Site visit: Damac Maison de Ville Artesia, Dubailand
Damac Properties’ $177m, four-tower Damac Maison de Ville Artesia forms part of the developer’s strategy to capitalise on growing demand for hospitality offerings in the up-and-coming Dubailand neighbourhood
Dubai’s hospitality sector is abuzz as Expo 2020 draws ever closer. Even preparations for the event are serving to fuel hospitality-related growth in the city.
In June, Arabian Business reported that revenue per available room (RevPAR) in the emirate increased by 17.6% this April, according to analysts at benchmarking advisory, STR. The first quarter (Q1) of 2017 saw Dubai hotels register occupancy levels of 86.3%.
Unsurprisingly, the UAE is the GCC’s largest market for hotel construction, according to Ventures Onsite’s GCC Hotel Market Overview report. The value of Gulf hotel projects expected to be completed in 2017 is $9.51bn, a significant increase compared to last year’s figures. Meanwhile, STR’s January 2017 Pipeline Report revealed that the UAE has 28,898 rooms in the pipeline across 99 projects.
One of these hospitality projects is Damac Maison de Ville Artesia, a four-tower development that Damac Properties is building within the Damac Hills community in Dubai. Formerly known as Akoya by Damac, Damac Hills – situated in Dubailand – spans 390ha (42 million sqf), and features properties such as Trump International Golf Club Dubai, Trump Estates, and Damac Villas by Paramount Hotels & Resorts.
Artesia is set on The Drive, a dining, shopping, and entertainment strip within Damac Hills. One of the project’s four buildings, called Tower A, is a hotel, while Towers B, C, and D will comprise hotel apartments. The development will feature 1,214 units, including studio, suite, hotel room, and one-, two-, and three-bedroom apartment plans.
China State Construction Engineering Corporation Middle East (CSCEC ME) is Artesia’s main contractor. The company announced winning the contract, worth $129.7m (AED476.5m), in August 2015. CSCEC ME is also providing mechanical, electrical, and plumbing (MEP) services for the development, which was designed by a joint venture between U+A and ECCE.
Artesia’s total development cost is approximately $177m (AED650m), according to Niall McLoughlin, senior vice president at Damac Properties.
Between 25 and 30 contracts have been procured for the project so far – including teams to provide aluminium glazing and fit-out services – and McLoughlin says this number could reach 40 going into the project’s operations and management stage.
Towers C and D – which are 19 and 15 floors tall, respectively – feature a total of 513 luxury units, including studios, as well as one-, two-, and three-bedroom options, with prices starting at $175,600 (AED 645,000). Tower A is 28 floors tall and comprises 473 units.
Damac expects to select an operator to manage Tower A as a four-star hotel by the end of 2017, according to McLoughlin. Artesia’s overall completion is scheduled for Q2 2018, he adds.
In conversation with Construction Week, McLoughlin says the Dubailand development’s launch was based on a review of its location, and demand for hospitality options in Dubai, “specifically in an area that is not currently served by any hotels”.
He elaborates: “The location triggered the idea of creating a hotel and hotel apartments. We’re talking about one of the most attractive locations in Dubai – a lot of developments have been planned for Dubailand.
“So the location itself was an inspiration to develop the Artesia, because if you look at the amenities in the locality, you’ll find very few hotels and hotel apartments here. Demand was one of the biggest [drivers] behind the idea of Artesia.”
Indeed, Dubailand currently appears to be a hotspot for property developers in the emirate. Real estate consultancy, Cavendish Maxwell, said this January that it expects up to 7,000 residential units to be handed over in the locality this year. The neighbourhood, which already houses entertainment complexes such as Dubai Butterfly Garden and Dubai Miracle Garden, will soon get a 143ha park, to be developed through a memorandum of understanding (MoU) between Dubai Municipality and Dubai Holding.
However, as McLoughlin points out, this enterprising hive of activity currently lacks diversified hospitality options. From the perspective of a hospitality project developer, he continues, Artesia’s neighbourhood is also attractive thanks to its proximity to key local highways, as well as the Al Maktoum International Airport (DWC) and Expo 2020 site.
“Artesia’s locality is also being integrated with major roads, both constructed and under construction, which means we’re [just a few] minutes away from Sheikh Zayed Road, and about 15 to 20 minutes away from DWC.”
McLoughlin is says these factors have – and will continue to – cement Artesia’s reputation as a high-quality hospitality offering for the locality.
However, the project’s development has not been without its challenges. Finding high-quality MEP contractors, McLoughlin notes, can be particularly difficult amid current market conditions. One of the factors driving this theme is the dwindling number of specialised sub-contractors, including MEP teams, in the contemporary construction market, he says.
“In general, we are [facing] different kinds of challenges related to construction, such as finding contractors, and the availability of skilled labour and specialist contractors,” McLoughlin continues. “The number of MEP contractors in the market is [lower than] main contractors. Secondly, MEP is a heavily cash-driven business, [and is especially] driven by advance [payment].
“MEP contractors have to invest in equipment, send it to site, and start work – only then might they receive some income from the main contractor.”
Typically, this arrangement would require MEP contractors to be financially comfortable so as to deliver projects “on proper terms”, McLoughlin continues.
“Most MEP contractors have been through a very difficult time between 2009 and 2013,” he explains. “It came with financial burdens, which is why you’ll find that some MEP contractors [ended] their operations locally.”
In addition to financial constraints that may have intensified in light of low economic fluidity, MEP contractors looking to succeed in current market conditions must also meet continuously evolving – but equally significant – client demands, such as those relating to sustainability and energy efficiency. For cash-intensive businesses such as MEP outfits, such demands are not always easy to fulfil, McLoughlin concedes.
“A lot depends on the relationship between the main contractor and sub-contractors, because if the former is facing financial challenges, then that [trickles down] to all contractors, including MEP,” he continues.
“At Damac, we pay all our contractors according to the best possible timelines. We accelerate monthly payments, facilitate certain plans that may suit the team and, in some cases, even make allocations to pay directly to MEP contractors.
“An alternative is to facilitate more advanced payments to the main contractor, so they may pay the sub-contractor on time and allow work to proceed as planned.”
In this regard, McLoughlin appreciates CSCEC ME’s expertise and renown across the UAE’s construction sector. The contractor has previously worked with Damac on projects such as Lake View and Lake Terrace, and, in November 2016, was awarded a $150m (AED554m) contract to build the Paramount Residences at the Paramount Tower Hotel and Residences.
“CSCEC ME is very good at what it does, and goes beyond our [expectations]. It is one of the strongest contractors in the UAE,” McLoughlin says, signing off on an optimistic note about Artesia’s progress.
“This is a big project, and we’re very proud of it.”