Opportunities for Dubai's fit-out contractors are growing as owners launch projects to refurbish hotels in the run-up to Expo 2020.
Emaar Properties is understood to be working on refurbishments of three of its Downtown Dubai properties, including The Palace and The Address Downtown Dubai following the recent rebrand of its Qamardeen Hotel to Vida and the refurbishment of Manzil.
Moreover, Jumeirah Group is planning a refurbishment of one of the flagship restaurants at its signature Burj Al Arab hotel and has appointed Dutco Styles and Wood to oversee the project.
Emaar Properties and Jumeirah Group did not respond to requests for comment.
Adam Prowting, the new general manager for Dutco Styles and Wood, said he was prevented by confidentiality agreements from discussing the Burj Al Arab project, but said that “the majority” of the work being carried out by his 130-employee company was in the hospitality sector.
“Hospitality has been the leading sector for the last couple of years,” said Mr Prowting, adding that the bulk of its work has been refurbishing rather than fitting out new hotels.
“And we believe there are a lot more refurbs to come as well.”
Mr Prowting said that internal research carried out by Ducto Styles and Wood has identified 60 major refurbishment prospects due to come on to the market. It is targeting a turnover of Dh150 million next year on the back of such opportunities.
He said that hotels typically have a shelf life of six or seven years before they need to be fitted out again. Given that many of Dubai’s existing hotels were completed in the run-up to the 2008 financial crisis, many are overdue a facelift.
“The recession slowed things down [but] we believe we’re coming out of that and there’s going to be a lot more competition in years to come.
“There’s a need for it. A lot of venues are becoming outdated.”
Research from Arcadis in 2013 estimated that 10,000 of Dubai's hotel rooms will need an upgrade by 2020.
Tom Gilmartin, the business development manager at Alec Fit Out, which is part of Al Jaber Group, put the cycle for major refurbishment at seven to 10 years, but added that it is now almost 10 years since the market’s peak in terms of new openings.
“Refurbishments will form a very important part of the market coming up to 2020, as many of the older hotel owners will try to upgrade their assets to ensure they can compete against the newer developments,” he said.
He added that owners plan for refurbishments to take place during the summer period when occupancy rates are lower.
“With this in mind, many clients are planning refurbishments now. Ideally, a contractor should be awarded [a contract] by February to enable engineering and procurement to take place before getting on to site.”
Tarek Ardakani, the director of business development for Bond Interiors, said his company was also heavily involved in bidding for projects, but added that the market is “very competitive” and that margins were thin.
Mr Prowting, who has worked in the UAE for nine years, agrees. “It’s the most competitive since I’ve been here. Margins are going down rather than stabilising or going up.”
Khaled Bitar, the general manager of the Jordan-based fit-out contractor Artline, believes that although the UAE hotels market offers lots of business opportunities, the lack of profit means it is not one it is willing to explore.
He was at The Hotel Show in Dubai last week, but was there mainly to meet clients from other parts of the region including Bahrain, Oman and Saudi Arabia, where it has worked on the refit of the Al Faisaliah Hotel.
“Competition for contractors here in Dubai is very tough,” he said.
“It’s an expensive country to live in. If my staff were here it would cost me treble what I am paying for them in Jordan. We also would need to be competitive in this market.”
mfahy@thenational.ae
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Coming soon
Torno Subito by Massimo Bottura
When the W Dubai – The Palm hotel opens at the end of this year, one of the highlights will be Massimo Bottura’s new restaurant, Torno Subito, which promises “to take guests on a journey back to 1960s Italy”. It is the three Michelinstarred chef’s first venture in Dubai and should be every bit as ambitious as you would expect from the man whose restaurant in Italy, Osteria Francescana, was crowned number one in this year’s list of the World’s 50 Best Restaurants.
Akira Back Dubai
Another exciting opening at the W Dubai – The Palm hotel is South Korean chef Akira Back’s new restaurant, which will continue to showcase some of the finest Asian food in the world. Back, whose Seoul restaurant, Dosa, won a Michelin star last year, describes his menu as, “an innovative Japanese cuisine prepared with a Korean accent”.
Dinner by Heston Blumenthal
The highly experimental chef, whose dishes are as much about spectacle as taste, opens his first restaurant in Dubai next year. Housed at The Royal Atlantis Resort & Residences, Dinner by Heston Blumenthal will feature contemporary twists on recipes that date back to the 1300s, including goats’ milk cheesecake. Always remember with a Blumenthal dish: nothing is quite as it seems.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The specs
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Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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UAE currency: the story behind the money in your pockets
