demand outstripping supply - arabian falcon
TRANSCRIPT
DemanD outstripping
supply
A N A F H M i d d l e e A s t e c o N o M i c R e p o R t
t H e vA c At i o N o w N e R s H i p i N d u s t R y i s e s t i M At e d t o g R o w 3 0 % i N 2 0 1 4
b u t s u p p ly i s N o t c At c H i N g u p.R e g u l At i o N i s t H e k e y
The number of Timeshare properTies in The uae has noT been able To caTch up wiTh The growTh indemand
•ThedemandfortimesharesintheUAEhasbeenoutstrippingsupply,promptingvacationownershipplayerstolookforother
destinationstomeetdemand.
•Thetimeshareindustryisestimatedtohavegrownby15-20%in2013anditisexpectedthatyear2014willsurpassthatrate,
withgrowthslatedat30%year-on-year.
•Thegrowthisspurredbyglobaleconomicrecovery,ingeneralandrobusteconomicgrowthintheUAEinparticularbuoyed
byastrongtourismandhospitalitysectorandapropertysectorthatisbacktotheboomcycle.
•However,whiledemandhasbeengrowingyear-on-yearinhighdouble-digitratesthenumberoftimesharepropertiesinthe
UAEhasnotbeenabletocatchupwiththisgrowth.
•Oneofthereasonssupplyhasnotbeenabletocatchbecausedevelopersandothermulti-nationalhospitalitycompanies
arestillwaitingforthefinalisationofthedraftregulationforthetimesharesector.
•Dubai’sRealEstateRegulatoryAgency(RERA)hasalreadyformulatedbyIntervalInternational,aprominentworldwide
providerofvacationservicesandanoperatingbusinessofIntervalLeisureGroup(IILG),andRCI,thelargestofthetimeshare
exchangeagencies.BothcompaniesarepartnersofArabianFalconHolidays.
•Uponthepassingofthelaw,RERAwillregulatethetimesharebusinessinDubaithroughitsspecificTimeshareDivision.
•Inthemeantime,RERAhasbeensupportingthetimesharesectorbyprovidingtrainingsandaccreditationtobrokers.The
GovernmentofDubaiLandDepartmenthasalsobeenorganisingtrainingcoursesforrealestatebrokersworkinginthe
Dubai’stimesharethroughacoupleofprofessionalcourses.
•Withtheapprovalandtheenactmentofthetimesharelaw,therewillbeclarityontheprocedures,whichwillapplyto
timeshares,andthiswillgreatlyimpactthesectorandtheeconomyoftheUAEasawhole.
•DubaiissettobethefastestgrowingtimesharemarketintheworldandthatthetimesharesectorwillgiveDubaieconomya
Dh14billionboostin2020thankstothesignificantincreaseinthenumberoftourists,realestatepricesandhotelroomrates
intheemirateoverthenextdecade.
•InDecember2013,HHSheikhMohammedbinRashidAlMaktoum,Vice-PresidentandPrimeMinisteroftheUAE,andRuler
ofDubai,issuedDecreeNo.41of2013,concerningtheregulationoftheholidayhomesmarketinDubai,saidtobethefirst
stepinregularisingtheemirate’sholidayhomesmarket.
HigHligHts
THE GROWTH STORY
DUBAI LEADING THE WAY
DEMAND OUTSTRIPPING SUPPLY
CHALLENGES FACING VACATION OWNERSHIP MARKET
PERCEPTION
REGULATION
ABOUT TIME SHARE
ABOUT ARABIAN FALCON HOLIDAYS
ABOUT ROYAL CLUB DUBAI
ABOUT INTERVAL INTERNATIONAL
CONTENTS
30%expected growth in the
timeshare sector
2014
15-20%growth in the timeshare sector in
2013
The demand for timeshares
in the UAE has been
outstripping supply
AED14billion
Economic boost of the
timeshare sector to Dubai
in 2020
Source: American Resort Development Association
AFH RESEARCH
supply ⊲DEmAnD
AFH RESEARCH
tHe groWtH storyThetimeshareindustryissettoreceive
amassiveboostin2014withasustained
recoveryintheglobaleconomyanda
resultantriseinbothhotelroomratesand
propertypricesinmajortourism
destinations.
Vacationownership,ortimeshare,
industryisestimatedtohavegrown
between15and20percentin2013
globally,anditisexpectedthatyear2014
willsurpassthatgrowthrate.
