UAE economy to grow at the fastest pace in GCC over the next 2 years
Azizi Developments, the Dubai-based developer recently announced its foray into the booming hospitality sector in the UAE. As the country seeks to increase its investment into the hospitality sector, the company aims to contribute Dh60 billion towards this venture. Among the company’s plans is a seven-star hotel as well.
Farhad Azizi, CEO of Azizi Development, spoke to Khaleej Times in an exclusive interview, sharing his visions about the company’s new venture. Excerpts:
What prompted you to enter the UAE hospitality market?
The hospitality sector is especially pronounced here in our home, the UAE, with Dubai seeing a substantial influx of visitors year after year and continuing to be crowned as the number one destination in the world.
We have long been planning to diversify into the hospitality sector, with Dubai being the world’s most popular tourist destination. We see the emirate as the most welcoming, hospitable, and exciting place to visit, with more marvels to see than any other city in the world, and want to be a proactive part of that.
Our announcement coincided with the 30th edition of the Arabian Travel Market, the region’s leading event for the inbound and outbound travel industry and biggest gathering of its kind.
More importantly, the announcement also comes in light of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, having announced the UAE’s target to reach 40 million visitors and increase the tourism sector’s GDP contribution to Dh450 billion within seven years. The UAE is looking to increase investments into its hospitality sector by Dh100 billion. We are proud to contribute Dh60 billion to that.
We are very excited to be introducing our very own hospitality division and brand to Dubai and beyond! This announcement is one that Azizi Developments has been preparing for extensively. We had begun purchasing hotel plots many years ago.
As such, what is also important to note is that, unlike other large real estate developers in the UAE, we will not only develop these hotels and resorts, but we will also operate them ourselves.
What is your estimate of the UAE hospitality market?
Evaluating the sector in terms of investment prospects, the future looks favourable. Key factors such as the strategic location of Dubai, the presence of global corporate entities, and top-tier attractions are all contributing to the growth and appeal of the hospitality sector. This aligns with the UAE’s progressive vision, creating a ripe investment environment while also driving economic growth through employment opportunities.
In terms of expected returns, the Dubai hospitality sector shows promising potential. This is reflected in the projected increase in average daily rates and revenue per available room, despite a still challenging environment marked by a low occupancy rate and an increased supply. This, however, will change in the coming years, with Dubai’s popularity as a tourism hotspot surging. Our optimistic outlook is underpinned by an anticipated 80 per cent hotel occupancy rate for this year, as suggested by Zoom Property Insights. The same source predicts that international visitors to Dubai will surpass pre-pandemic levels in 2023, which will significantly benefit the hospitality sector.
A further testament to this growth trajectory is the 73 per cent hotel occupancy rate that Dubai achieved last year, having welcomed 14.36 million international visitors, according to Dubai’s Department of Economy and Tourism. Moreover, the KPMG Dubai Hospitality report emphasised that Dubai witnessed the highest hotel occupancy rate in 15 years by the end of Expo at 96 per cent , with the tourism sector contributing $29.4 billion to the economy in 2022.
Strategically, the UAE’s hospitality market stands out as one of the most lucrative globally, the hospitality sector will see 48,000 new rooms by 2030, aiming for an expansion of 25 per cent, to cater to the growing number of tourists.
Digitalisation and sustainability, two significant trends of 2022, are expected to remain dominant themes in the hospitality industry. The strategic push towards contactless check-in, carbon emissions reduction, and promoting inclusion and diversity implies a sector that is innovative and socially responsible.
Are you looking only at building hotels or will there be other facilities?
We will add 20,000 keys to Dubai’s hotel stock in the next five years alone. As a leading developer, we are now leveraging our real estate aptitude and in-depth understanding of the wants and needs in the realm of accommodation to grant visitors unparalleled hospitality experiences, worldwide. We see our expansion into the tourism sector as the next big stride in our overarching mission of enhancing lifestyles and look forward to showcasing our upcoming hospitality projects to our stakeholders in the UAE and beyond in due course.
We will showcase our upcoming hospitality projects to our stakeholders across the globe in the coming months.
While the hotels are still in design, and the branding is still being developed, we have already purchased many plots. These in themselves will set our hotels & resorts apart from other market offerings.
All of our upcoming hotels will be high end, with most being five-star hotels, and one being a seven-star hotel.
Another exclusive insight I can give you now is that it our seven-star hotel will go far above and beyond in merely fulfilling DTCM’s five-star requirements. It will break many world records, that we are excited to share in due course. The seven hotel floors will each be uniquely themed in the styles of certain parts of the world. The parts of the world will be chosen according to their depth of culture and heritage. We will be selecting prominent cultures that have a rich and distinctive history. This, we feel, is aligned with Dubai being such an international, multicultural, and hospitable city that is so welcoming to people from all over world. We want our hotel to be representative of this merit of the marvelous city of Dubai.
I cannot reveal too much information on the portfolio spread yet, but we will have more announcements in due course.
Will you be entering into tie-ups with global players?
We will not be collaborating with any hotel chains or global players. What sets us apart from many other developers in the UAE moving into hospitality, is that we will not merely develop the buildings and then let another hotel chain operate it. Instead, we are establishing our own hotel brand, and will operate our hotels ourselves, globally.
What are your plans for the sector?
We want to contribute to the UAE’s leadership’s ambitions and plans, with us playing an active role in helping to generate the targeted Dh100 billion in new investment in the tourism sector with our investment of Dh60 billion.
Our Dh60 billion investment over the next five years, via the launch of over 50 high-end hotels in Dubai, will be financed via our own capital. Our development business has been — and will continue to be — highly successful profitable, allowing us to diversify into hospitality without the need for bank financing. Should the need arise, we may tap into capital from external, third parties, though.
We already have several plots of land across Dubai’s key tourist destinations in our portfolio.
What I can reveal at this stage is that one of them, the seven-star hotel, will be the second-tallest tower in the UAE, on a strategically located plot on Sheikh Zayed Road, just opposite the World Trade Centre.
In the future stages of our growth plan, we aim to extend the reach of our hospitality brand to a global scale. We have plans to purchase and develop plots in major metropolitan cities such as Singapore, Hong Kong, Frankfurt, London, and Paris, among others. More information will be shared in due course.
UAE economy to grow at the fastest pace in GCC over the next 2 years
Tech giant has unveiled its first major product in more than seven years
Backwardation in Brent crude oil futures steepened after the weekend announcement
Hinduja leaves behind is rich legacy
Non-members of the IG P&I Clubs must provide additional information to regulators if they insure any UAE-flagged ships
Ranked 8th on the global ranking, Tel Aviv remains the costliest city in the Middle East for international employees
The government recently discontinued the issuance of the denomination
Except exempt entities, all juridical persons of the free zones should fulfill all related conditions to be classified as QFZP