As Pipeline Evolves, Financing for UAE Projects Becomes Choppier [Infographic]
The United Arab Emirates has matured as a hotel market, with more segments developing to invade what was traditionally a haven of just upscale and luxury brands
The United Arab Emirates remains one of the strongest and fastest-growing hospitality markets on the planet, fueled in large part by the glamorous desert oasis of Dubai. This is perhaps one of the main reasons that the country's hospitality industry has long been the domain of upscale and luxury brands.
As of late, however, it appears that the hospitality segment in the country has grown to the point that it must now include properties from other segments. As a result, experts say that investors have begun to seek innovative ways of getting assets to market there while at the same time continuing to ensure the maintenance of payment and cash flow.
Another Big Year for Hotels in the UAE
This year is on track to be yet another record-breaking year for the signings and deals in the United Arab Emirates, and as a result it will require an increase of financing to match, according to hospitality industry experts.
Speaking at a panel at last month's Arabian Hotel Investment Conference, Andrew Lindley, who is the finance director for Action Hotels, said that he has of late seen good support from national and regional banks.
"We've opened seven hotels in the last three years, and all have needed financing. We're seeing different financing products and structures," some of which are slowly creeping in from more mature markers, Lindley said. "In more developed countries, options include interest-only or 100% bullet payments, and that is hopefully where the market is going. As owners, we are pushing for that."
The Best Deal Structure
The most important question is perhaps what is the best deal structure for those looking to invest in the hospitality market in the United Arab Emirates.
Alejandro Martin, senior investment banker at Abu Dhabi Commercial Bank, was on the same panel as Lindley, and he recently weighed in on that topic.
"A 3- or 4-star deal for a product that attracts recurring visits and this cash-flow generation," Martin said. "That can be a difficult one to judge, but it comes with hard equity, not just land, and of course some brands provide extra value."
Lindley, meanwhile, said that hotels on the whole as an investment offer a level of staying power that generally make them a great deal.
"Develop hotels to have them stay standing," he said. "Hotels depreciate over 50 years. Bullet deals are the recognition the property can stay there. Match the client and their reputation with the development and the period of time it will be standing."
One thing seems to be for certain, however, that the investment opportunities for hospitality in the United Arab Emirates will continue to be lucrative and complex moving forward.
Let's take a look at a few projects currently underway in the United Arab Emirates:
The Langham, Palm Jumeirah, Dubai
Catering to couples and large families, the resort will have well-appointed one- and two-bedroom suites that range from 63 to 236 square meters; some of them will feature individual plunge pools. …[READ MORE]
The property will be situated on Palm Jumeirah and will form part of the mixed-used resort development known as The8. …[READ MORE]
The Abu Dhabi EDITION will be part of the prestigious Al Bateen Harbor complex within the Abu Dhabi Marina, an upscale mixed-use development including luxury residential and retail. …[READ MORE]
More information on hotel projects in the United Arab Emirates can be found in the
TOPHOTELPROJECTS database.
Jule Grass
Marketing Manager
+49 4261 4140 309
TOPHOTELPROJECTS
