Work on the Dh2.3 billion (US$626 million) Palazzo Versace Dubai is "well under way", but original plans for a refrigerated beach have been scrapped after concerns over its environmental effects. Emirates Sunland Group said it was half-way through building the palatial hotel on Dubai Creek.
Eighty per cent of the 169 private residences, which start from Dh17.7m, were sold before the economic crisis and financing had already been secured from a syndicate of banks, said Soheil Abedian, the managing director of Emirates Sunland Group. "The majority of buyers had paid 50 to 60 per cent, so we were able to continue with construction," Mr Abedian said. The Palazzo Versace Dubai will be the second Versace hotel after the launch of Palazzo Versace Gold Coast in Australia in 2000.
As well as the private residences, which will be fitted out with furniture designed by Versace, Palazzo Versace Dubai will have 217 hotel suites. More than 100 specialists from around the world have been recruited to a workshop based in Abu Dhabi to produce mosaics for the hotel, and specialists have also been flown in to hand craft the wall panelling and ceiling vaults, according to the developer.
But Mr Abedian admitted that "sales have slowed in the past few months", and the developer has had to be more lenient about receiving payments in the crisis. "We're looking at them on a case-by-case basis," he said. "Not one single Versace apartment has been cancelled." The company decided to abandon plans for a refrigerated beach, which would involve a cooling system of pipes under the sand, after consultants concluded that its high energy consumption would be environmentally unsustainable.
"The idea, as good as it sounded at the time, is not right for today," Mr Abedian said. The hotel is part of the wider Dubai Properties development, Culture Village, at Dubai Creek. Palazzo Versace is expected to open in 12 to 18 months, depending on the progress on the infrastructure of Culture Village. "We can only open our project when we have received all the infrastructure required for the opening, such as electricity, water and the road," Mr Abedian said. "We are hopeful that within the 12 to 18 months they would be provided.
"The latest news of the merger of Emaar Properties with Dubai Properties and others is fantastic news for the future for many of the developments." But some analysts say there is already an oversupply of five-star hotels in Dubai. "The Dubai hospitality market has been strongly concentrated on developing high-end luxurious properties during the last five years," said Arnaud Andrieu, the vice president at CBRE Hotels. "Even if projects have been cancelled during the last months, the Dubai five-star hotel supply is, by evidence, nowadays oversupplied and still five-star hotels are planned to be delivered during the next year, even if with delay."
But designer hotels, as global brands, had a competitive advantage, Mr Andrieu said. A drop in demand and subsequent reduction in room rates caused a 40 per cent drop in Dubai's revenue per available room in May. Mr Abedian said that given the high-end positioning and famous brand name, the hotel would have no difficulties attracting guests. "If you want to be in a place where your glass is worth $120, you go to Versace," he said.