtaining a higher yield on investment. From a financial perspective, the monetary value of hotels in Dubai has been primarily dependent on the conditions of the economic market. So, if there is an improvement in the economic climate, the hotel industry should also improve immensely.
What are the factors that influence the success of buying hotel apartments in Dubai
One of the key factors that influence your choice of hotel room investment in Dubai is the location, as it will significantly influence capital growth. Hotels need to attract domestic and foreign visitors. As a result, the development would require it to be very close to transport points and local sights of attractions. Different locations can help attract many guests to a hotel. A good location will provide several benefits. For instance, if the investment is in a city centre, the location would pull significant investment for guests because they will be unlikely to provide various facilities for potential residents. This improves the potential to buy hotel room investment.
An essential aspect that can influence a hotel’s success is tourism. Some of the major attractions within a hotel’s locality can influence the occupancy rate. As a result, investors must focus on doing solid research on local tourism.
In addition, they should make significant efforts to enhance and promote tourism in the nearby area. Hotels located in luxurious areas such as Dubai Marina, Burj Khalifa, and Jumeirah Lake Towers could reap massive benefits for individuals that prefer hotel room investment Dubai.The bookings could also be expected to be coherent without having any specific reliance on tourism. They are some of the best investment offers for potential buyers in the UAE.
Essential features of a hotel that can increase property investment are mainly based on highly experienced hotel management companies. These companies focus on some very important features including, service quality and customer service.They also focus on other hotel amenities, such as spas, pools, golf courses, etc. A good marketing team within a hotel is essential to promote the facilities available. Moreover, customer care and high-quality standards can also help to increase customer retention and profitability. Real estate investment is a viable option to buy hotel apartment in Dubai for investment.
Hotel apartment investment – Dubai 2021
Many investors are opting for hotel apartment investment in Dubai. Once a potential investor buys the hotel apartment, the management at the hotel puts it up for let on their behalf. Hotel guests pay high amounts for spending time at a hotel, and the returns are shared between the hotel and the investor.
What are the various options for Hotel room investment in Dubai
Damac Properties is providing multiple opportunities to prospective investors for hotel room investment Dubai. This can help them tap into Dubai’s ever-increasing hospitality sector to buy hotel room investment. Customers now have the following options for investment:
A Single Room
Invest in an individual hotel room for a future income stream. Investors can also enjoy a free stay every year.
Individuals that want to buy a room and purchase in cash now have the option to own a unit. They can also become a part of the fast-increasing property market that approximately expects a 10% return on hotel room investment on an annual basis.
The potential for having full ownership of a hotel room in Dubai is relatively new in the country. For the purpose of having investing secured, hotel rooms are now available along with full ownership rights. They also include title deed.
This allows potential buyers for hotel room investment in UAE or buy-to-let hotel rooms to reap significant benefits. Plus, potential investors have an option to sell hotel room investment at any time.
As a result, investing in hotels in Dubai has become highly popular in the UAE hotel industry.
The status of Dubai as a world-class business, holiday, and leisure destination has been on a growth trajectory. It has gained momentum on a gradual basis.
Due to the upcoming Expo 2021 as well as other property developments that can help to improve the position of Dubai at a global level, Damac properties is now developing and providing at least 16,000 additional keys by the end of 2021 for adding it to the existing portfolio of 2,000 hotels.
This also adds to Dubai’s inventory of premium hotel rooms that can also fulfill the future requirements for luxury accommodation.
How does hotel room investment work?
From a literal perspective, the idea of a hotel room investment is that you purchase a room that is operated by another company. As a result, you receive a fixed percentage in return for a particular number of years. By the end of the fixed year period, the company will purchase back the room from you at a relatively higher price. Irrespective of what happens, you are paid a fixed rate at the end of the term.
Why should you consider investing in a hotel room in Dubai?
One of the primary reasons why you should consider investing in a hotel room in Dubai is that you can get tax-free capital growth and earnings since it is a commercial property.
Is it possible to purchase a hotel room in Dubai?
Yes, you can invest in a hotel room and even occupy it for a specified period of time each year. However, there are certain requirements that need to be met prior to making an investment. You also have the option to own an individual unit.
What are the best possible investment options in Dubai?
- Real estate
- Hotel room
- Tourism and travel
- Dubai marina
Is it possible to permanently purchase a hotel room?
Technically, yes. These types of hotel rooms are mainly referred to as condo-hotels that allow you to occupy the place for a specified period of time. Hotel rooms are now available with full ownership rights in Dubai. They also include title deed.
How do you make an investment in a hotel room?
Investment in a hotel room could be defined as a buy-to-let investment in UAE. You can purchase the unit and also have the option to let it to guests in return for a specified payment. All you have to do is research and shortlist the hotel you want to invest in, purchase the hotel apartment, and expect returns on your investment.
Hotel room investments offers promising returns and price flexibility. Buying hotel rooms in Dubai is great for the owner of the hotel as well as the investor because it offers more finances for the owner to run the business and high-yielding income to the investor. DAMAC properties offer Properties for sale in Damac Hills 2, Apartments for sale in Damac Hills 2, penthouses for sale in Safa Two, 1 bedroom for sale in Safa Two, and Luxury apartments for sale in Dubai By Crypto and more projects like Costa Brava and The Park Villas at DAMAC Hill