Self-Catering Villas and Apartments Are Smart Options for Visitors. Alessandro D'Ubaldo
The lodging industry is revealing itself as the golden fruit of the country's real estate developments and extensive marketing. Although the number of players entering the market is growing, there are still numerous opportunities available for further successful entries. And thanks to the lodging industry's recent performance and medium-term outlook, financing for development of serviced apartments is becoming more readily available.
The serviced apartments category has been doing consistently well meeting the needs of corporate executives and travelers alike with a good combination of short- and medium-term rentals.
Speculative hoteliers are taking advantage of the market, pushing rates to new height. There seems to be no under-performing property on the Dubai market and it has reached a point where it is reasonable to consider converting a residential property into a commercial one.
While pursuing serviced apartment's construction or lease seems like a good investment, there is a fair chance that yours might not be the only one. While the overview for the project might look good today, given current market conditions, five more similar projects planned for the same market may turn such a forecast into a different sort of reality.
The following questions, and actions, may be worth taking into consideration prior to making a decision to build or lease: What is the proposed supply of such developments in the area? What is the likely launch schedule for these?
Remember, existing accommodation providers are likely to put up a battle, including lowering their rates substantially, to keep their clients away from new properties. In any case, the lodging industry will undoubtedly continue to be an exciting market over the next few years, with plenty of opportunities for hotel and hotel apartment investments.
A small-sized building of two to five floors or a compound of villas close to the beach could be the right step to begin with. If supported by a solid management and marketing plan, a tiny development could result in a large enough triumph.
Remember that not all successful projects have to be gigantic — a small property will most likely be perceived by guests as cozy and private. In Dubai a market gap can be identified for small sized projects in the three- or four-star category where the potential for successful new entries is tangible.
For those new investors looking to explore the serviced apartments business it is advisable to place a solid emphasis on careful market research so that strategic plans can be developed to track both expenditure and prospective results.
These strategies could incorporate industry networking, database utilisation, telemarketing, Internet visibility and interaction, and media design and promotions.
It is also essential to identify and appoint a management and marketing company for the property which will professionally look after all aspects related to the set up and running of the business. This could vary from the recruiting and training of staff to the daily management and marketing requirements, in addition to developing a brand building and awareness programme.
A tiny project will not be of any interest for those huge and well established international franchises. However it can be very attractive for those management and marketing companies who are looking to enter the Dubai market in gradual steps bringing their solid overseas experience and business relationships.
About the author: Alessandro D'Ubaldo was the founder and Managing Director of Dubaldo Real Estate Broker a pioneering short-term rental management company operating in Dubai since 2005 before the advent of platforms like Airbnb. He is a senior hospitality and F&B executive with over 20 years of experience in the GCC. Connect with Alessandro on LinkedIn