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Return on investment potential for hotel residences can be up to double

  • Published by Vedat
Dubai-based developer Seven Tides is receiving increasing interest from local regional and international investors for its exclusive Anantara Residences Dubai, situated on Palm Jumeirah, ahead of its debut at the Cityscape exhibition which opens 8 October 2013.     

Anantara-Dubai-Palm

The fully
furnished Anantara Residences comprise a total of 442 one and two-bedroom apartments, ranging from 1,158 to 1,524-square feet and 1,743 to 2,867 square feet respectively, with terrace or balcony spaces, the majority with sea views. There is also a limited number of three - four bedroom penthouses, offering up to an additional 3,200 square feet of space.

“The starting price for a one-bedroom apartment is AED2.4 million. In comparison a Palm Jumeirah Shoreline apartment of similar size (1,184 square feet), in the Jash Falqa building is on the market for AED2.2 million. But in terms of financials that is where any similarity ends,” commented Abdulla Bin Sulayem, CEO, Seven Tides.

According to property experts Asteco, these Shoreline apartments only command an annual rental rate of approximately AED100,000. But Dubai Government’s Department of Tourism and Commerce Marketing (DTCM) has estimated that the average rate for a hotel room in Dubai last year was AED607 with a forecast for 2013 of AED637. The DTCM also claimed that hotel occupancy rates in 2012 were running at an average of 81.8%, again with a positive outlook for 2013.

Therefore a hotel room (or residence with access to five-star resort hotel facilities) could generate as much as AED190,200, almost double the AED100,000 annual rent a Shoreline apartment realises.

“Of course there are management fees involved but equally it could be argued that the DTCM figures are average rates - Anantara is a luxury five-star resort and as such would attract room rates at the top end of the scale. What is clear is that investors not only have options, but they can potentially realise up to 8.2% return on investment, based on the DTCM’s average rates, not to mention capital appreciation. According to the Asteco H1 2013 report, Dubai apartment sales prices are currently growing by 38% annually.

“Many investors are now looking for the flexibility to generate supplementary income by leasing their apartments when they are not in Dubai. So far in terms of nationality breakdown, the bulk of our investors have come from the UAE 22%; Russia - 20%; UK – 14%; India - 12% and Kuwait and Qatar 8% respectively,” said Bin Sulayem.  

Another potential bonus for investors is of course Dubai’s Expo 2020 bid. If it is successful, this type of leasing could become extremely popular with project consultants for example, who may need to travel to Dubai on a regular basis for a number of weeks at a time during the build up period. In the unlikely event that the Dubai bid is not chosen, the amount already committed to infrastructure projects will still provoke demand for flexible accommodation.  

Facilities at the 293-room five-star Anantara Dubai Palm Jumeirah, Resort & Spa, which opened recently, include a gym, 107,600-square feet of temperature controlled lagoon pools, six dining and entertainment venues and the Anantara Spa.

Not that the view from the apartments is anything to complain about. The collection of 442 luxury apartments and 14 penthouses are fronted by a private stretch of white sand beach with all residences enjoying spectacular panoramic views of the Arabian Gulf, Atlantis hotel, Burj Al Arab and the Dubai Marina skyline.
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