Dubai developer Union Properties (UP) has revealed plans to build about 1,000 affordable hotel rooms in the next five years to address a shortage in the mid and lower-end of the market, Bloomberg reported.
UP managing director Ahmad Al Marri said: “Most of the demand is at the three- and four-star level, because the majority of existing affordable hotels tend to be located in the older part of Dubai.”
“We can’t invite people to visit the city just to have them come and find it very expensive,” he told Bloomberg.
Dubai plans to almost double hotel rooms as it seeks increase annual visitors to 20 million by the end of the decade, when it will host the World Expo 2020.
Earlier this month, Dubai Tourism chiefs told Arabian Business they had received 151 applications for new three and four-star hotel developments in the emirate and were 10,000 keys short of a 35,000-key target only seven months after launching a campaign for more mid-tier accommodation.
Matthew Green, head of UAE research at CBRE Group, told Bloomberg about 42 percent of the existing supply and at least 56 percent of the rooms to be built in Dubai by 2017 are five-star, which can cost 2,000 dirhams ($550) or more per night. Three and four-star hotels command nightly rates of 300 dirhams to 625 dirhams, he said.
Al Marri told Bloomberg that UP, which is planning projects with a value of around AED4billion ($1.089bn), planned to build four hotels and was looking for land plots in Business Bay and space along Sheikh Mohammad bin Zayed road owned by Dubai Investment Park.
Union Properties is enjoying a revival in earnings and share price after Dubai’s 2008 property crash led to three years of annual losses. The developer sold the Ritz Carlton at the Dubai International Financial Centre in 2010 and three years later sold the Marriott hotel and swapped the Renaissance hotel for debt after it was unable to complete construction of the properties. The Courtyard Marriott at the Green Community is the company’s only remaining hotel.
The company returned to profit last year and in April paid its first dividend since 2009 after reducing debt, Al Marri said. Since then, the developer has focused on high-demand areas such as accommodation, retail and expanding residential communities.
Al Marri has previously flagged raising the foreign ownership limits in its stock once the current limit of 25 percent is taken up. Legally, the developer can allow foreigners to own as much as 49 percent of its shares.For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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