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Dubai Palm Jumeirah’s Viceroy: 98 per cent sold
Developer retains entertainment and leisure facilities.
September 17, 2013 6:03 by kippreport
The real estate investment firm behind the AED3.67 billion Viceroy Dubai Palm Jumeirah project has sold 98 per cent of its available units.
SKAI Holdings, which officially launched the project with hotel operator Viceroy Hotels and Resorts in May, sold 470 hotel rooms and hotel apartments, and 219 residential apartments and villas to date, securing an investment of AED2.4bn.
The remaining areas – including food and beverage outlets, meeting rooms, the banquet hall and spa – will be retained by the developer.
The resort presents a unique investment model, enabling buyers to purchase hotel rooms that are then leased back in exchange for 40 per cent of the room’s revenue. According to the company’s statement, investors’ annual rate of return, based on current market conditions, is approximately 12 per cent annually.
Construction of the project is currently under way, with the piling and foundation works set to start this month.
Kabir Mulchandani, chief executive of SKAI Holdings, says that Dubai has always been a safe haven for regional investment, but given the “political unrest” in the Mena region, there has been a rise in the number of investors looking to invest in properties in the emirate.
He adds: “Investors have been extremely keen to purchase property in this exciting new project, which we believe will become one of the region’s most sought-after resorts. Buyers have been particularly interested in purchasing the hotel rooms, which is a unique business model here in the UAE.”
Dubai’s property market
A recent report by Standard Chartered insisted that Dubai’s housing market is “growing on the back of improving fundamentals”, rather than speculation.
It added that the key difference between the market in 2008 and 2013 is off-plan sales, citing the ‘flipping’ of off-plan properties as being the main reason behind the previous boom-and-bust cycle.
In the past 12 months, residential prices in Dubai have increased by 38 per cent for apartments and 24 per cent for villas, while rents for apartments and villas have risen by 20 per cent and 17 per cent respectively.
While this growth, which is still below the pre-crisis peak, is welcome news for property owners and investors – tenants are struggling to keep up with the rapidly rising rents.
According to a report by property broker CBRE, in July, the increase in housing rents in Dubai is accelerating – rising by 7.5 per cent between April and June.
Average housing rents in the city increased by more than 30 per cent over the past year and nearly 14 per cent in the first six months of 2013; while even the most optimistic prediction about salary hikes anticipate only a five per cent increase for next year.
A recent report by Fitch Ratings predicts that Dubai’s property market’s rebound will continue into 2014.