Individual investors are being offered a unique opportunity to gain exposure to Dubai's booming hotel industry via a "rental pool" program for luxury serviced apartments, announced today by DAMAC Suites and SPA, a subsidiary of regional developer DAMAC Properties.
The "rental pool" arrangement will be applied to apartments within DAMAC Properties' first luxury serviced apartment development Burjside Boulevard, situated within the exclusive Burj District.
The program operates whereby a single investor buys a unit which they transfer into a pool of apartments. The apartment "pool" is then serviced and reservations managed in much the same way as a five-star hotel by DAMAC Suites and Spa.
"Dubai's hotel industry is surging, occupancy rates were the highest in the world in January 2012. There are a lot of individual investors who would like to invest in the hospitality sector, but there are very few avenues for small investors to gain exposure to this segment of the market" said Niall Mc Loughlin, Senior Vice President of DAMAC Properties.
The "rental pool" will be administered by DAMAC Properties' hospitality management company 'DAMAC Suites and Spa.' The company will deliver a bespoke services package as well as manage reservations. All revenue will be pooled, and once costs have been extracted, profit will be distributed accordingly amongst all participating owners.
"This is a way for individuals to invest in Dubai's lucrative hospitality sector. Our "rental pool" offering is a solid investment vehicle which provides for maximum returns while minimising risk" Mc Loughlin commented.
Hotel occupancy soared to 86 per cent in January according to the Dubai Department of Tourism and Commerce Marketing, the highest in the world. More importantly, from an investment perspective, average revenue per room for January was the second highest globally, after Paris. The average room rate in Dubai was just under AED 1,000 in January.
Apartment owners will also have the privilege of reserving an apartment within the complex for any length of time for their own purposes. This will be administered by calculating a slightly lower occupancy rate for that particular owner in the distribution of pooled revenue.
"Burjside Boulevard will be managed as per five-star hotel standards. We expect the occupancy rate for these serviced apartments will be extremely high given the quality of the development and its premium location opposite the Dubai Mall and within close proximity to the Burj Khalifa area" said Mc Loughlin.
Luxury serviced apartments bridge the divide between high-end residential apartments and luxury five-star hotels. Dubai is a vibrant business hub, and it's very common for people to come to the Emirate for months at a time for work.
"We are seeing strong demand from investors who know they are likely to be in Dubai for significant periods of time. This investment model is very appealing to people who want a luxury apartment available when they need it, but would like to make money from it when they are not in Dubai" said Mc Loughlin.
International investors have been increasingly looking to the UAE for investment opportunities as the nation's economy continues to expand. The IMF has confirmed the UAE's economy grew by 4.9 per cent last year, and is forecast to grow a further 2.3 per cent this year.
Dubai received 9.3 million tourists last year, up 10 per cent from 2010, pushing up hotel revenue by 20 percent according to Dubai's Tourism Department. The city's largest malls such as Dubai Mall and Mall of the Emirates are operating at more than 90 percent occupancy rates, according to their owners. While shopping accounted for 30 per cent of Dubai's GDP in 2011 according to a report by Standard Chartered Bank.
"Dubai is booming again and much of the growth is coming from the tourism and hospitality sectors. We are offering investors a strategic investment vehicle for gaining exposure to this particular segment of the market" Mc Loughlin concluded.
DAMAC Properties is an internationally recognised, luxury-focused, high-end developer. With a proven track record for delivering some of the most luxurious residential properties across the Middle East region, the developer is well capitalised and has the vision and momentum to provide solid investment opportunities for customers across all the markets in which it operates.