Dubai-based Skai Holdings plans to build a $1 billion (Dh3.67 billion) hotel with over 200 serviced apartments on Palm Jumeirah, the real estate investment firm announced on Wednesday.
The development will be operated by the Viceroy Hotel and Resorts in its first venture into Dubai after its sister property Yas Viceroy Abu Dhabi.
Construction of the Viceroy Dubai Palm Jumeirah, located on the base trunk of the Palm, has begun and is expected to open in the last quarter of 2016.
Skai Holdings is the owner of the project and Zaya Dubai will be the developers, according to the statement.
Besides the 481-room hotel, the project will also include the Viceroy Residences of 221 serviced apartments.
Asked about how the $1 billion project will be funded, Kabir Mulchandani, chief executive of Skai Holdings told Gulf News: “The project is being funded 50 per cent by equity and 50 per cent by debt. The financing has already been obtained and details will be announced formally next month.”
“While the hotel market in Abu Dhabi is crowded, there continues to be a healthy demand for hotel rooms in Dubai. Hotel occupancy rates are running at approximately 85-90 per cent and with Dubai International airport experiencing increasing passenger numbers and the growth of the Al Maktoum airport, we expect hotel demand to remain strong moving forward,” said William Neill, head of Cluttons in Abu Dhabi.
Asked about the potential for another hotel on the Palm, he said: “There remains room on the palm. The southern side of the Palm’s trunk towards it’s base remains largely undeveloped at present. This land would have been earmarked for either a residential or hotel development.”
Commenting on Dubai’s hotel supply, Matthew Green, head of research at CBRE, said: “Dubai’s hotel stock dwarfs the rest of the region with nearly 60,000 keys operational, although other markets such as Doha are slowly catching up. Despite such significant supply, Dubai posted the best performance of any Middle East city with average occupancy rates of 76 per cent during 2012 and one of the best average daily rate (ADR) performances of any global market.”
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