Since the change in UAE regulations, short-term lettings have rapidly increased in popularity with single and portfolio landlords alike.
In a deal worth $5 billion (Dh18 billion), UAE-based IBC Group recently announced plans to acquire 10,000 prime properties to furnish and manage as holiday homes in Dubai. The investment company has contracted Berkshire Hathaway HomeServices Gulf Properties (BHHS) on an exclusive basis to assist in identifying, acquiring and financing the properties. Khurram Shroff, chairman of the IBC Group and co-founder of The Gallery Suites Vacation Rentals, says short-term rentals in the city have grown more than 160 per cent since 2016. “I believe we have only begun to scratch the surface,” he tells Property Weekly as he talks about the holiday home market’s potential in the run-up to Expo 2020 Dubai.
You have just acquired 10,000 holiday homes. What kind of demand do you see?
We are addressing a niche demand in the market. A recent study puts the projected GCC hospitality market at $32.5 billion by 2022, which includes a share of more than $7.5 billion for the UAE alone. So, the overall market is receptive to the kind of volume we have decided to invest in. The unique experiences we will curate will drive the demand on its own.
The Dubai hospitality market is attracting discerning and cosmopolitan travellers and the preference for short-term lease holiday homes is on the rise. We believe the number, 10,000, is in conjunction with the emergence of Dubai as a regional and international hub. We are well-positioned to address this opportunity and have the capability to influence the market.
Are you already thinking beyond the Expo?
The GCC will continue to host major international events. Dubai will grow as a major commercial hub and tourist destination. For instance, even now many business travellers conduct meetings and negotiations across the region, while using Dubai as their base.
How do you see the competition in this sector? Is it overheating?
There is competition, but there is also demand. And as with any market, customer preferences will see some players succeed, as opposed to others. The short-term and vacation rental market will have to provide unique customer experiences to flourish. This is where I believe initiatives, such as those that Gallery Suites is bringing to market, will create a niche for themselves.
What exclusivity do you bring in?
The properties that Gallery Suites will offer will cater to a growing segment of sophisticated travellers, who appreciate the finer things in life. For example, we are creating spaces that will feature unique art installations in keeping with our vision of serving customers who aspire to ‘inspirational living’. We aim to deliver tasteful, elegant and a stimulating ambience in some of the most sought-after locations in Dubai. Of course, these curated experiences will be complemented by outstanding services and convenience.
What will be the role of the IBC Group as compared to Gallery Suites?
The IBC Group will retain ownership of the properties. It will lease the short-term rental properties to Gallery Suites. In turn, Gallery Suites will handle the furnishing and operations of these 10,000 properties, within the guidelines.
What is your Sharia-compliant initiative?
By being Sharia-compliant, we are inclusive of the sentiment and faith of Muslim customers and investors. The acquisition of these properties is being financed using an Islamic finance vehicle known as Sukuk, which is a Sharia-compliant bond. Also, we will cater to Muslim travellers with standardised Qibla direction and prayer mats in each of our apartments.