Driven by the expected 25 million visitors to Dubai by 2020, Buroj Property Development, a real estate development company, plans to develop 10 serviced apartments across Dubai by next year, Emirates 24|7 can reveal.
“We are investing Dh700 million in four serviced apartment projects this year and we plan to add another six similar projects across Dubai by 2015.
“We believe there is a lot of opportunity in this sector as the number of tourists expected to visit are set to rise till and post-2020,” Ismail Ahmed,Chief Executive Officer, Buroj Property Development said.
The first four of the serviced apartment towers, comprising over 450 units, will come up in International City (IC), Dubai World Central (DWC) and Jumeirah Village Circle (JVC).
“There is high demand for serviced apartments not merely in DWC, IC and JVC communities, but all across Dubai. “We see is a great opportunity, particularly in the mid-range category, thanks to the incentives announced by the Dubai government, and the growth to be driven by the Expo 2020.”
The latest statistics issued by Dubai’s Department of Tourism and Commerce Marketing (DTCM) revealed hotels welcomed over 5.8 million tourists in the first half of 2014, an increase of one per cent compared to the same period last year.
However, the total revenues for hoteliers and hotel apartment operators reached Dh12.74 billion, registering an increase of 10.9 per cent year-on-year.
Average length of stay was 3.4 days in hotels and 5.7 days in hotel apartments during the first six months of the year, DTCM stated.
In fact to propel growth in mid-range hotel segment, Dubai government has already announced financial incentives, which includes companies to be granted a concession on the standard 10 per cent municipality fee, land transfers becoming easy with approvals being centralized and given within three months.
Dubai will be hosting Expo 2020 from October 2020 to April 2021 and in the run-up to the event nearly 277,000 new jobs will be created.
All set to start construction
According to Ahmed, the designs for the four towers are complete and the company is awaiting approvals to start construction.
“We will start construction early next year as we want to complete these towers by end-2017,” he says, adding, “We have enough liquidity to allow us to finance all our projects… we will not be borrowing from financial institutions.”
It has been reported that over 100 applications have been submitted to DTCM by developers/companies who plan to build mid-range hotels.
Experts have said that the numbers will increase once the final master plan for Expo 2020 site is unveiled.
Oversupply in serviced apartment sector?
Ahmed does not believe so.
“We are expecting 25 million visitors by 2020. Those primarily visiting the Expo will be businessmen and I am sure that majority of them will be investing in Dubai’s real estate market once they see the excellent infrastructure here and the solid return on their investment.”
The other reasons are growth in population and affordability, he adds.
“The population of Dubai is expected to grow by at least five per cent per year as the economy will boom and more jobs will be created. Young professionals will look for serviced apartment.
“Secondly, prices here are significantly lower than other global cities even though we saw the prices rise in 2013. “If you compare London, Paris or any other global city to Dubai, the city offers infrastructure at par with global cities but the cost of buying a property in a prime location is considerably lower.”
The Wealth Report 2013, produced by Knight Frank, a global property company, proves the point.
The report stated prices of Dubai’s prime luxury properties are 10 times lower than Monaco, the world’s most expensive residential property market.