Dubai real estate firm SKAI Holdings is offering deed ownership on hotel rooms at its new $1bn hotel and resort project on the Palm Jumeirah, becoming the first developer in the emirate to offer such a scheme.
SKAI has begun construction on the Viceroy Palm Jumeirah complex, which will be located on the trunk of the manmade island and will include 481 rooms and suites, 221 residences and six villas.
As part of its the sales strategy for the project, SKAI is offering hotel rooms for sale, priced from AED1.65m plus fees, with 20 percent paid upfront and the remaining 80 percent on completion of the project in late 2016.
While the concept is has been offered by developers in many western cities such as London and New York, this is the first time investors in the UAE have been given the chance to own deeds to a hotel room and avail of a monthly yield in return.
It is the first time purchasers and investors can buy hotel rooms [in Dubai],” said SKAI Holdings CEO Kabir Mulchandani.
“The yield per square foot (sq ft) for hotel rooms is much higher than commercial, residential or retail,” he claimed. “Between a hotel apartment and hotel room on a per sq ft basis, I will give you some numbers: 500 sq ft hotel room in a particular project goes for AED1,800 ($490) a night, so about AED3.6 per sq ft per night
“A 1,100 sq ft apartment in the same project goes for AED1,100 ($299) a night, as it is a longer term lease. So that is AED1 per sq ft. So that is a three and half times kicker on the yield. The finish between a hotel room and a hotel apartment is the same and the cost of building it is the same.
Mulchandani said the difference between the SKAI proposal and other similar schemes was the fact all the rooms are put into a joint rental pool, meaning the rooms owned by the hotel owners and the operator aren’t sold first and the investors left until last, as has been the complaint in some similar setups abroad.
“This is the fairest pool as the units we have held and the units Viceroy owns and the investor units are all put in the same pool so there is no segregation,” says Aloki Batra, a financial analyst at SKAI.
“What happens is most of the time is the hotel and operators’ units get sold first, but our units get sold in the same pool. Therefore, it is a revenue share, not a profit share. We are giving 40 percent [of revenue] straight off to the investors. This is paid out monthly, so [for example] as we’ve just finished May the investors on June 20 would get a statement and payment.”
“People want title deed, it is not fractional ownership and this is not a timeshare. You own the real estate, you own it and you lease it back to us,” he explains.
SKAI said investors’ annual rate of return on the hotel rooms was estimated to be around 12 to 14 percent, in line with current market conditions. Batra said about half of the hotel rooms had so far been sold.
According to the latest HotStats figures released by TRI Hospitality Consulting ME, Dubai’s hotel sector maintained comparable levels to last year, with slightly lower performance levels. Revenue per available room (RevPAR) fell by 1.9 percent to $321.75.
Performance levels remained strong with RevPAR growing 7.2 percent to $325.40, driven by a growth in occupancy and average room rate by 2.7 and 4 percent respectively.
Managing director Peter Goddard said: “Although the performance of hotel in Dubai was slightly lower in April, the Emirate continues to outperform 2012 with average occupancy reaching 88.2 percent for the first four months of the year.”
Viceroy for sale
Also 2 bedrooms with different sizes
1916 sqft for sale
Starting from AED 4,400,000 Net.
There are places. And then there are destinations. Viceroy Dubai is the ultimate destination for an urban resort. Enjoy the beach, the exciting landscaping and yet, within 10 minutes, you can have a meeting at the world famous Burj Khalifa. The location enjoys convenient and fast connections to the major highways, providing great access to the whole of Dubai. How great is it to be able to live on an island and yet be only a minute away from the city's major artery. The site enjoys spectacular views not only of the sea but also Dubai's dynamic skyline.
10 separate restaurant/bar F&B offerings
Over 800sqm of wellness spa facilities including 10 treatment rooms with indoor and outdoor treatments offered for women and men
Over 450sqm of indoor gym/fitness facilities with spectacular sea views
3 separate outdoor swimming pools in separate zones for recreation, relaxation, and children
Beach Club facilities with beach activity and water sports
A children's centre with activities and childcare facilities
Gourmet food retail facilities on site
Library and relaxation lounges
Extensive banqueting, business meeting & board rooms and business facilities
A main ballroom that can cater for 465 persons and with views unmatched by any other similar space in Dubai
Full concierge services
Full housekeeping facilities offered optionally for all residents
24-hour room service for all residents
Access to and from the development by boat from the development's private pier
The Viceroy Club offers 20% discounts to all Viceroy Hotels and services to all owners
Enabling, Shoring and Excavation works scheduled to be completed, along with all piling works
Main Construction Works scheduled to be completed
PROGRESS TO DATE
Enabling, Shoring and Excavation works started, COC1 obtained
Mobilization to site started
Enabling, Shoring and Excavation NOC(s) and Permits all have been obtained from the relevant authorities, Trakhees and Nakheel
Main Contractor was appointed
Enabling, Shoring, Excavation and Piling Contractor was appointed