condo hotels have been getting a lot of publicity lately.
They offer a hassle-free means for international investors
to purchase real estate and participate in the growth
of this dynamic city.
hotels (also sometimes called condotels and hotel residences
in the U.S. and referred to as residence apartments
in Dubai) are luxurious condominiums located in five-star
hotels. While owners can use their condos when they'd
like, most investors in Dubai don't intend to use them
at all. Instead, they plan to place their unit in the
hotel's rental program full time and receive a percentage
of the revenue it generates.
do you choose a condo hotel unit, one that is likely
to produce a healthy revenue and will appreciate down
the road? Consider the following 10 questions when evaluating
a Dubai condo hotel property:
How do condo hotels differ from other types of vacation
Condo hotels are not your typical second homes. They
are fabulously-furnished condominium suites in some
of the most famous hotels and resorts around the country.
properties are usually large, high-rise, luxury hotels
and come with premium services like valet, concierge
and daily housekeeping. All issues regarding maintenance
and operation are handled by an onsite professional
management company. Prices can range from $150,000 (U.S.)
to over $1 million for prime properties.
2. Is a
condo hotel right for you?
The ideal Dubai condo hotel buyer is someone who wants
to participate in the rapid growth of Dubai but does
not have the time, inclination or ability to manage
property on his own. He would like a professional management
company to handle the maintenance of the condo he owns,
renting it out to guests, as well as all other hotel
3. Is the
condo hotel well-located in Dubai?
Consider whether the property is located in a popular
destination, one that is likely to do a healthy tourist
or business trade regardless of economic factors.
condo hotel that is near a convention center, a theme
park or cruise port will benefit from proximity to these
high-traffic venues and will have higher occupancy rates.
And higher occupancy will translate into more annual
rent revenue to unit owners.
Dubai, the hottest spots for condo hotels are near the
Dubailand theme parks which will soon attract millions
of guests each year much like Disney World, and Dubai's
financial district, sure to attract millions of business
travelers each year.
the Dubai condo hotel have any on-site amenities that
will draw guests such as a health
club, spa, fine dining restaurant and retail stores?
You'll want to choose a condo hotel that has a host
of amenities to appeal to Dubai visitors and justify
the room rates it plans to charge.
the individual unit that you're considering in a Dubai
condo hotel meet guest needs?
Does it have enough bedrooms, enough
square footage, to satisfy hotel guests? Does it have
kitchen facilities? (Most do, but not all.) Does it
offer an appealing view? Is it provided furnished?
6. Is the
Dubai condo hotel developer offering any type of buyer
Many Dubai condo hotels are sold with a rental
guarantee to entice new buyers. For example, one of
the largest Dubai developers offers a guarantee of an
annual 8% return or 60% of the rent revenue, whichever
is greater for the first three years of operation. After
the third year, the owner simply receives the 60% revenue
split without the guarantee, but presumably by then,
the hotel will have become established and will be able
to achieve its occupancy goals.
is the revenue split and anticipated annual expenses
of the Dubai condo hotel?
Whereas U.S. developers are hesitant
to discuss revenue splits because of SEC regulations,
Dubai developers are free to discuss these details.
Most offer a 50% to 60% split of the unit revenues to
the unit owner. Most can also give you an estimate of
expenses you can expect each year.
is the right time to buy this condo hotel?
The best time to purchase a condo hotel unit, from an
investment standpoint, is in the preconstruction stages.
Most developers are required by their lenders to pre-sell
as much as 50% of their units before receiving their
construction loan. The good news for buyers is that
the time before the first shovel hits dirt is when prices
are lowest and selection is greatest.
the building process could be as long as two years,
you'll have paid in "today's dollars" for
your condo versus the appreciated price once the condo
hotel is complete and operational.
How can I find out about condo hotels in early preconstruction
stages in Dubai?
It can be difficult to learn about condo
hotels before they're built. After all, there's no building
to catch your eye and unless you live in Dubai, you
won't be privy to "local buzz" about a new
best bet, therefore, is to align yourself with a knowledgeable
real estate broker, one who specializes in condo hotels
and has connections with Dubai's development community.
or she can tell you what is currently available, keep
you apprised of new condo hotel projects coming down
the line, and also clue you in to special buying opportunities
(sales, default units coming back on the market, buyer
incentives, etc.) which occasionally crop up.
the Dubai condo hotel unit you've selected appreciate?
If investment is your primary goal, you want to choose
a property that has good appreciation potential. Look
at surrounding properties and area appreciation rates.
Does the condo hotel have lots of competition? Is it
different or better than other area properties?
demand for hotel rooms in the area expected to grow
in the coming years? In Dubai, this last question is
the most important and almost undoubtedly can be answered
with a resounding "yes!"
About the Author:
Joel Greene is the president of Condo Hotels Dubai
and its parent company, Condo
Hotel Center located in Miami, Florida.
If you would like to know more about investing in Dubai
real estate, be sure to request
Joel's FREE Dubai Condo Hotel Report.