Buying a hotel apartment in Dubai

Investing in residential and commercial real estate in Dubai is becoming a popular way to preserve capital and earn a return. The city is a major tourist hub, so investing in the hospitality sector can be a good option. However, buying an entire hotel is too costly for most investors. An excellent alternative is the opportunity to buy a hotel room (unit) in Dubai.

In the UAE, new residential projects, hotels, and mixed-use complexes are constantly being built. Depending on the location, the class of accommodation, and the stage of construction, the price per room can range from $100,000 to several million. Both UAE citizens and foreign buyers can purchase a room/unit in Dubai.

Key points when buying a hotel room in Dubai

Buying a hotel apartment in Dubai is not the same as buying a standard residential property. There are several ways to invest in the hospitality sector:

• buying a room in a large hotel and signing a management agreement with the hotel operator;
• purchasing a hotel room for personal use;
• purchasing a small (boutique) hotel.

The first option is the most popular. In this case, the investor acquires ownership of a room at the construction stage or in a completed hotel, signs an agreement with the hotel operator, and receives income without further involvement in day-to-day operations. The contract usually specifies the conditions under which, for a certain period each year, the owner can stay in the room free of charge. Most often, owners use this allowance for their own holidays. Booking rules, use beyond the included period, and other details are set out in the agreement. At the same time, the hotel apartments match the style and service standards of the rest of the hotel; design and operating rules are determined by the hotel, not the individual owner.

This type of commercial real estate can yield around 7% to 15% per year (indicative). The hotel operator handles marketing, guest relations, housekeeping, and routine operations. Given Dubai’s growing popularity with tourists, returns may increase, and in addition the investor may be eligible to apply for a residence visa for themselves and family members (subject to current regulations).

Buying a hotel room in Dubai for personal use is less common but not necessarily disadvantageous. In this case, the owner can live in a five-star property with all its benefits for a relatively modest owner’s fee. Given the long-term price growth in Dubai real estate, such an investment can also be profitable.

Buying a small hotel is typically the least attractive option. The initial outlay is higher, and the relatively low popularity and limited supply of such properties make finding a strong opportunity difficult. In addition, most hotel operators do not work with properties of fewer than 100 rooms, so you would need to manage the asset yourself. Resale can also be challenging, as such assets are less liquid.

Whatever form of hospitality investment you choose, it is advisable to work with a professional brokerage. Al Hayat Almushreqa Real Estate will be happy to help you choose a suitable unit and prepare all the necessary documents. Pay particular attention to the management agreement when buying a hotel room; beyond proof of ownership, the terms agreed with the hotel operator (use, income distribution, expenses, and standards) are critical.

Sale of hotel apartments

It is also possible to sell hotel apartments in Dubai if your plans change or you find a better opportunity. Reselling commercial property is generally more complex than reselling residential units, but there is steady demand in Dubai for hotel rooms that are ready to rent. Some investors buy units during construction and resell them once the hotel opens, profiting from price appreciation. The fastest resales typically occur in hotels operated by well-known brands, though with proper positioning and documentation, selling units in new hotels is also feasible