Nakheel awards Dh819m Palm Tower contract to two Abu Dhabi builders

Nakheel has awarded a Dh819 million contract to build The Palm Tower, a 52-storey five-star hotel and residential building at Palm Jumeirah in Dubai.

The master developer yesterday said it had appointed two Abu Dhabi companies, Trojan General Contracting and National Projects & Construction, to jointly build the 240-metre-high tower.

The Palm Tower is one of 10 hotels being built by Nakheel as part of its expansion into the hospitality market. However, most of the other properties are in the mid-market (three-star and four-star) section of the market rather than the luxury end, which Sanjay Manchanda, Nakheel’s chief executive, described last month as “ultra-competitive”.

On the sidelines of the recent Cityscape Global conference, Mr Manchanda said the hospitality sector was “integral” to Dubai’s economy and that until recently Nakheel did not have a significant presence in that market. He was at the conference announcing Nakheel’s second property with Premier Inn, a budget hotel operator, at its extended Dragon City project.

“We’ve found that there is an opportunity. We scouted a few locations and we believe there is more to it in the budget sector,” said Mr Manchanda.

“We found that we need to be looking at location. Where are the gaps in the market and what are the economic returns?”

The Palm Tower’s hotel will have 290 rooms, with dining and leisure facilities such as a rooftop infinity pool, a restaurant and a viewing deck. The building will also house 504 luxury apartments, for which sales have already begun. The tower will have a number of studio apartments, as well as one-bedroom, two-bedroom and three-bedroom units. Prices for the apartments will be from Dh1.7 million.

Nakheel said the tower would offer access via a bridge and walkways to its Club Vista Mare and its Palm Promenade West Beach projects.

Faisal Durrani, the head of research at Cluttons in Dubai, said Dubai still needed more hotel rooms to be made available ahead of Expo 2020.

“The city has such ambitious targets to host 20 million people in the next four to five years. Hotel occupancy is still 80 to 90 per cent, there’s still 12 million to 13 million people coming in every year,” he said. “In order to hit that 20 million target, you need a whole lot more hotels and a whole lot more supporting tourism infrastructure in the form of retail and hospitality developments.”

There should not be many concerns about a potential oversupply, he said, given that London currently has about 130,000 hotel rooms for 18,000 visitors a year, while Dubai only has about half as many hotel rooms.

“But you can’t look at these things in isolation,” said Mr Durrani. “It’s all part of a much, much bigger picture. The aviation sector in Dubai is playing a huge role in helping to drive tourist numbers and growth in the economy as well.

“We have Al Maktoum airport being given the green light to be built. That is going to contribute a massive part of the economy over the next decade or two. Dubai wants to be an aviation nexus for the globe. With that comes the tourists, the requirement for additional hotels, shopping malls and theme parks. It’s still a growing city.”

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