Nakheel focuses on hospitality with Deira Islands plan
Nakheel’s Deira Islands will be home to 28,000 hotel rooms and serviced apartments when fully complete, the developer said.
The hotels spread over 128 plots will be a mix of third party developers and Nakheel joint ventures with two huge resorts planned and another three on the drawing board.
“We are really into hospitality in a big way,” said Ali Rashid Lootah, Nakheel’s chairman, who was speaking at the opening of its new community mall, The Pavilion in Jumeirah Islands yesterday.
The property developer has been diversify its revenue stream away from property development since the global financial crisis.
Nakheel has become increasingly focused on the hospitality and retail sectors, with more than 16 million square feet of retail space either delivered or under construction.
It has 18 mid-scale hotels delivered or under construction.
“We will continue opening our own clubs and restaurants as we believe there is a huge opportunity in food and beverage [F&B],” said Mr Lootah. “We are not feeling the retail pressures that some retailers are facing. We have not had to reduce our retail rents and we have seen increasing footfall in our malls.”
Nakheel aims to open The Pointe, a 150-outlet strip of venues by the fourth quarter. It is 75 per cent leased so far.
“We are in an expansive moment and we will be awarding contracts worth Dh12 billion this year,” said Mr Lootah.
The huge amount of new hotels and rooms available on Deira Islands is expected to increase pressure on average room rates in Dubai which have been slowly falling.
Figures from the analytics company STR show that Dubai has 22,000 hotel rooms in the pipeline, without the Deira Islands figures included. In December, a peak season for the hospitality sector, the average room rate in Dubai fell 8.4 per cent year-on-year to Dh824, according to STR. Occupancy rates, however, edged up 3.2 per cent to 79.7 per cent.
“Dubai, as of March 31st, had the highest average room rates, at $227, and highest occupancy, at 86 per cent, in the world,” said Philip Wooller, the area director for STR Mena. He said the problem was not one of visitor numbers in the city as the easing of its visa requirements from Russia and China had stimulated the market.
“The additional 28,000 rooms sounds incredible, Milan only has 32,000 in the whole city. Dubai currently has 89,000 rooms available with a target of 150,000 by 2020. The average room rate will drop as more affordable hotels appear and the demographics from source markets such as India and China require lower tariffs.”
Despite headwinds facing the hospitality sector, Dubai and Abu Dhabi have recorded relatively strong performance. “Dubai saw the highest occupancy at 89.1 per cent in the GCC while the beach-based hotels had the highest average room rate at $399,” said Yousef Wahbah, Mena head of transaction real estate at EY.
Abu Dhabi experienced the highest increase in revenue per available room (revpar) compared with February 2016. Last month, revpar increased by 21.7 per cent compared with 2016, with an increase in average occupancy of 3.1 per cent in February 2017.
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