Damac Properties is to set up a second hotel apartment management company to maintain 2,200 serviced apartments it is developing across Dubai this year.
Damac, which raised US$348 million in a share sale in London five months ago, said that the new management company, Naia, will eventually manage more than 3,800 Damac developed serviced apartments as the company increases its total serviced apartment portfolio in the region to about 10,000.
It will operate alongside Damac’s existing luxury serviced hotel apartment operator Damac Maison Hotels and Hotel Apartments which opened its first block of 355 serviced apartments at Damac Maison Dubai Mall Street close to Burj Khalifa on New Year’s Eve.
Naia, which is Hindi for "new" and Arabic for a "small deal", will be targeted at a younger, trendier clientele than the company's existing Damac Maison brand, the Damac managing director Ziad El Chaar told The National. However, he added that prices for the two brands would be similar, depending on location.
“We are launching Naia really out of necessity,” Mr El Chaar said. “The scale of this operation is very large with an ultimate total of 10,000 keys, 50 per cent of which are likely to be rented out by owners through our rental pools. We believe that we need a coefficient of two employees per hotel apartment. The two brands will be run by separate teams.”
Mr El Chaar added that the operators would be run at cost by the developer to keep ownership costs low for owners in the hope of tempting more purchasers to buy high premium serviced apartments.
Naia will manage a portfolio including two schemes launched before the global financial crisis: the 17-storey Naia Downtown Jebel Ali (formerly known as Suburbia), which will begin operations this month and 800 homes at the company’s Miracle Garden project in Dubailand.
It will also manage Damac’s two new projects at Dubai World Central close to the Expo 2020 site; its 10-storey, 270-apartment Tenora block and its 900-key Celestia as well as Damac apartments at its Akoya golf course scheme, Jumeirah Village and Business Bay.
Last month Damac issued a $650m five-year senior unsecured sukuk, maturing in April 2019 at a profit rate of 4.97 per cent which were listed on the Nasdaq Dubai and the Irish Stock Exchange.
Damac said that the cash would be used to fund land purchases but declined to say whether this would be for further serviced apartment schemes.
Dubai Tourism and Commerce Marketing statistics show that Dubai currently has an inventory of 87,000 rooms – a number which needs to rise to about 150,000 rooms to service the anticipated 20 million tourists expected to flock to Expo 2020.
According to HotStats, occupancy rates for hotels in Dubai climbed to 88.4 per cent in March 2014 with average room rates at just under Dh1,500 per night. The report added: "The Dubai hotel market continues to grow at an impressive rate, with average rates in the first quarter of 2014 increasing 5.6 per cent to $389.99."
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