Hotel apartments lure Dubai’s big developers Deyaar and Damac

Deyaar expands its hotel apartments portfolio as Dubai expands along with the tourist numbers.

The three 19-storey towers will include 286 one to four-bedroom apartments. Courtesy Deyaar

Dubai’s big developers are being drawn to hotel apartments as they move in on a sector traditionally dominated by small local operators.

Deyaar yesterday launched its second hotel apartment project near the science and biotech freezone DuBiotech.

Al Barsha South is also the location of 440 off-plan homes from Tecom Investments, which operates 11 business parks such as DuBiotech and Dubai Knowledge Village, expected around the end of next year.

Deyaar’s residential and hotel apartments are expected to complete in December 2016.

Along with two residential towers, the hotel apartments will form the Montrose complex. The residential apartments will go on sale from Saturday.

The three 19-storey towers will include 286 one to four-bedroom apartments. There will be 180 hotel apartments, with studios, one- and two-bedroom units. The size of the units range between 759.52 square feet and 2,442.76 sq ft.

This would be Deyaar’s second hotel apartment project after The Atria, another mixed-use residential and hotel apartment development in Business Bay, launched in the second quarter.

Property sales boosted Deyaar’s first half net profit by 145 per cent to Dh114.6 million from Dh46.6m last year.

Damac, another Dubai developer, is venturing into the increasingly busy segment with its Golf Veduta serviced hotel apartments in Dubailand.

Also known as serviced apartments, the hotel apartment market in Dubai is still dominated by local players with limited internationally branded stock, according to Filippo Sona, the head of hotels at the consultancy Colliers International’s Dubai office.

“There is still a gap for internationally branded limited-serviced and mid-market brands, as well as brands in the lifestyle segment,” he said.

There are 62 serviced apartment operators in Dubai, excluding those properties directly operated by their owner.

In Dubai, a majority of the serviced apartments, or 38 per cent, are unbranded, 32 per cent have a local brand, such as Golden Sands, Xclusive Group, Dunes, Abidos and Flora, and only 30 per cent is internationally branded, such as Marriott Executive Apartments, according to Colliers.

There are 6,052 more units waiting to come on line in the short to medium-term. Among those scheduled this year are Accor’s Adagio in Al Barsha with 201 units.

Marriott Executive Apartments in Dubai Health Care City opened this year with 128 units.

With fewer employees per room than a hotel, serviced apartments have a leaner operating model and can tap into the extended-stay corporate travel segment.

Moreover, it is easier for serviced apartments to shift their focus from short-stay to long-stay guests during downturns.

“The supply growth of serviced apartments has outstripped hotels in recent years, with a compound annual growth rate of 14.3 per cent in the past 10 years, versus a 10.1 per cent growth in number of hotel rooms,” Mr Sona said.

Dubai has the largest concentration of hotel apartments in the UAE, accounting for 24,924 rooms as of August, according to a Colliers study.

Hotel apartments represent 28 per cent of the stock of accommodation in Dubai.

Last year, the occupancy rate at serviced apartments was an average of 82 per cent, which rose by 6.5 per cent, with room rates at Dh433, increasing by 3.8 per cent in the previous year.

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