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Discuss this article (4 Comments)Credit crunch frustrates investors in Dubai hotels
by This email address is being protected from spam bots, you need Javascript enabled to view it on Friday, 14 August 2009
TOURISM BOOM: Int'l hotel investment could fall as much as 58.3 percent to $10bn in 2009. (Getty Images)
More foreign buyers eye hotel properties in Dubai for investment as returns remain high despite the global crisis, but sellers are scarce and deals are hampered by the difficulty to get loans, industry experts said.
"If you compare 5-star properties in Paris and Dubai, both well-located, your return on investment is much better in Dubai," said Amine Hamdani, manager and surveyor at global real estate service company CB Richard Ellis.
While investors' net income for a property in France will be around 15 percent today, Dubai properties can generate around 35 percent, Hamdani told Reuters.
International hotel investment could fall as much as 58.3 percent to $10bn in 2009 as the global financial crisis spreads to the leisure and tourism industry, according to hotel consultancy firm Jones Lang LaSalle Hotels.
Hamdani said more international buyers were looking at investments in existing properties in Dubai, but few owners were selling. High net-worth individuals comprise the majority of buyers who look for high returns on investments, while institutional investors aim for 9-11 percent return, he said.
Alex Kyriakidis - global managing director of tourism, hospitality and Leisure at consultancy Deloitte & Touche - said the main challenge for buyers remains the lack of bank lending.
"There are owners who want to realise value or attract partners in their hotel projects and there are interested buyers in the Dubai hospitality industry, but the problem which will continue for at least the next six to nine months is the lack of credit," said Kyriakidis.
"With the absence of credit coming forward from the banking system it's impossible to make these deals work," he said, adding that they were few sellers currently as "no one is looking to put their assets on the block".
Dubai hotels saw a five percent increase in the number of guests during the first half of 2009, official data showed this week, after they cut prices and launched promotions. (Reuters)
READERS' COMMENTS
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I believed it !!
Posted by Ram, Dubai, UAE on Monday 17 August 2009 at 13:12 UAE time
"Dubai hotels saw a five percent increase in the number of guests during the first half of 2009, official data showed this week, after they cut prices and launched promotions. (Reuters)"
Wow... they have had increase in number of guests even in this hard global recession... i believe it...
Posted by Ram, Dubai, UAE on Monday 17 August 2009 at 13:12 UAE time
"Dubai hotels saw a five percent increase in the number of guests during the first half of 2009, official data showed this week, after they cut prices and launched promotions. (Reuters)"
Wow... they have had increase in number of guests even in this hard global recession... i believe it...
Hotel Business in Dubai
Posted by Iqbal, Dubai, UAE on Sunday 16 August 2009 at 10:15 UAE time
I think the 35% return is inaccurate unless the hotem property is owned by the Franchise owner. Moreover, due to the difficulty and high cost of visit visas, the large number of visitors from the Indian Subcontinent, Russia, Africa have decreased substantially. These visitors were the the biggest market segment and they were the biggest spenders in Malls, Gold Souk etc. Nowday, I would be surprised if the hotels are breaking even as many have laid off subsantial number of employees.
Posted by Iqbal, Dubai, UAE on Sunday 16 August 2009 at 10:15 UAE time
I think the 35% return is inaccurate unless the hotem property is owned by the Franchise owner. Moreover, due to the difficulty and high cost of visit visas, the large number of visitors from the Indian Subcontinent, Russia, Africa have decreased substantially. These visitors were the the biggest market segment and they were the biggest spenders in Malls, Gold Souk etc. Nowday, I would be surprised if the hotels are breaking even as many have laid off subsantial number of employees.
hotel business in Dubai
Posted by MAHOMEDZICAR OSMAN, DUBAI, UAE on Saturday 15 August 2009 at 13:16 UAE time
FEW SPELLING MISTAKES CAN BE TAKE US TO WRONG INTEPRETETION OF MY ABOVE COMMENT. THE FINAL TEXT IS: Basically I agree with content. But seems to ME unfair to talk about 35% return on Hotel Business. During the Global crisis and as per my experience running a small Hotel Apartment in Naser Square, the way to make the business sustainable its to follow the policy . So, the incresing of the number of guest did not reflect the increaisng of income. In my Hotel, (ROYAL MARK HOTEL APARTMENT) the policy is to drop the prices in order to keep visitors to come to Dubai, as those visitors, in the end, they will empower all other surrounding businesses.
In Dubai, in the leisure Industry, we are not fighting only with global crisis. We are fighting with negative role of western media against Dubai.
And yes, about the absente of anykind of bank support. More then bank support, I think we need the Government support, in order to reduce the prevaling rate of rents on hotel buildings, at more acceptable levels, where we can see a litle of income over our investment.
Posted by MAHOMEDZICAR OSMAN, DUBAI, UAE on Saturday 15 August 2009 at 13:16 UAE time
FEW SPELLING MISTAKES CAN BE TAKE US TO WRONG INTEPRETETION OF MY ABOVE COMMENT. THE FINAL TEXT IS: Basically I agree with content. But seems to ME unfair to talk about 35% return on Hotel Business. During the Global crisis and as per my experience running a small Hotel Apartment in Naser Square, the way to make the business sustainable its to follow the policy . So, the incresing of the number of guest did not reflect the increaisng of income. In my Hotel, (ROYAL MARK HOTEL APARTMENT) the policy is to drop the prices in order to keep visitors to come to Dubai, as those visitors, in the end, they will empower all other surrounding businesses.
In Dubai, in the leisure Industry, we are not fighting only with global crisis. We are fighting with negative role of western media against Dubai.
And yes, about the absente of anykind of bank support. More then bank support, I think we need the Government support, in order to reduce the prevaling rate of rents on hotel buildings, at more acceptable levels, where we can see a litle of income over our investment.
hotel business in Dubai
Posted by MAHOMEDZICAR OSMAN, DUBAI, UAE on Saturday 15 August 2009 at 10:55 UAE time
Basically I agree with content. But seems to is unfair to talk about 35% return on Hotel Business. During the Global crisis and per my experience running a small Hotel Apartment in Naser Square, the way is . So the incresing of the number of guest did not reflect the increaisng of income. In my Hotel, the policy is to drop the prices in order to keep visitors to come to Dubai, as those visitors, in the end, they will empower all other surrounding businesses.
In Dubai, in the leisure Industry, we are not fighting only with global crisis. We are fighting with negative role of western media against Dubai.
Posted by MAHOMEDZICAR OSMAN, DUBAI, UAE on Saturday 15 August 2009 at 10:55 UAE time
Basically I agree with content. But seems to is unfair to talk about 35% return on Hotel Business. During the Global crisis and per my experience running a small Hotel Apartment in Naser Square, the way is . So the incresing of the number of guest did not reflect the increaisng of income. In my Hotel, the policy is to drop the prices in order to keep visitors to come to Dubai, as those visitors, in the end, they will empower all other surrounding businesses.
In Dubai, in the leisure Industry, we are not fighting only with global crisis. We are fighting with negative role of western media against Dubai.
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