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In a presentation at the inaugural Serviced Apartment Summit MEA held recently in Dubai, real estate firm Colliers International revealed that Dubai can absorb around 8,200 keys more over and above the planned supply of serviced apartments.
Presently, there are 29,329 serviced apartment keys in the market and 5,603 keys are planned to be delivered in the lead-up to 2020, says Filippo Sona, Director, Head of Hotels at Colliers International. ''The occupancy rates in Dubai have been consistent at 78-79 per cent in the last three years,'' Sona tells Property Weekly. ''It is likely to stabilise at 78 per cent and this is likely to continue to 2018. Considering our occupancy forecast and add to this the promising mega projects being built throughout the city, we believe there will be additional tourist influx into the city. Hence, there is scope to build an additional 8,193 serviced apartments in Dubai.''
Serviced apartments are showing higher performance than hotels across the region, wherein branded serviced apartments are making higher gains, he says. ''Six out of eight serviced apartments that received higher customer ratings are branded and tend to be linked to a hotel or to a mass venue such as shopping malls,'' he says.
''Unbranded serviced apartments are not able to drive higher profits as they are running operations with 29 per cent more staff and, therefore, higher costs.''
According Colliers International's MEA Serviced Apartment Markets and Guest Experience Index, primary elements of a serviced apartment will include studios that are up to 15-30 per cent larger than standard hotel rooms, with living and kitchen facilities and limited food and beverage options. Generally, these units are located within city areas in proximity to transport links, according to the report. Forecasting future trends in this segment, the report states there will be a rise in duplex apartments with a maid's room to attract families. Loft-inspired, efficient room designs, grab-and-go food and beverage options and retail-connected properties appeal to leisure guests. Serviced apartments being built in suburban areas with shuttle service to the city centre are also among the foreseen trends.
Talking about the GCC, Sona says there are presently 64,775 units in the region and about 15,997 will be added to the supply. ''Dubai, Riyadh, Abu Dhabi and Doha will be the biggest markets for serviced apartments in the GCC, whereas Jeddah and Muscat will be the markets with the largest investment opportunities in the sector,'' says Sona.
More than 150 international delegates from countries such as the UAE, Turkey, Saudi Arabia, Egypt, Oman, Kenya, Nigeria, Thailand, France, Ireland, the UK and Montenegro attended the two-day Service Apartment Summit.
The summit attracted international service apartment owners and operators who are looking to expand and extend their services in GCC markets, particularly Dubai. London-based serviced apartment owner and operator Cheval Residences is among the companies eyeing the region as part of a global expansion programme.
''We are here to meet and talk with developers and investors about working together,'' George Westwell, Director of Cheval Residences, tells Property Weekly. ''We see the serviced apartment segment in Dubai as an exciting market and there is an opportunity to raise the [number] of properties available in this sector.''
He says serviced apartments in the emirate are lacking a homely touch, adding that durability, maintainability, accessibility and functionality are essential areas to consider when building a unique product that offers a homely experience. There is scope and market for such a product and this is an area of opportunity for improvement and growth, he says.
At the summit, Cheval Residences' senior representatives served as panelists in two sessions, sharing their expertise in managing third-party assets as well as creating award-winning residences.
The first day of the summit included tours of branded residences on the Palm Jumeirah, including properties at Anantara and Fairmont The Palm. The second day consisted of sessions, including those by hosts Piers Brown and Joe Sita, CEO of IFA HI.
In a masterclass on serviced apartments, Sona of Colliers outlined the variations of the products available in the Middle East and Africa and how they are performing. Other discussions covered the pipeline of projects, investment, operations, branding, legal issues and local and international demand.
The consensus among speakers and delegates was that serviced apartments have a bright future in the region, and that the already significant development pipeline is likely to grow considerably over the next five years.
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Source: Hina Navin, Special to Property Weekly