Muslim travellers will spend $157 billion by 2020, driven by millennial travellers, with the top outbound market being Saudi Arabia
Sharia-compliant hotels are still an untapped market within the UAE’s hospitality sector, according to the chief executive of real estate company Deyaar Development PJSC.
Speaking to Arabian Business, Saeed Al Qatami said he was optimistic about the response to Deyaar’s Millennium Atria Business Bay hotel apartments, which is set to open doors before the end of 2018.
The 30-storey property, which will be managed by Millennium Hotels & Resorts MEA, is the first in Deyaar’s hospitality portfolio.
“I don’t think the supply is that much, supply is still not enough,” Al Qatami said. “Yes, there are a number of Sharia-compliant products available within the city of Dubai, but we still believe there is room to attract more clients.”
The Millennium Atria Business Bay will include studio, two and three-bedroom apartments and duplex apartments designed by YOO Studio, the internationally-acclaimed interior design company founded by John Hitchcox and Philippe Starck.
Al Qatami said he believes that the property will be an attraction for both short-term and long-term visitors irrespective of its Sharia-compliant status.
He explained: “We have done a thorough study when we started this project. Tourists and travellers won’t just look for the Sharia aspect if excellent services are provided with the right products. For example, we make sure our units are good sizes – a studio is 50sqm and a one-bedroom apartment is 80 to 90sqm.
"These sizes are very attractive for any kind of client, Sharia or not. A lot of families and tourists will be interested in these products (and) I think we will also get a lot of repeat clients.”
The units will have views of either the Burj Khalifa or the Dubai Water Canal.
The CEO added that while revenues from Sharia-compliant hotel apartments might be smaller in terms of food and beverage spend, the costs in comparison to running a hotel were far lower too, still delivering a good return on investment.
“Even if you have less revenue, you have much lesser costs so your bottom (line) numbers are going to be better,” he said.
New revenue stream
Deyaar reported revenues of AED314 million for the six months ending June 30, 2018, a 0.7 percent decrease compared to the corresponding 2017 figure of AED316 million.
In the same period, the property developer posted a healthy net profit of AED65.2 million, down 2.6 percent from AED67 million in the first half of last year.
“In 2019, we will have new revenue stream from the hospitality business,” Al Qatami said. “We are also keen to do other (hospitality) projects and we do have land banks within Dubai. But we said let’s finish these and let’s understand from this learning curve where we have made the right decisions and not so right decisions.”
However, he added that Deyaar would stick to delivering only Sharia compliant products.
According to figures were released during Arabian Travel Market’s Global Halal Tourism Summit earlier this year, Muslim travellers will spend $157 billion by 2020, driven by millennial travellers. The top outbound market remains Saudi Arabia, which is forecast to grow 17 percent over the next three years to reach $27.9 billion.
The CEO said all real estate-related products, whether commercial, residential or hotels, face tough conditions in the current macroeconomic climate.
“There’s a lot of things going on around the region in terms of geopolitical (factors), which is making it challenging. There’s also the currency issue, which is the strong dollar that’s adding more and more to the challenges.”