A sea change for Dubai

• Dubai has often been at the forefront of incredibly ambitious schemes in the hospitality and tourism markets, and this week the emirate’s nascent but healthy short-term rental space just burst in to life with two landmark deals.

First, rentals provider Maison Privee signed a deal to manage a $100 million portfolio of luxury villas on the Palm Jumeirah on behalf of real estate firm Gulf Sotheby’s International Realty and its clientele.

And then, investment group IBC Group announced plans to spend $5 billion on acquiring 10,000 properties to furnish and manage as holiday homes in Dubai. IBC Group said the move aims to build confidence in the region’s real estate industry. The company also said it intends to acquire up to a million properties in more than 100 cities worldwide. It has contracted Berkshire Hathaway HomeServices Gulf Properties (BHHS) to assist in identifying, acquiring and financing the properties.

All this is good news for real estate developers as it looks a tailor-made solution for the oversupply of residential inventory building up in the region. But it could signal choppy waters ahead for Dubai’s hotels which are already suffering from falling REVPAR as much of the pipeline built in time for Expo 2020 comes on stream.

Maison Privee says its growth has been down to the “implementation of a very strong hotel-like corporate structure, IT stack and unique operating model”. It, and IBC Group, are after a bigger slice of the hospitality pie by attracting visitors who would previously have stayed in a hotel.

This leaves serviced apartments in an interesting, and potentially advantageous, position somewhere between the two models. The MEA is a market where people still love strong and recognisable brands – serviced apartments and branded residences can offer that along with the extra space and flexibility that vacation rental guests are looking for.

These are fascinating times for the region – to make sure you are up to speed with its rapidly evolving dynamics, don’t miss your chance to attend next month’s Serviced Apartment Summit MEA, which will feature discussions on the synergies between the rental market and serviced apartments, along with speakers from the likes of Airbnb, Maison Privee, Accor, Oakwood, HoCoSo, Colliers International, Knight Frank and Air Agents.