The planned sale of some of Emaar Properties’ hotel assets could help fund a Dh10 billion ($2.7bn) retail complex at Dubai Creek Harbour as Dubai's biggest developer seeks to become “asset light”, its chairman said on Tuesday.
Asked by reporters whether a potential hotel asset sale would help the company finance Dubai Square, Mohamed Alabbar said: “I think you guys know us very well…we’ll IPO [Emaar Hospitality as planned ] so we’ll give most of the money to our shareholders, but then if we need it we can use that money.”
Emaar unveiled on Tuesday plans to build a Dh10bn retail complex called Dubai Square as part of its Creek Harbour development, where the Creek Tower bigger than Burj Khalifa is under construction. Dubai Square will be half funded through debt and half from Emaar’s capital, Mr Alabbar said.
Emaar Hospitality Group, a unit of Dubai’s biggest real estate developer, plans to sell non-core assets including its hospitality portfolio bar a handful of key valuable assets, to finance business growth and focus on hotel management contracts.
The main objective of an asset sale would be to help Emaar have a lighter cost base, Mr Alabbar told reporters. “The thing is, we should not be holding assets as a hotel operator. Hotel companies don’t own assets – Four Seasons doesn’t own hotels, Hilton doesn’t own hotels, but we own everything and will continue to own the majority.
“But this is the first chunk of [how], in the future, we should really just be asset light, as that is how the hospitality business works,” he added.
Asked whether the company would retain flagship hotels, the Armani Hotel in Burj Khalifa and The Address Dubai Mall, among others, Mr Alabbar said: “Of course, it’s Downtown, these are our landmarks.”
He did not indicate when the asset sale would commence.
The company has hired Standard Chartered bank for the process and expects to sell around $1.4bn of assets, the UK’s Financial Times reported last week, citing unidentified people briefed on the proceedings. Mr Alabbar told CNBC Arabia last Tuesday that a long-awaited public listing of Emaar Hospitality would go ahead as planned, but he did not provide a timeframe.