India’s Oberoi hotels group has restarted talks with Aldar to build two hotels in Abu Dhabi – seven years after originally signing a deal.
In 2007, Oberoi Hotels and Resorts signed a deal with the developer for luxury hotels in Aldar’s Yas Island and Al Raha Beach projects.
“Both these projects were put on hold due to the worldwide financial meltdown,” said PRS Oberoi, the executive chairman of the Oberoi Group. “As the market is now more buoyant, we are re-engaging with Aldar to bring the Oberoi experience to the emirate.”
Aldar did not immediately respond to queries about the projects.
The global crisis that hit the financial markets in 2008 knocked the wind out of some hotel projects in the UAE, and most did not start construction until near the end of 2009.
Those that were delayed or fell by the wayside included projects in The Lagoons, The World, Palm Deira, Palm Jebel Ali, The Waterfront, a number of hotels in Dubai’s Business Bay, such as the Dancing Towers, and a number of hotels on Saadiyat Island, such as the Shangri-La.
Master plans for Al Raha beach and surrounding areas were also put under review.
“Even now that work has restarted, the development is proceeding at a much more studied and careful pace, trying to keep pace with the general demand growth in the city,” said John Podaras, a partner at Hotel Development Resources, a consultancy based in Dubai.
“New hotel investment is unlikely to reach the pre-crisis frenzy as investors, and more importantly sources of finance, are being considerably more cautious, backed by much more strict guidelines from the Central Bank.”
Previously, loan-to-value (LTV) ratios were usually above 75 per cent, and debt was often obtained with the minimum of due diligence, he said.
Now projects go through stricter scrutiny, he said, and “what investment is happening is likely to be sunk into increasingly more viable projects”.
Still, while most operators in more mature markets explore other possibilities when things slow down, in the Arabian Gulf region operators have preferred to wait until the developer is ready to go ahead and complete the building to preserve the relationship with the owner, Mr Podaras said.
Oberoi has a property in Dubai’s Business Bay that opened in June last year.
Its second hotel in the country, Oberoi Al Zorah, a beach resort, is expected to open in Ajman during the final quarter of next year. The 115-room hotel will be located in a mixed-use complex comprising an 18-hole golf course, luxury apartments and retail space.
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