'Buy to let' hotel rooms to hit market

The "buy to let" hotel room concept is slowly starting to take off in the UAE as the financial crisis has created doubts about returns on investment in the property ­industry. Al Jabal Real Estate, a Dubai-based property developer, will today announce plans to develop a 500-room hotel in Ajman, which will allow investors to purchase rooms and benefit from returns based on occupancy levels. "If you buy a house today and rent it out, your investment return would be in the range of 5 per cent to 8 per cent, but if the hotel has 60 per cent occupancy, the investor's returns would be in the range of 16 per cent," said Saeed Currimjee, the managing partner of Al Jabal Real Estate and Al Jabal Holdings. "The management company will take a share in the profits, and the rest will be equally divided by the room owners, so no matter how many times your room has been occupied you would still get an equal share." The Crescent Star will be a 33-storey, four-star hotel-apartment property located in Ajman's Marmooka City, an estimated 30-minute drive from the Dubai airport. The management said it expected the project to be completed in 40 months, with an investment of about US$80 million (Dh293.8m). Prices will range from Dh547,500 for a 520 square foot room to Dh1m for a 2,000 sq ft room. "The rooms are fully furnished and Wi-Fi is free of charge," said Mr Currimjee, adding there were no limitations on foreign investors. Mr Currimjee said the buy-to-let concept should not be confused with timeshare. "With timeshare, you don't get a return on your investment, you just get time slots where you can spend your holiday in a certain destination," he said. Already an emerging trend in Europe, the buy-to-let concept was introduced in the UAE by the Egyptian hotel developer Orascom Hotels and Development in 2005 for its resort project The Cove in Ras al Khaimah. "The concept of buying a hotel room to let is not new, it's been around for years in Europe and right now in Dubai there are a handful of companies that have offered it," Mr Currimjee said. Al Jabal Real Estate is negotiating with a hotel management company to run the hotel. Earlier this year, Al Jabal Real Estate launched Crescent Towers, which includes three 18-storey towers, also located in Marmooka City. The project will be completed by 2011. "The reason we are developing properties in Ajman is because it is five times cheaper than it is in Dubai," said Mr Currimjee. abakr@thenational.ae