Comment: Meeting the needs of investors
In a city that moves at the pace Dubai does, launching multiple properties that bring investors original opportunities in prime locations, with attractive returns, isn’t always easy to achieve.
Hospitality is one of Dubai’s leading industries and there are many investors seeking a slice of the pie, but without the capital or borrowing capability required to fund a hotel themselves. Equally, there are individuals seeking to buy in Dubai, who are unsure of how to rent and maintain a property they don’t wish to live in.
This is where the development of serviced branded residences, operated on a hotel condo business model, comes in, with significant benefits on offer to both developer/owner and the investor. This model is one of the quickest ways to launch a product with minimal risk to the developer, as apartment investments are sold off-plan, thus funding the project directly.
However, traditionally there have been limitations, as developers tended to make it mandatory for investors to place their purchased apartment in the hotel rental pool, allowing them access to it for just a few days a year.
We’ve tried a different approach at the Anantara The Palm Dubai complex on The Palm Jumeirah. Here, we own apartments and hotel rooms, all operated under the Anantara brand and benefitting from the hotelier’s professional management, service and marketing.
We offer investors a guaranteed ROI of up to 10% via a rental management scheme that takes care of the entire process and provides stress free returns.
At Anantara The Palm Dubai Residences, we put our focus on investors and end-users who may want to live in their apartments, use it as a holiday home or treat it as a dedicated investment property, to maximise ROI. After three years, owners can choose to live in their apartment all year around.
However, hotel rooms at Anantara The Palm Dubai Resort are only for investment purposes and as such owners are only allowed to use their room seven days per annum.
Combined with freehold ownership, sales across all categories have been strong, allowing investors of any nationality to enjoy the returns as well as potential capital gains of being associated with the prestige and quality of the Anantara brand.
Building on this success, and keen to expand our hotel portfolio over the coming five years, we developed Dukes Dubai, also on The Palm Jumeirah, and increased our promise to investors. Here, we developed an ownership model that has allowed us to offer a guaranteed 10% ROI, over five years; in other words, 50% cash back to investors on their initial outlay. Again, the hotel residences are sold on a freehold ownership basis, fully furnished with multiple floor plan layouts to choose from, allowing owners to use their hotel apartments for seven days a year, with the hotel managing the remaining 358 days. Ninety percent of units were sold ahead of the opening on December 28, 2016, indicating that the demand for this type of product — even in challenging economic times — is there.
When creating these models, it is easy to look around at the competition and amalgamate the most successful parts of various offerings. Here at Seven Tides we have instead conducted meticulous studies on Dubai’s most sought after areas as well as market conditions, investor trends and the prevailing economic climate.
We have worked hard to create property investment models that continue to resonate with local, regional and international investors, and we have the confidence to stand alongside our partners, providing them with calculated risk across a range of budgets. Subsequently, together we are now reaping the rewards of that investment strategy.
About the Author: Abdulla Bin Sulayem is the CEO of Seven Tides. He will be speaking on a panel session at the Arabian Hotel Investment Conference 2017 (AHIC) entitled ‘Hotel Room Investments: The Alternative Model’. AHIC, which takes place from April 25-27 at Madinat Jumeirah in Dubai, is the premium knowledge and networking platform for hotel investors in the Middle East. Visit: www.arabianconference.com