Mixing it up

The evolution of mixed-use projects has offered developers some relief amid times of crisis, says Vision Hospitality Asset Management regional director for the Middle East Nigel Teasdale.

With Cityscape Dubai set to take place from October 5-8, now is a good time to consider how the real estate and hospitality industries have become intertwined - and just what they do for each other.

Looking back, urban hotels were traditionally built in the commercial and touristic heart of cities, where they served visiting politicians, dignitaries and the few wealthy enough to travel for leisure; the location would bear very little relation to where people lived.

Likewise resort hotels were designed to provide an escape from city life, so these were typically removed from populated areas.

The hotel as part of a mixed-use development is therefore a relatively-new concept, and is one that has evolved primarily in response to a couple of factors. Firstly, people have more free time, and the ability to combine a number of leisure activities (shopping, wellness, culture) at one location has obvious appeal.

Secondly, the relocation of much commercial activity from crowded city centres, where land values are typically high, to clusters at communication hubs, creates a need for hotels in these locations.

It is only a small step from this to the concept of the mixed-use development. From the standpoint of those who manage the hospitality industry, this concept offers a solution to some of our key challenges.Whether you operate a health club or a hotel, you are faced with the issue of peaks and troughs of usage, be they by time of the day, day of the week, or month of the year. By bringing together business users from the commercial component, and leisure users, who may be both residents and hotel guests, you can iron out these peaks and troughs.

Concept evolution

As the concept has evolved, the range of accommodation and real-estate options has become more varied with a one-night hotel stay and full property purchase being available, along with everything in between. Longer stay guests have self-catering and serviced-apartment options, and vacation and fractional ownership offers leisure visitors and investors a range of opportunities to suit their appetite.

One of the key challenges facing real-estate developers is to convince private investors to purchase real estate off plan (subject to local legislation), and gain their trust that the finished product will be completed, and that when it is, it will match the artist's impression.

Where there is a completed hotel at the heart of the project it can assist this process in a number of ways: firstly, an internationally-branded upscale hotel adds credibility to the development, giving the prospective purchaser confidence - he will reason that the hotel is unlikely to have been built if the rest of the scheme is not to follow. Secondly, the hotel provides a haven from the construction work going on around it, and creates an environment in which the prospect feels comfortable and a sale can be made.

The kudos that international hospitality brands bring to real-estate developments may increase the real-estate value, and many of these brands have access to prospects through their databases; thus partnerships between developers and the anchor hotel operator have become commonplace.

It is no secret that the real-estate sector in the Middle East has been adversely impacted by the economic crisis. In these circumstances a diversification of income streams allows the developer some relief. It may be that hotel income and commercial rents are also reduced, but these can offer the benefit of continuing to flow, whereas real-estate sales may simply dry up completely.

Lead by example

As mixed-use developments go, Downtown Burj Dubai must rank as one of the most impressive in the world. At an estimated cost of US $20 billion, it covers 2km² close to Dubai's financial centre. All the components described above are present, however, what makes the development stand out above all is its ambition and sheer scale.

The centrepiece, Burj Dubai, in which the first Armani Hotel is scheduled to open soon, is, by some distance, the tallest building in the world; Dubai Mall, complete with aquarium and ice rink, is (depending on what measure you use) the world's largest retail complex and Dubai Fountain has set various records. With the help of these attractions the area has quickly become a destination in it own right, and this may generate the required retail footfall. Furthermore, with one hotel built next door to the mall, and another attached to it, there is little doubt that each will contribute to the success of the other.

If fortune does indeed favour the brave, Downtown Burj Dubai deserves to be smiled upon.

Nigel Teasdale is regional director for Vision Hospitality Asset Management. Contact: This email address is being protected from spam bots, you need Javascript enabled to view it .

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM