The rise and rise of Damac
Three years after the launch of Damac's hospitality arm, they have five hotel apartments and 10,000 units confirmed in the pipeline
Adding two more properties to its collection at the end of March, Damac Hotels & Resorts marked the launch of its new lifestyle brand, Naia. Now, with sights set firmly on operating its own full-serviced hotels, and giving would-be-investors the opportunity to own hotel rooms, the firm is not leaving any stone unturned
Damac signs are springing up left, right and centre in Downtown Dubai, and two more properties from the developer became operational at the end of March. Just three years after the launch of the company’s hospitality arm, Damac Hotels & Resorts has five operational hotel apartment buildings, and 10,000 units confirmed in the pipeline, with many more under negotiation.
The firm’s aggressive expansion saw Damac Maison The Vogue, and debut property of new brand Naia Hotels & Resorts, Naia Breeze, added to the collection at the end of March, contributing 500 rooms to the existing portfolio, which comprised the December-launched Damac Maison Cour Jardin; Damac Maison Canal Views, which made its debut in October last year; and the original Damac Maison Dubai Mall Street, which opened its doors in December 2013.
With Damac Properties’ foundations firmly set in freehold development, the hospitality arm of the company, established in 2012, began its foray into the hospitality sector with serviced apartments.
Citing the fact that Damac Maison Dubai Mall Street has 226 of its 355 units in the rental pool already after just 16 months of operations (at the time of going to press), Niall McLoughlin, senior vice president —corporate communications and investor relations at Damac Properties reflects on the company’s transition into hospitality as a success.
“In the first year we didn’t come to market with 226 units, so every month we ramp up and we’re trending around industry occupancy rates, hitting double-digit yields depending on when customers have purchased the units.
“In January, occupancy was over 80% and our rate was over AED 1100 (US $300).
“The true success is if you have an owner in Dubai Mall Street and they own other products and they put them in the rental pool. We’ve had a lot of owners at Canal Views that have put their apartments in the rental pool for other projects, so that says they’re happy. We’re continuing to grow and we’re still a relatively new model and new brand,” he adds.
While four of the properties fall under the luxury Damac Maison brand, Naia is the company’s new lifestyle offering, with Naia Breeze the first property in the portfolio.
“Naia is positioned as ‘the city is yours’. It’s a little more for the youthful demographic. So come and stay, have a great experience with the room but how do we facilitate for you to go out and explore the city?”
“For all the staff it’s about expertise, so when you talk to a receptionist or a housekeeper, they are going to have knowledge about what’s going on in the city and they will assist you to discover it. The restaurant in Naia Breeze is a café, so it’s touching on the local element — how do we partner with local artists? It’s just a sense of local discovery and really authentic quality in terms of our food products,” he explains.
Naia Breeze, located in Business Bay has 339 serviced apartment units, a café, outdoor swimming pool, separate male and female Jacuzzi, steam room and sauna, a gym and a kid’s playground. And now that Damac Hotels & Resorts has a solid portfolio of serviced apartment properties, it is looking to operate fully-fledged hotels, with the first to be under the Naia Hotels & Resorts brand.
This will be located at Damac’s Akoya Oxygen development, and will have an adjacent serviced apartment building. The whole project is to be completed by 2019.
Set on a 1.3 km retail strip, The Drive at Akoya by Damac, which is to feature an outdoor cinema and skating rink, the properties will have views across the Trump International Golf Club, which is already fully grassed.
McLoughlin explains that the F&B element will be the only thing that “will be substantially enhanced versus the hotel apartments” in the full service hotel, which is to have up to 600 keys across its 28 floors.
“Compared to a hotel apartments, you’re not going to have kitchen facilities but there is going to be F&B, so we’re looking at some interesting concepts right now, as well as meetings facilities,” he said, adding that the company is currently working with consultants from California on developing F&B concepts.
As with Damac Maison, Naia Breeze and the serviced apartment offering at Akoya by Damac, will sell individual units and offer the chance for owners to submit their apartments into a rental pool. Damac will operate these as serviced apartments.
Additionally, Naia Hotel will offer would-be investors the opportunity to own hotel rooms, which provide a 40% share in room revenue to the owner. The units will come complete with title deeds and inclusive hotel stays, with zero service and utility charges.
“This is a different asset class,” explains McLoughlin. “A lot of people are bullish on hospitality. They might have US $250, 000 available and they want to put it somewhere in the industry, but they don’t necessarily have any interest in buying an apartment.
“They can put it in a hotel room; they would have yield, they would have appreciation and a management contract with title deeds, so it’s a different real estate offering in the hospitality sector.”
McLoughlin explains that while he hasn’t seen any other examples of this model in the Middle East, it is common in the USA, and it will also be rolled out at the monster US $1bn Damac Towers by Paramount development in its 753-room Paramount Hotel Dubai, as well as in four other projects in Dubai and Saudi Arabia, which are being developed under a licensing agreement between Damac Properties and Paramount Hotels & Resorts.
“It’s the natural development of a property product that taps a different type of market. Each individual unit is owned by someone, and that person has the title deeds on that hotel room, and has a management agreement with Paramount Hotels & Resorts to operate it on a percentage of RevPAR, plus some usage.
“The operator doesn’t speak to 850 people, for example. Those people sign over to intermediaries who represent them in negotiations with the hotel and the owner just gets a cheque; there are no day-to-day negotiations,” McLoughlin clarifies. In addition to Parmaount, Damac Hotels & Resorts has agreements with a number of big brands.
Its most recent win was Tiger Woods, who will design an 18-hole championship golf course for Trump World Golf Club, Dubai, to be set within the 55 million ft2 Akoya Oxygen development by Damac.
“There’s still a lot of opportunity in Dubai and a lot of brands that haven’t yet come here,” explains McLoughlin. “Our last big win was with Tiger Woods — it doesn’t get any bigger than that. Before that it was The Trump Organisation, the number one golf course operator in the world. Versace was a big win, Fendi was a big win.”
While the company is delighted to be working with big names, McLoughlin plays his cards close to his chest with regards to future developments with them.
He confirms no details regarding the possibility of a Trump Hotel, which was reported by Arabian Business last year following an interview with Damac managing director Ziad El Chaar.
The article said a five-star Trump hotel would be located in Akoya Oxygen, Damac’s green master development under construction along Umm Suqeim Expressway, where Trump is already developing a second 18-hole golf course.
“We’re doing a lot of work with Trump,” says McLoughlin. “The arrangement we have is two golf courses — Akoya by Damac and Akoya Oxygen. With Trump we’re looking at opportunities with him and when we have something to announce, we will announce it. Whatever works, if it makes sense, if the market wants it, if the economic situation allows, we’ll do it,” says McLoughlin, and truly it seems the possibilities are endless for Damac Properties.
“We love working with companies that bring a unique product to market, which Damac can add its value proposition to. We’re always in negotiations with a lot of people,” he concludes.