Damac offers investors ‘rental pool’ opportunity
Dubai, March 26, 2012
Damac Suites and Spa, a subsidiary of Damac Properties, is offering individual investors an opportunity to gain exposure to Dubai’s hotel industry via a ‘rental pool’ programme for luxury serviced apartments.
The arrangement will be applied to apartments within Damac Properties’ first luxury serviced apartment development Burjside Boulevard, which is situated within the Burj District, a statement from Damac said.
The programme operates whereby a single investor buys a unit which they transfer into a pool of apartments. The apartment pool is then serviced and reservations managed in much the same way as a five-star hotel by Damac Suites and Spa, the statement said.
“Dubai’s hotel industry is surging, occupancy rates were the highest in the world in January 2012. There are a lot of individual investors who would like to invest in the hospitality sector, but there are very few avenues for small investors to gain exposure to this segment of the market,” said Niall Mc Loughlin, senior vice president, Damac Properties.
Damac Suites and Spa will deliver a bespoke services package and manage reservations. All revenue will be pooled, and once costs have been extracted, profit will be distributed accordingly amongst all participating owners.
“This is a way for individuals to invest in Dubai’s lucrative hospitality sector. Our ‘rental pool’ offering is a solid investment vehicle which provides for maximum returns while minimising risk,” Mc Loughlin said.
Hotel occupancy soared to 86 per cent in January according to the Dubai Department of Tourism and Commerce Marketing, the highest in the world. “More importantly, from an investment perspective, average revenue per room for January was the second highest globally, after Paris. The average room rate in Dubai was just under Dh 1,000 ($272.2) in January,” he said.
Apartment owners will also have the privilege of reserving an apartment within the complex for any length of time for their own purposes. This will be administered by calculating a slightly lower occupancy rate for that particular owner in the distribution of pooled revenue.
“Burjside Boulevard will be managed as per five-star hotel standards. We expect the occupancy rate for these serviced apartments will be extremely high given the quality of the development and its premium location opposite the Dubai Mall and within close proximity to the Burj Khalifa area,” said Mc Loughlin.
Luxury serviced apartments bridge the divide between high-end residential apartments and luxury five-star hotels. Dubai is a vibrant business hub, and it is very common for people to come to the Emirate for months at a time for work, he said.
“We are seeing strong demand from investors who know they are likely to be in Dubai for significant periods of time. This investment model is very appealing to people who want a luxury apartment available when they need it, but would like to make money from it when they are not in Dubai.”
International investors have been increasingly looking to the UAE for investment opportunities as the nation’s economy continues to expand. The IMF has confirmed the UAE’s economy grew by 4.9 per cent last year, and is forecast to grow a further 2.3 per cent this year.
Dubai received 9.3 million tourists last year, up 10 per cent from 2010, pushing up hotel revenue by 20 per cent according to Dubai’s Tourism Department.
The city’s largest malls Dubai Mall and Mall of the Emirates operate at more than 90 per cent occupancy rates, according to their owners. While shopping accounted for 30 per cent of Dubai’s GDP in 2011 according to a report by Standard Chartered Bank.
“Dubai is booming again and much of the growth is coming from the tourism and hospitality sectors. Damac Properties has recognised this market dynamic and is offering investors a strategic investment vehicle for gaining exposure to this particular segment of the market,” Mc Loughlin said.
Damac Properties is an internationally recognised, luxury-focused, high-end developer with a proven track record for delivering some of the most luxurious residential properties across the Middle East region. – TradeArabia News Service