Gallery Suites - a subsidiary of the UAE-based investment company IBC Group - has joined forces with India-based hotel booking portal OYO Rooms to furnish and manage 10,000 premier holiday homes in Dubai.
The deal, valued at Dh18 billion, will manage a portfolio of elite properties located in different areas of the city.
Pranav Mehta, country head for UAE and Oman at OYO Arabia, said the venture is an opportunity for OYO and Gallery Suites to leverage their strengths together, as opposed to competing for the same market share.
“We are keen to expand our engagement with the Dubai market and grow along with the IBC Group through the course of this project,” he added.
Through this collaboration, Gallery Suites and OYO Rooms seek to emerge as the service providers of choice for the burgeoning rental holiday homes market in Dubai.
“Properties being furnished and managed by the partnership are focused within locations rated ‘high’ in the ‘occupancy heat map’ in areas including Dubai Marina, Palm Jumeirah and other exclusive addresses in the city,” said a joint statement released by Gallery Suites and OYO.
The occupancy heat map was used to illustrate property demand in a recent report released by Knight Frank, a London-based property consultancy firm.
"Dubai's holiday home market accounts for 2 per cent of Dubai's total households, which is the highest proportion of all other key global hub cities," said Khurram Shroff, executive chairman of Gallery Suites.
More than 10,000 active short-term rentals are currently listed in the city, which represents growth exceeding 160 per cent since 2016, he said.
UAE properties are providing high rental yields despite sales prices and rents softening in the first half of the year, according to a report by real estate listings portal Property Finder.
Dubai properties offer rental yields of more than 7 per cent on average, which compares favourably with other major cities.
Average rental yields in New York stand at 2.9 per cent, London 2.7 per cent, Singapore 2.5 per cent and Hong Kong 2.4 per cent.
"With increasing demand for short-term lets and holiday homes, particularly in the run up to Expo 2020, these types of lets are achieving between 25 per cent and 40 per cent higher returns when compared with traditional longer-term leases," said Nick Witty, managing director of Chestertons Mena.
As part of the deal, the IBC Group will retain ownership of the properties, leasing them to Gallery Suites to furnish and operate under permits issued to it. In turn, OYO Rooms will enable many of the fundamental operational functions - such as marketing, housekeeping and check-in/check-out facilities.
