Hotels and hotel apartments in Dubai offer 150 per cent higher to double return on investment, when compared to residential real estate. Residential properties fetch 6-7 per cent annual rental return in Dubai, according to most credible market reports – which is still higher compared to most international property markets.
However, an investor could get between 12 to 15 per cent return on investment from some of the new-concept branded hotel apartments, such as iSuites – that will help investors make more money with less pain, studies show.
This calculation is based on 70 per cent occupancy on an actual room rate of Dh550 per night, and after deducting all the expenses. The investor could make a net income of 12 per cent minimum per annum. Which means, on a Dh1 million investment, an investor would get Dh120,000 per annum net and could recover investment with a little over 12 years.
However, in all probability, this could exceed 15 per cent, in which case, the investor could get back the entire value of the investment in less than seven years. This means, the return on investment could be more than double in serviced apartments. On top of this, the asset value appreciation is an added incentive for investment.