Dubai’s latest luxury branded hotel Palazzo Versace could fetch anywhere upwards US$300 million, according to its developer, who plans to sell it.
The 215-room property designed on the lines of a 16th-century Italian palace complete with infinity pools and handblown Bohemian crystal chandelier, opened in December. A room this weekend at the hotel starts from Dh1,200 a night and can go up to Dh4,320 a night.
“Our business model is to build and then sell, and keep the management,” said Raza Jafar, the chief executive of the hotel’s developer, Enshaa, and chairman of the Palazzo Versace Hotel. The property opened in Dubai’s Culture Village. “We will sell [the Dubai property] at the right time. The hospitality market is stressed but it’s a stable market, a reasonable buyer’s market.”
There is value in owning an ultraluxury brand, said Mr Jafar. The mood among buyers is cautious but there are genuine investors looking for good opportunities, he said.
There are few hotel transactions in the region, where most builders remain as asset owners.
In 2014, Saudi Arabia’s Prince Al Waleed bin Talal’s Kingdom Holding sold Mövenpick Hotel and Apartments in Bur Dubai to UAE-based investors for $95m.
The same year, Oman’s Bank Muscat acquired the 294-room Mövenpick Hotel, Jumeirah Beach Residence in Dubai. The value of the deal was not disclosed.
In 2012, the Sunland Group sold the Palazzo Versace Hotel on Australia’s Gold Coast to private investors for $68.5m.
The Dubai developer is also looking to take the fashion-branded hotel to India, Montenegro, Malaysia, Indonesia and to London and Paris. While the first announcement could come this year, it would take another three to five years to get it ready.
Enshaa would partner with local developers to execute the projects abroad and would keep the management of the brand.
Despite the pressure on room rates and a rash of supply of hotel rooms in Dubai, the developer is confident of selling the rooms.
“The clientele that Palazzo Versace is targeting is ultra-wealthy individuals. If the worth of a client has gone down by 10 per cent or 20 per cent they don’t change their lifestyles,” Mr Jafar said.
“Saying that, we are offering competitive pricing. We are flexible and trying to attract more guests and give more guests the experience to realise the value that we are offering.”
The emirate had 78,184 rooms in November, or a 5.5 per cent increase year-on-year, according to STR Global research.
While the Palazzo Versace hotel and 169 residences cost $625m to build, the adjacent 80-storey D1 Tower, which features 518 apartments, cost $400m.
Prices of the residences have appreciated by 10 to 12 per cent from the time it was under construction, according to Mr Jafar.
Currently, Palazzo Versace residences are going for Dh3,500 to Dh4,000 per square foot, while the D1 Tower residences are going for Dh2,000 to Dh2,300 per square foot, the developer said.
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