India’s oldest hotel operator has added a second property in Dubai as the emirate attracts rising numbers of tourists from the subcontinent.
The Taj Group opened the 296-room luxury hotel in Dubai Downtown – 14 years after opening its first property in Deira.
It comes as the number of Indian passengers passing through Dubai International Airport rises steadily. In February, 809,129 passengers from India passed through the airport, representing the largest group of passengers by nationality.
“The Indian leisure market has taken off, and that’s certainly a factor but also there are more opportunities for the Indian brands now,” said John Podaras, a Dubai-based partner at the hospitality consultancy Hotel Development Resources. “Expo 2020 is also a factor, and already the Dubai machinery is gearing up for that.”
Rising salaries over the past decade and of disposable income in India have led to an increase in overseas travellers, including those from smaller cities.
The GDP per capita in India was last recorded in 2013 at US$1,165, well up from $740 in 2006.
The UAE is the single largest country for air ticket bookings for outbound travel from India with the online travel agent ClearTrip.com. “We have seen this increase over the last three to four years with the increase in air capacity to the UAE from India,” said Amit Taneja, Clear-Trip’s chief revenue officer. “From the tourism perspective, Dubai is giving Singapore tough competition.”
Dubai is the single largest market for hotel bookings on ClearTrip, followed by Singapore.
Both the Taj and Oberoi, the other grand old hotel company from India, have had mixed success with hotel projects with some earlier announced projects yet to be opened. They include a Palm Jumeirah development for the Taj, and hotels slated for Yas Island and Al Raha Beach for Oberoi.
Oberoi opened in Dubai’s Business Bay in 2013 and plans to open in Ajman this year.
The Mumbai-based property company Hiranandani Group is working on a budget hotel with Accor in Dubai’s Business Bay that is expected to open in 2017. Also based in Mumbai, Suba Group of Hotels opened its first four-star property in Deira last year to tap into the Indian business traveller market. It expects to have a property near Dubai World Central’s Al Maktoum International Airport.
Tourist numbers from India are forecast to grow to 50 million by 2020, having risen from 3.7 million in 1997 to 9.8 million in 2007, according to the United Nations World Tourism Organisation.
Travel agencies such as Thomas Cook have started to offer package holidays from India for as little as 35,000 rupees (Dh2,056) for a five-day tour of Dubai that includes flights, hotels and sightseeing.
India was the second-largest source market for Dubai and the largest for Abu Dhabi last year.
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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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