Imagine owning an Apartment with ZERO Maintenance or Property Managements Cost ‘’Forever”.
Owning a property is like owning a business.
A business requires capital to setup, investment into marketing to attract customers, employees to serve those customers and then on going expenses to ensure that the business continues to provide value to its customers.
Similarly a property requires capital to be acquired, marketing to attract tenants (customers), a Property Manager to manage those tenants, and then on-going annual expenses in the form of maintenance, upkeep, etc. to keep the tenants happy in your Property.
Remember the Adage – ‘’There is no Free lunch’’. Similarly many a time property in Dubai or the rest of the world is sold as if it is so simple, all you need to do is buy the property, rent it and collect the rent at the end of every month or quarter or annually.
While there is some truth to this – this is not the entire story.
Truth be told – Property Management, i.e. having a professional Property Manager run the property and then yearly servicing and maintenance costs can eat into the rental income to the tune of 8% to 15%. (15% is cases where the Property and Tenant are ill management).
The above reason is why the below mentioned opportunity appeals to me so much.
Imagine if you could own an apartment with zero management or maintenance costs ‘’forever’’.
For this reason, one of the best opportunity I have identified is investment in a Hotel Room or Hotel apartment in Dubai.
The developer manages the entire cycle – end to end – i.e. builds the property, hires the international hotel operator, holds them accountable to established income and service standards, and hotel occupancy, and then splits the total net revenue with you – the INVESTOR.
The general revenue generated by a Hotel Room is considerably higher compared to a similar residential apartment in the vicinity, simply because the day rate can be up to 3 or many times higher than a similar residential day rate.
The beauty of it all is that you still OWN the apartment in your name (and can sell it in the future) and get to use your hotel apartment for 14 days up to 30 days, while enjoying the benefit of the stress free income.
This maybe the biggest opportunity as Dubai approaches EXPO 2020.
27 million tourist arrivals are expected by 2020 (14.2 million in 2017),Source: EuroMonitor International
60,000 Hotel Rooms still needed by 2020. Currently at 104,000 and target of 164K (2017),Source: Dubai Tourism
Clearly you can see there is a large discrepancy between the numbers of tourists expected to visit Dubai in 2020 and the number of Hotel rooms available;
“When you look at the number of visitors that are expected to arrive in the UAE for EXPO 2020, then it is clear that you will need more supply in the hotel inventory”. Laurent A. Voivenel, Senior Vice President, Swiss-Belhotel International.
To read more about the impact of the EXPO 2020 on the Hotel industry in Dubai, read my previous blog pose here;
In simple summary again;
You invest in a hotel apartment, and your apartment is managed by a professional hotel operator, and then profits are distributed to you quarterly. No headaches, No Fuss.
However a word of caution, not every developer can and will be able to successfully deliver a Hotel project, for which due diligence, over sight of terms and conditions, past track record and more needs to be looked at on a case to case basis.
The opportunity surrounds us, will you take your part?
Speak soon,
Fahd Dawood
CEO | FD Global Properties
+971 55 421 8943
Author: “The Intelligent Real Estate Investor”
YouTube: Fahd Dawood