For such buyers, the best option for investing in Dubai property may be to purchase ownership of a hotel room or serviced hotel apartment. What is it and what are the features of the choice and purchase of real estate in hotel complexes, we decided to ask the Executive Director of IMEX Real Estate Arthur Kobozev.
Arthur, tell me, what does the buyer get when buying property in a hotel or hotel serviced apartments?
The buyer, in this case, becomes the owner of not only a turnkey finish, but also the design of rooms by famous designers, as well as furniture, electronic and household appliances and interior items. The company operator of the hotel assumes all responsibility for the maintenance, repair, proper design and maintenance of guests according to hotel standards. As a rule, rooms and apartments are offered for sale in hotel chains of the 4-5 * category.
What are the advantages of buying a hotel apartment compared to the purchase of, say, an apartment in an ordinary residential complex?
The benefits of this kind of investment are obvious. Owners of hotel apartments receive in their property not just a real estate unit with a "design" decoration, furniture and a set of high-quality equipment. Perhaps the main thing is that the buyer of such real estate has the right to use all the amenities of the hotel - room service, maid and concierge services, Spa-centers and fitness rooms, bars and restaurants. In addition, since property is acquired, the buyer has the right to apply for UAE residency visas for himself and his family members.
That is, in fact, the investor acquires part of the hotel in the property?
Not certainly in that way. There is a difference between property under the full control of the hotel operator and property only served by the hotel but not managed by it.
And what is the difference?
The fact is that when an investor purchases a hotel room or apartments under the management of a hotel, then at the same time with the contract of sale (or, alternatively, in the purchase contract itself) he signs an agreement on the transfer of the property (in this case, a hotel room) to the management of the hotel operator. This agreement reflects the standards for the operation of real estate, its value, as well as the procedure for obtaining and distributing income from its use. That is, the operator company takes over not only the maintenance of real estate, but also its management in order to generate income. The conditions of the owner’s residence in the purchased housing are separately specified, namely the period during which such accommodation is possible, the booking procedure, the cost of living in excess of the agreed period, and so on.
If we are talking about apartments that are only serviced by the operator, then in this case, the homeowner disposes of his property. He can live in apartments himself or rent them out, either independently or with the help of a management company. But, as in the case of a hotel room, the owner of the property is obliged to pay for the maintenance of his apartments in accordance with the standards of the operator company.
Who, in your opinion, is primarily interested in acquiring hotel apartments?
I would single out the two main target groups of buyers of hotel apartments. The first group includes investors who would like to use real estate for their own comfortable living (or for the stay of their relatives, friends and acquaintances) for a short period of time in a year, for example, during holidays or vacations. At the same time, the investor is relieved of the need to constantly take care of the maintenance of real estate and incur additional operating costs, but on the contrary, he can count on making a profit from it. The choice of this group is a hotel room or apartment managed by a hotel operator.
To the second group, I include clients who are eager to get the best of everything, and are willing to bear some additional costs. Although in this case, their benefit is obvious: in fact, they live in a five-star hotel, at the same time they pay only a small part of the cost of the "room" and have the flexibility to use their property. If necessary, they can The Address, Downtown Burj Dubai transfer their housing to the management of the operator company in order to generate income, or sell it in order to return the investment. For this category, serviced hotel apartments are the choice.
One way or another, but for any investor it is important that his property possesses maximum attractiveness. How are things going in the hotel industry, are the consequences of the crisis reflected in it?
According to the latest published data in the global Deloitte study, in 2008, Dubai ranks second and third in the world ranking in terms of average income from one hotel room and average room price, respectively. The average cost of a room in Dubai hotels in 2008 was US $ 300 per day, and the average income from a room was US $ 237. Only Moscow is ahead of Dubai, which is not surprising, given the fact that the Russian capital is a world leader in terms of property prices and at cost of living.
At the same time, hotels in the Middle East region were least affected by the consequences of the global economic crisis, showing in the second half of 2008 an increase in the rate of average income per room by 14.5%.
Of course, it would be unreasonable to believe that this year the hotel business in Dubai will grow at the same pace, however, compared to other countries, this emirate has every chance to remain in the lead. The latest figures for February 2009, by the way, confirm this. Although the overall occupancy rate of Dubai hotels has slightly decreased, but overall, it remains at a very high level, approaching 80%, and Dubai beach hotels were 95% full in February.
How many offers on hotel apartments are there on the market right now?
There are a lot of offers for hotel apartments in the Dubai market. However, you should approach the selection very carefully. Since you are acquiring not only a property, but also a set of rights and obligations related to its use, a particularly careful study of the relevant documents is required. In addition, you should evaluate the prospects of the hotel project itself, in which you consider the possibility of acquiring apartments. And, of course, when buying any property, you need to familiarize yourself with all possible options in order to make the choice that best suits your requirements.
For example, if you are a businessman and visit Dubai mainly for business, then perhaps you should pay attention to apartments in new hotel complexes in the business districts of the city. One of the latest such projects is The Address, Downtown Burj Dubai, which opened last October and is managed by the hotel operator Emaar Hospitality Group. This chic 63-story building has a strategic location in the heart of downtown Dubai, in close proximity to the tallest building in the world - Burj Dubai. The cost of apartments here starts with 950 thousand dollars.
If you are looking for a place to relax on the sea, then you should pay attention to hotel projects on the "palm" island of The Palm Jumeirah. For example, Grandeur Residences luxury serviced apartments can be purchased for around $ 6,400 per square meter. According to the most pessimistic estimates, the net annual income when transferring the apartments to the hotel will be 5 8% of the total investment. At the same time, I want to emphasize once again that the owner is relieved of all the hassles and expenses of maintaining and managing real estate, and is free to choose whether to live in his apartments on his own or rent them in order to obtain a steady income.
Well, another typical option is when the acquisition of hotel apartments is considered primarily as an investment, and only then - as an opportunity to have housing. Here you can recommend paying attention to the projects of large international hotel chains. For example, it is possible to purchase a hotel room managed by the Swiss Movenpick chain to stay there 30 days a year for free, or in any other hotel of the same chain around the world with significant discounts. Moreover, during the first three years, the operator company guarantees the owner an annual net income of 6.7% of the amount of investments placed. The cost of this number is 175 thousand dollars.
Let's move on to practical recommendations on the topic of how to approach the choice of an investment object?
The most important recommendation is to try to see everything with your own eyes. And for this, we, at IMEX Real Estate, organize free familiarization tours for Dubai for our clients. We offer our customers an individual rich program for the day, with visits to all projects of interest. During the tour, our customers can see and compare themselves not just individual objects for sale, but all the main projects of the new urban development, in order to consciously determine the direction of the search. Our consultants accompanying the client will show, tell and answer all your questions in real time. This service is aimed at providing customers with the most complete picture of the real estate market in Dubai, and is demanded, first of all, by those who first think about purchasing real estate in the Emirates.
Do your offers cover only Dubai projects?
Of course, interesting offers for hotel rooms and apartments are not only in Dubai. And, although the Dubai real estate market is the largest and most dynamic, if the client has a desire, we can offer interesting options in Abu Dhabi and the northern emirates. More detailed information about the offers of IMEX Real Estate, as well as the opportunity to make a request to our specialists, is available on our website www.imexre.com
Thank you for the interview. We wish you success.
