More developers willing to mix up location options as short-stay market takes hold
Dubai’s real estate market has always been partial to hotel/serviced apartments. Any well-established cluster within key central points of the city has had developers targeting investors with such offerings. Now, the momentum is taking developers to locations further out.
“We have found that the rental market is very strong in certain newly growing areas on the outskirts, such as Dubai Sports City, Jumeirah Village Circle, etc with rental yields at 9-10 per cent,” said Samir Salya, Chairman of Reign Holdings, which operates the Arthur & Hardman brand for its residential offerings. “This in effect is more attractive than having rental from any blue-chip property or residential in Europe.
“We believe in our product, which is a boutique hotel. Our prices have been the same in 2014 as today.”
“We have had a land bank since 2013, and will only target mid-tier in the freehold cluster for the moment. There’s huge scope in this area. We have higher returns from all our projects.”
The pipeline for hotel/serviced apartments is only going to get longer, with newer locations such as Dubai South, Creek Harbour and MBR (Mohammad Bin Rashid) City also set to attract developer interest. Now that Dubai has clarified its short-term stay regulations, it could get investors to seriously evaluate their interest in “holiday homes”. New players such as Bueground, which picks up properties in select residential towers for the corporate traveller, has also broadened the scope for this type of property.
Reign Holdings itself is part of a regional fund syndicate, said to be valued at Dh1 billion. “We have no intention of raising any capital from institutional investors,” said Salya. “At some point in the future, our systems and process in place will allow us to float the group and keep a major share in the business. That will most likely work as our exit strategy.”
It has 10 projects in the pipeline in Dubai and has handed over 400 furnished units (Roma by Giovanni Boutique Suites in Dubai Sport City). Another 124 Italian-style luxury units (Milano by Giovanni Boutique Suites, are in construction in Jumeirah Village Circle and will be completed in June 2018. The plan is to launch another development there — the Naples with 167 units in August.
But aren’t there too many off-plan launches happening in Dubai right now? And that too with a significant gap still existing between supply and demand.
“We have seen that there are many projects in the market as off-plan … but our sales have been pretty smooth,” said Salya. “In my opinion, the pricing doesn’t really vary. We have always based the price at between Dh1,100 and Dh1,500 a square foot. We have been able to achieve these in the past and in the present.”
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