The expected increased housing demand from professionals and the six-month World Expo 2020 has encouraged several leading developers and holiday home operators to bring in more supply of serviced apartments.
“Demand for hotel apartments is growing,” says Samir Salya, chairman of Reign Holdings, parent company of the developer Arthur Hardman. “The Dubai Statistics Centre recorded more than 83 per cent occupancy rates for hotel apartments last year, which is up by around nine per cent from 2012, when occupancy rate was 74.1 per cent.”
The developer recently launched Milano by Giovanni Boutique Suites, a 124-room fully furnished hotel apartment project in Jumeirah Village Circle (JVC) that is expected to be completed in June next year. The other two projects, Naples and Venice, are also in the pipeline. “With Expo 2020 just three years away, there is an extensive need for hotel apartments near to the Expo site such as JVC, Dubai Sports City, Al Furjan and near Al Maktoum Airport.”
Distinct model
Blueground, an international hospitality technology company, entered the Dubai market a few months ago with a different approach than most holiday home and hotel apartment operators in the city. The company obtains residential properties on lease from the owners in upscale towers in Dubai’s prime locations, furnishes them and provides these mainly to senior professionals, corporate guests and visitors as fully furnished properties.
“We are the only holiday home licensed operator in Dubai that is focusing on corporate guests, renting instead of just managing apartments and offering such high-quality properties on a large scale,” says Alexandros Chatzielftheriou, CEO and co-founder of Blueground. “Currently, we have 60 units. Our goal is to reach 250 apartments by the end of the year and 500 within the next three years.”
Blueground rents the property from owners for at least a year with a guaranteed 100 per cent occupancy for long-term agreements. “We work only with senior business professionals who stay for at least one month and an average period of eight months,” says Chatzielftheriou. “Due to the profile of these tenants, the properties we lease are very well maintained. We offer full property management without charging any fee and the flexibility to the owner to sell their assets at any point in time.”
Blueground focuses on areas and units near business districts surrounded by recreational amenities, as their target guests are often single or without their families. “Our apartments are always in high-quality buildings that offer premium amenities like a pool, gym, concierge and security and the units are well maintained on high floors and with great vistas. Presently, we have properties in Downtown, Business Bay, Marina, Dubai International Financial Centre and we are also looking into The Greens and Jumeirah Lakes Towers.”
In Dubai, Blueground works with large corporates such as Accenture, Novo Nordisk and Ikea. “Also, in Greece and Turkey, we are working with more than 50 large corporates including Coca Cola, H&M and GSK,” says Chatzielftheriou.
Branded apartments
According to Selim Al Zein, assistant vice-president of hospitality at Deyaar, corporate clients prefer internationally branded serviced apartments because they generally offer better value than three- and four-star hotels in the region. “When considering only the internationally branded market, serviced apartments received a better value rating than five-star hotels,” says Al Zein. “The value to corporate clients is not only the room rate, but also other factors such as cleanliness, comfort, space, quick and efficient laundry services, meeting room facilities, and good IT infrastructure.”
Al Zein says that serviced apartment guests in Dubai increased by a compound annual growth rate of 18 per cent from 2004 to 2015, compared with 8 per cent for hotel guests. “The Dubai market will continue to support further development,” says Al Zein. “However, the gap in each of Dubai’s micro markets needs to be carefully assessed for the right serviced apartment product in the right location.”
Areas such as Deira, Business Bay, Downtown Dubai, Al Barsha, Dubai Science Park and Dubai Investments Park all have seen good occupancy for internationally branded properties, he says. “There is an expectation that a considerable number of corporate guests will be switching to internationally branded serviced apartments should the supply be sufficient.”
Currently, Deyaar has begun construction on a hotel and serviced apartment project in Al Barsha, along with previous hotel apartment developments, namely The Atria in Business Bay and the Mont Rose in Dubai Science Park.
Customise solutions
Noorul Asif, Chief Operating Office (COO), Schon Properties says hotels will have to cater to the needs of different client types. “Whether one is a professional on the job or a millionaire on a leisure trip, the hotels will have to customise their services for all,” says Asif. “While hotels do not offer that kind of flexibility in a 350sq ft [32.5 m²] room, branded hotel apartments could solve the issue and be the right solution for everyone, be it an employee or an employer.”
He adds: “Businessmen and professionals want to maximise their time. They demand to explore the place but do not have the time to ask people around to find the best place to visit. Everything should be ready. In essence, the hotel industry needs to evolve to be the best accommodation and lifestyle solution for every guest.”
Schon Properties recently launched iSuites, which will have 21 mid-rise buildings with 2,550 hotel apartments in DIP, scheduled for delivery in 2020 before the Expo event. “Going forward, we will have a shortage of approximately 30,000 hotel keys by 2020,” says Asif. “As Dubai grows, there will be additional pressure created in this sector.”
