Dubai-based developer Deyaar has guaranteed annual returns of 7 per cent over two years to investors on one of its Dubai projects.
It made the pledge on its serviced apartments in The Atria – a 30-storey tower in Business Bay – which will be managed by Millennium & Copthorne Hotels when the building completes late next year.
Deyaar is also offering other benefits for potential buyers including stays of up to 20 nights at the property, discounted room rates for friends and family and money off at the restaurants in the tower.
The Atria is a project containing two towers. One of these will house the 347 serviced apartments, ranging in size from studios to three-bedroom duplexes. These have all been designed by interiors specialist Yoo Studio, with other features including an infinity swimming pool, a spa, gym and restaurants. The adjoining tower will contain 219 apartments.
Saeed Al Qatami, Deyaar’s chief executive, said that its offer was “unrivalled in the market”.
“The package offers investors the opportunity to own a serviced apartment in one of Dubai’s most cosmopolitan quarters, with 14 per cent guaranteed returns over two years,” he said.
“Although once best known as a commercial area, Business Bay is now a thriving social, tourism and business hub, with an active, urban lifestyle. It is among Dubai’s most in-demand residential areas.”
Offering a guaranteed return for a specified period, usually up to two years, has become a more widespread selling tool among developers of serviced apartments in Dubai.
Just last week, Schon Properties announced that it would offer investors in its iSuites development of 2,700 serviced apartments in Dubai Investments Park “guaranteed annual returns” of 12 per cent, although it did not specify the length of the guarantee period. Seven Tides had also previously offered a guaranteed return of 10 per cent per year for investors who bought serviced apartments at its Dukes Dubai project at Palm Jumeirah.
Myles Bush, the chief executive of Dubai-based brokerage PH Real Estate, said that “in principle, it’s a great idea” for developers to offer guaranteed returns for a limited period. “It certainly helps to bring in a higher number of potential buyers.”
But he said that buyers need to look closely at the track record of the developers offering the returns and at prices for comparable serviced apartments.
“We shouldn’t always believe everything it says on the tin in terms of the guarantees being paid back. They need to look at the developer – have they done this before? Have they succeeded in delivering what’s promised?” said Mr Bush. “The second thing is to do a comprehensive market analysis to make sure that the developer is not loading that price on top of the selling price.
“I think people have fallen victim before where they have seen these high returns. They get very excited and think it’s fantastic but ultimately they are paying more on the initial asking price than the property is worth.
“A buyer needs to be confident in the developer and in the fact that they will be able to rent it out for a competitive rental yield.”
mfahy@thenational.ae
Follow The National's Business section on Twitter
