The new CEO of Nakheel has claimed that Dubai is “raining cash”, citing the huge demand in the emirate for hotel rooms.
In a speech to the CEO Clubs UAE on Wednesday, Sanjay Manchanda said the tourism sector’s growth seemed unstoppable as new hotel rooms failed to put downward pressure on occupancy levels and room rates.
“The average room rate has gone up to US$303. According to all analysts we’ve been going through, this is the highest in three years. So guys, this is just raining cash,” he claimed.
Manchanda took over as Nakheel CEO less than six months ago. The company was one of the high-profile corporate casualties during Dubai’s debt crisis, which saw house prices in the emirate decline by over 60 percent. Nakheel agreed a US$16bn debt restructuring deal in 2011 and was forced to scale back its plans. The firm is reportedly currently in talks with lenders to extend a AED8bn (US$2.17bn) loan due in 2015.
Nevertheless, in a wide ranging speech to business leaders, Manchanda said he was now predicting a “fairly stable” future.
“I think hotels are the darling of this place [Dubai]. Everyone wants to have or own a hotel because no matter [that] year on year rooms are added, the occupancy also goes up. It tells you the story.”
The number of tourists arriving in Dubai surpassed 10m for the first time last year, up 9.6 percent, according to Dubai's Department of Tourism and Commerce Marketing.
Manchanda, whose Nakheel has seen several hotels developed on its flagship project Palm Jumeirah, including Atlantis, said even with 9,000 new rooms expected to be added to the existing 53,000 rooms in 2013-14, the industry was soaking up demand.
“If you look at 10m tourists coming in [and] hotels adding more rooms, [the] occupancy level, even if it’s stable that means more and more people are using this sector,” he said.
It was also a golden time for the retail sector, Manchanda said.
Nakheel, which owns Ibn Battuta and Dragon Mart malls, is developing Nakheel Mall on the Palm Jumeirah, and another one in Discovery Gardens.
Manchanda said the retail sector was estimated to grow another 5 percent next year, while the most popular malls had waiting lists of prospective tenants.
“Average occupancy [across Dubai] is 85 percent but... two of the malls we run [have] 100 percent occupancy – Ibn Batutta and Dragon Mart – [and] there’s a list waiting,” Manchanda said.
“In Dubai Mall you cannot find a vacancy. Mall of the Emirates you cannot find a vacancy. So these four malls are... running at 100 percent, amazing.
“These are good statistics by any standard, by any country.”
Real estate also was on the rise, increasing 17 percent last year, showing a strong recovery from the economic crisis that saw the market bust and prices fall as much as 60 percent.
But there was one sector of the real estate industry that Manchanda was happy to have avoided: office space.
“The one depressing sector probably is the office [sector],” he said. “There is an oversupply, there’s no denying the fact.
“Thankfully, I realised it - Nakheel does not have any office blocks.”