27 October 2017

Dubai: Service Me This

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Over the next 5 years it is expected that the serviced apartment/hotel stock is to double. The expected surge in the serviced apartment space reflects the optimism regarding tourism numbers, and is in line with the increase in hotels throughout the city as well.

A price analysis of serviced/hotel apartments reveals that they trade at a significant premium compared to the standard residential units.

In the ready space in Downtown and Dubai Marina, they trade nearly double to their non-serviced counterparts. However, in Palm Jumeirah they have only a 38% premium.

In the off-plan space can witness that developers have already factored some portion of the premium in the launch prices.

A community-wise analysis reveals that in Downtown, ready units trade at a premium compared to their off-plan counterparts, where as in Business Bay the reverse has transpired. This indicates that in Business Bay, the quality of serviced apartments is generally increasing with better brand names now coming in. In Palm Jumeirah we can witness that the ready serviced apartments trade at a discount by an average of 20%.

We opine reason for the premium in off-plan units are the rental guarantees and extended payment plans offered by developers, and that these guarantees have for the most part been baked into the launch prices of the projects.

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