New York hotel chain to manage 101-storey project at Dubai Marina
In the past year, prices for residential apartments increased by an average 38 per cent and by 24 per cent for villas.
Rents during the same period rose by 20 per cent for apartments and 17 per cent for villas. Apartment prices have performed better than villas, according to a Standard Chartered report released last week.
In the second quarter, apartments sales were up 12 per cent and rentals 7 per cent on the first quarter.
The independent chain Hampshire Hotels Management, which has hotels in the United States, India and Thailand, will invest in and manage the Dream Dubai Marina under its luxury brand Dream Hotels. The total value of the project is Dh1.5 billion, including construction costs.
The building would be among the world's 15 tallest towers when complete.
Dream Hotels has a long-term licence deal with Wyndham Group of Hotels under which Wyndham, an international hotel chain, promotes the brand.
The 101-storey Dream Dubai Marina in the emirate's freehold zone will comprise 300 hotel rooms and 420 serviced apartments. The project started in 2008 but then stalled because of the financial crisis. The hotel is due to open in the last quarter of next year and the serviced apartments will be ready in five years.
Prices of the apartments, which will range from 1,200 square feet to 7,000 sq ft of space, will start at Dh2 million for one bedrooms and will go up to Dh25m for the penthouses, said Abuali Malik Shroff, the chairman and managing director of Sheffield Holdings, the owner and developer of the building.
"It will provide an investment opportunity with long-term returns," Mr Shroff said.
The concept of hotel apartments as an investment is emerging in the Dubai market.
"In particular it lends itself to the condo hotel market by allowing multiple and stratified ownership with unified management," said Chiheb Ben Mahmoud, the executive vice president and head of hotel advisory for Middle East and Africa at the property company Jones Lang LaSalle.
"Prices of hospitality managed apartments have in general evolved in line with the general market trends, while commanding a premium has depended on a large number of factors such as the hospitality brand and the location."
While a brand can account for more than 25 per cent of the price of a hotel apartment, the cost also depends on nearby amenities such as public transportation.
"The user of a hotel apartment is typically looking for a hassle-free solution to a temporary lodging problem," Mr Ben Mahmoud said. "Any external factor that contributes to addressing the particular needs of the occupiers will be expected to positively impact the apartment price level."
At 420 metres, Mr Shroff claims Dream Dubai Marina will be the world's tallest combined hotel and hotel apartment building. That would dwarf the current tallest free-standing hotel JW Marriott Marquis at 355 metres.
Hampshire Hotels, based in New York, expects to open a Dream Hotel in Abu Dhabi by the latter part of 2015.
Sheffield Holdings and Hampshire expect to open another five hotels in the Middle East and the Indian subcontinent in the next five years, with two in the UAE.
"Depending on how things move in Lebanon, we want to open there, it's a great market," said Sant Singh Chatwal, the chairman of Hampshire Hotels. "We are also eager in Istanbul."
Revenues for Dubai's hotel and hotel apartment operators rose an average 18.6 per cent in the first quarter over the same period last year to touch Dh11.6bn. The average hotel room rates increased from Dh607 last year to Dh637 this year. For hotel apartments, the prices rose to Dh437 this year from Dh421 for last year, according to Dubai's Department of Tourism and Commerce Marketing.
As of June, total rooms in hotels and hotel apartments in Dubai numbered more than 81,000, and occupancy rates for both the segments were around 84 per cent.