(MENAFN- Khaleej Times) Traditional serviced apartments models are established in Dubai and meet international operator requirements providing predominately studio apartments, limited facilities and operated by a hospitality brand. Alongside this sub-market, the hotel apartment sector is also strongly represented across Dubai.
The layout, typology and unit sizing of this asset class is more aligned to standard residential units, therefore, resulting in synergies in demand and key players in the hotel apartment and residential markets. Whilst the asset class definition for hotel and serviced apartments are blurred within the current market, a key differentiator is the presence of a branded hotel operator. Operators are willing to be flexible in the application of a hotel apartment model with a number of brands existing in residential building schemes.
The total number of serviced/ hotel apartments and flats increased gradually since 2008 from 168 to 216 in 2015, followed by a decline since in 2016. The number of hotel apartments in Dubai declined from 206 hotel apartment buildings accommodating 24,966 flats to 196 with 24,698 flats in 2017. After registering a dip in 2014 to 75 per cent and then increasing in 2015 and 2016 to 79 per cent and 82 per cent, respectively, the occupancy reached 80 per cent by the end of 2017. The standard hotel apartments registered an average occupancy level of 81 per cent while deluxe category registered a slightly lower occupancy level of 78 per cent.
Currently, Dubai has various internationally branded residence accommodation owing to its image of luxury tourism destination. A large number of operators are also entering the market to cater to the growing demand driven by tourism. By 2020, significant supply is expected to be added to the existing stock of branded residences with the completion of various projects in Dubai, including Dubai Pearl in Dubai Marina, Joya Verde in JVC, Raffles-branded residences, The Pointe, Palm Promenade, Palm West Beach, The St Regis Beach Club and Palm Beach Residences in Palm Jumeriah, The Banyan Tree Residences Hillside in JLT.
The majority of the branded residences projects operate on a rental pool agreement format, under which units are sold to investors with a lease back option to the rental pool agreement for a period of time. It offers developers a low risk option that helps fund development and management during the tenure of the agreement with owners and to retain ownership of the development in the end. The Address Residences and residences owned by The First Group are operating on a rental pool model.
As of February 2018, the average rents in The Address Residences and Burj Khalifa, range between Dh107,500 for a studio to Dh267,500 for a 3-bedroom apartment, while sales prices range between Dh2,250,000 for a studio to Dh14,000,000 for a 3-bedroom apartment. In comparison, the average sales price for Bulgari Resort and Residences, Jumeirah Bay Island, range between Dh4,502,000 for a 1-bedroom apartment to Dh60,000,000 for a 4-bedroom apartment.
The writer is a senior consultant at Cavendish Maxwell. Views expressed are her own and do not reflect the newspaper's policy.
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