With facilities including a flotation tank containing 600 kilograms of salt, showers programmed with mood lighting to pummel you with an assortment of sensations and two specially crafted building scents, Damac’s new Damac Maison tower has all the gimmicks you would associate with a five-star Dubai hotel.
The block of 355 serviced apartments, all but one of which have been sold to investors, officially opened to paying guests on December 31, with Damac renting out 150 of the apartments in its rental pool at rates starting at about Dh1,020 a night.
A final three-bedroom penthouse with a lavish terrace overlooking Burj Khalifa and The Dubai Mall including its own private jacuzzi is currently on the market for Dh14.8 million.
Owners in the block are then given the choice of whether to live in their apartment, rent it out privately or to put it into the Damac rental pool, which rents each of the apartments out through its own centralised hotel management functions for a 3 per cent management fee.
“We want to provide our buyers with all of the services of a five-star hotel,” says Ziad El Chaar, the managing director of Damac Properties. “At the moment there isn’t really anything else in Dubai which offers luxury hotel standards for serviced apartments.”
Damac, which listed on the London Stock Exchange in December, says it provides five-star hotel services such as spa, kids’ club, reception and restaurant at cost price in return for selling its hotel apartments at 15 to 20 per cent premium above what an equivalent apartment without the services would sell for.
And with the block providing the first of 7,351 serviced hotel apartments in the local area due to be completed under the Damac Maison brand by the end of 2017, Damac expects the concept to grow.
“We have many people in Dubai who are only visiting the city for two months a year. We have the perfect solution for them,” says Mr El Chaar. “We say during the two months you are in Dubai you can stay in this apartment. When you leave we will manage it for you. This apartment will make money for you.
"And at the same time when you come back you don't have on the same day to check if you have paid your Dewa bill, to check if you have paid Etisalat. You have everything ready for you."
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How does a serviced apartment differ from any other apartment or a hotel?
Serviced apartments try to be a hybrid between an ordinary apartment and a hotel, but different apartments fall in various grades between the two. Some serviced apartments are really just furnished apartments with a cleaner who comes in occasionally. Others can offer full five-star hotel facilities. They usually include a kitchen.
Is there a demand for them?
There are certainly many tourists in Dubai. According to the Department of Tourism and Commerce Marketing, more than 7.9 million visitors flocked to Dubai in the nine months to the end of September 2013 – a 9.8 per cent increase on the previous year – while hotels there reported the highest profit levels in the region last year for the fourth consecutive year. The DTCM adds that a quarter of all Dubai visitors stay in serviced apartments.
Is it lucrative?
At the moment it seems to be. Although Damac says serviced apartments tend to cost 15 to 20 per cent more than ordinary apartments and management fees can be quite steep, hotel occupancy in Dubai last year stood at 80.5 per cent, while revenue per available room stood at US$285 – one of the highest in the world, according to TRI Hospitality.
What’s the downside?
There is a lot of serviced apartments and hotels supply coming on to the market, which is likely to drive down profits in the future. According to Propertyfinder.ae, Dubai hoteliers plan to build 19,000 hotel rooms over the next five years – almost a third of the current number – as developers convert office towers into serviced apartments.
lbarnard@thenational.ae
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