The long-delayed Fairmont Palm Hotel will receive $115 million from Standard Chartered Bank in the first foreign financing of a UAE hotel project since the economic downturn.
Fairmont Palm wins foreign financing
Standard Chartered Bank is providing US$115 million (Dh422.3m) in financing to complete the long-delayed Fairmont Palm Hotel on Dubai's Palm Jumeriah.
The deal represents the first foreign bank financing for a hotel project in the emirate since the downturn, according to IFA Hotel & Resorts, based in Kuwait, which is building the hotel.
The 400-room Fairmont was scheduled to open last year but was stalled by financing issues. The hotel is one of several that have been delayed on the Palm Jumeirah, which is one of the signature projects of the Dubai developer Nakheel.
The new financing deal "definitely shows that things are looking better", said Harjinder Singh, an analyst with CB Richard Ellis.
High-end hotels have been weathering the downturn better than most, Mr Singh said. But many have been discounting rates to woo customers, he said.
Occupancy rates have remained strong but average room rates were down 10 per cent through the first half of the year, compared with same period last year, according to data tracked by STR Global
"The trend is the luxury segment is picking up faster than the budget segment," Mr Singh said.
Palm Jumeirah is a key market for IFA, which describes itself as the "largest foreign investor" on the island. The Fairmont will be the company's fifth development on the Palm, alongside the Palm Residence, the Al Shalal Beach Club, Golden Mile Palm Jumeirah and The Residences. It is also building Kingdom of Sheba, a high-end residential and resort development on land near the Atlantis.
The financing "is evidence of renewed confidence in the region and the industry and confirmation of ongoing confidence in the IFA Group and its projects on the Palm Jumeirah", said Joe Sita, the president of IFA Hotel Investments, the IFA unit spearheading the project.
This is the second financing deal between Standard Chartered and IFA, following a $165.9m loan last year to finance The River, a project in Bangkok by the Thai developer Raimon Land.