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An ongoing correction in the residential space and a still abundant supply of new offices need not unduly faze investors chasing realty assets in the UAE. They can always fall back on hospitality.
“Dubai remains the most active investment place … with the exception of the holy cities of Makkah and Madinah,” said Chiheb Ben Mahmoud, Executive Vice-President — Head of Hotels & Hospitality Group, Middle East & Africa at JLL. “A significant portion of the expressed interest (for mid-market gotels) is related to plots in urbanised areas in Deira and Bur Dubai which have remained undeveloped until now. In this context the envisioned projects are more towards the mid-scale/upper mid-scale segment.
“It is not a matter of developers looking to fill the gap as much as the mid-tier segment being perceived as less risky by new hotel owners. The segment is also perceived as more compatible with the ‘dry’ option.”
But hotels even further up the posh scale are finding takers, among both investor groups and hospitality chains, even newly minted ones. One such is Aiana Hotels & Resorts, created through an equal joint venture between Qatar based Shaikh Faisal bin Qassim Al Thani and Indian investor, Amruda Nair. The company’s global headquarters will be based out of Qatar Financial Centre.
“We have created a hotel management company that will operate hotels owned by independent owners,” said Nair. “Aiana will not own any hotels … our aim is to spread our vision in the Gulf, as well as, internationally.”
Its first property, a serviced apartment, will be in Doha’s upscale West Bay. “Under the Aiana brand we plan to have seven hotels either operational or under development in the Middle East, India and South East Asia over the next five years … all under management contracts,” said Nair.
“Eventually, we envisage more Aiana-branded properties in Doha as this will be our flagship market. We are currently in the design phase.
“It is important for us to have a presence in Doha because the model we finally introduce in this market can be replicated in Abu Dhabi and Dubai.
“I am confident about the appeal of the Aiana concept and we are currently focused on creating top-of-mind recall for hotel owners and real estate companies who want to diversify into hospitality. This process would eventually see us adding more properties by the end of the decade.”
The hospitality space in the UAE, meanwhile, is getting crowded. Dubai’s master-developers have been casting a keen on possibilities. Emaar already has its hospitality imprint in the form of the Address brand, and which is being extended into the mid-tier space through Rove Hotels. Nakheel is also building on its hospitality offerings, while Damac has already made headway with ‘Maison’ and will add ‘Paramount’ themed hotels to the portfolio.
According to a UAE realty sector report by S&P, ‘Hotel occupancy fell in the first quarter of 2015 and the average daily rate (ADR) dropped by about 5 per cent last quarter. We expect this phenomenon to continue as Dubai prepares itself for Expo 2020, for which 50 per cent more hotel rooms may be needed, especially in the mid-market segment. This sustained growth should continue to deflate hotel occupancies and ADRs as existing hotels compete for the tourist trade.’
Source: Manoj Nair, Associate Editor, gulfnews.com