Union Properties has put a Dh1.5 billion (US$408.4 million) price tag on its unopened Ritz-Carlton hotel at the Dubai International Financial Centre (DIFC). Union Properties, which lost about 90 per cent of its value in the past 18 months as the property downturn forced developers to delay or cancel projects, is depending on asset sales and rentals to boost its income. Credit Suisse last week said the shares were worth close to zero because of the big debt burden. The Ritz-Carlton DIFC "may sell at a price very close to" Dh1.5bn, Union Properties said yesterday. The hotel is under construction and was originally scheduled to open last year. Ritz-Carlton, which will manage the hotel, would not be affected by the sale of the property that is now expected to open by the end of the summer, a spokeswoman for the luxury hotel operator said. Union Properties issued its statement on the Dubai Financial Market website in response to a local newspaper article citing its chairman, Khalid bin Kalban. The response corrected the suggestion that the hotel "would be" sold at a price very close to Dh1.5bn. The company also confirmed that it had Dh14bn of sellable assets. "With many developers now in financial difficulty in the Middle East and North Africa region, more hotel stock is set to become available during 2010, namely in Dubai," Jones Lang LaSalle analysts said in the firm's hotel investment outlook report for this year. Union Properties, which has been hit hard by the economic downturn, is looking to sell a 50 per cent stake in its district cooling unit, Emicool, as well as other assets across a vast portfolio that includes retail, hotel, commercial and residential properties. Mr bin Kalban said at a roundtable discussion in November that "anything is for sale". As well as hotels under development, existing hotels could also be put up for sale, analysts said. Damas, the jewellery group, closed down the Angsana Hotel on Sheikh Zayed Road and sold the building last month. "The luxury segment with high fixed costs was hit hard, which could force some owners to sell," the Jones Lang LaSalle report said. The company expects the value of hotel sales in Europe, the Middle East and Africa to jump by 50 per cent this year to $5.5bn. Globally, the value of hotel sales fell 64 per cent last year to $9.4bn. "Because there are developers that have commitments and some of them might not have the financial capability to complete the project, they will be looking for some sort of financing," said Jalil Mekouar, the executive vice president at Jones Lang LaSalle Hotels MENA. As a result, they might look to sell their interests or projects because the availability of debt was not going to be "enormous", Mr Mekouar said. "Some of the owners and developers may have developed a hotel where the land was expensive and the construction was expensive," he said. "Because there has been a bit of a correction of the market in terms of hotel performance, the business model becomes a bit of a challenge because they are expecting higher returns. Some may have to sell their assets at a lower price than what it cost them." In a boom period for the Dubai hotel market, a number of developers stepped into the market to build new hotels. But since then, the industry has seen a decline in its performance from exceptionally high levels, amid new supply and a downturn in global travel. Union Properties is looking to the rental sector to generate income from its units coming on to the market this year. It plans to transfer 5,000 units, divided equally between residential and commercial, to its rental portfolio, which will be worth an estimated Dh500m a year. The residential units account for unsold properties, or those on which customers have failed to keep up payments. Union Properties is also counting on the handover of property within Motor City, the Green Community, Index Tower and Limestone House in the first part of this year for additional revenue. Mr bin Kalban said last week that repayments on the firm's Dh6.5bn debt, which were due to begin this year, have been delayed until 2011. @Email:rbundhun@thenational.ae