Globally,aftergrowingformorethan
threedecades,vacationownership
industrysufferedasetbackin2009owing
totheglobaleconomicslowdown.Inthat
yearalone,combinedglobalsalesof
vacationownership,timeshareand
fractionalownershipslumpedbymore
thanaquarter(27percent),withasset
pricessufferingatthehandsofthecredit
crisisthathadgrippedtheworld.
DevelopedcountriessuchastheUS
andEuropeaccountforthelargest
marketsforvacationownershipinthe
world.DevelopingcountriesintheMiddle
EastandAsiaPacificregionarealso
gainingpopularity,althoughthepaceof
developmentremainsslow.
Withintheregion,thereareahandfulof
destinationleadersinthevacation
ownershipindustry,namelyMeccain
SaudiArabiawherevacationownershipis
limitedtoreligioustimeshare;Egypt,which
isaclearleaderintermsofthelargest
baseoftimeshareprojectsandowners;
andDubai,whichisanascentbutrapidly
developingvacationownershipmarket.
Therearealsoacoupleofresortsin
Lebanon,butthemarketthereremains
rathersmall.
Thetimeshareconceptmarksoneof
thehighestgrowingratesinthetourist
sector.However,itspenetrationwithinthe
MiddleEastregionremainslimited.
Butthisislikelytochangesoon.
DuBai leaDing tHe WayWithpropertypricesinDubaiclockingthefastestgrowthratein
theworldlastyear,manyaspiringpropertyownersintheemirate
arebeingpricedoutofthesecondhomeorvacationhomes
market.ForsuchpeopleandmillionsotherswhovisitDubaiona
regularbasisandstayinoneofthehundredsofhotelsaround
town,aninvestmentintimesharemakesperfectfinancialsense.
Dubaiisthereforenowontheforefrontandissettobethe
fastestgrowingtimesharemarketintheworld.Thetimeshare
sectorwillgiveDubaieconomyaDh14billionboostin2020thanks
tothesignificantincreaseinthenumberoftourists,realestate
pricesandhotelroomratesintheemirateoverthenextdecade.
Dubaiisoneofthetopcountriesintheworldthatreceive
frequentinternationalvisitors-newandreturningones–both
forbusinessorleisure,exceedingthoseregisteredbymany
touristdestinationsglobally.AndthismakesDubaianidealplace
toinvestinthetimesharesector.
AccordingtoareportfrompropertybrokerKnightFrankin
December2013,Dubai’srisinghousepricesaretheworld’s
fastest;surpassingpricerisesinMainlandChina,HongKongand
Taiwan.
AsurveyheldbyYahooMaktoobResearchalsosaidthatDubai
hasbecomethemostpopularshoppingdestinationinWorld
beatingmegacitieslikeParis,London,NewYork,Beijingetc.
OverthelastdecadeDubaihasestablisheditselfasacityof
shoppingmalls,luxuriouslifestyledestinationandlandof
opportunitiesforretailersfromallovertheworld.Dubaihastruly
becomethenumberoneglobaltourismdestination.Dubaihotel
andhotelapartmentguestshavereached10.5millionin2013,
whileresidencenightswereup6.3percentatmorethan41
million.TheofficialexpectationssuggestedthatDubaiwill
receive20millionvisitorsby2020.
Nevertheless,thisnumberiscurrentlyunderreconsideration,
afterDubaiwontherighttoorganisetheWorldExpo2020
exhibition,whichisexpectedtoreceiveadditional25million
visitors.
WithonlyahandfulofqualitytimeshareresortoptionsinDubai
currently,thesectorissettowitnessarapidgrowthinyearsto
come,bolsteredbytheorganicgrowththatthetourismsector
willsee.
In2009,Dubaiwasnotsparedfromtheglobaleconomic
recessionanditwasinfactamongtheworstperformingreal
estatemarketsintheworld,withpropertypricesdecliningby
almost50percentfromtheirpeaksinthe
previousyear.
ButwhileDubai’srealestatemarkethasseenaswingfrom
beingoneoftheworld’sworstperformingmarketstobeingthe
world’sbestperformingmarketinfouryears,timeshareasa
marketremainsrecession-proof.Thisalsomeansthatitdoesn’t
seewildswingsontheupsideordownside–itprovides
much-neededstabilitytothemarketintimesofcrisiswhile
providingholidaymakerswithlessexpensivestaysduringupturns
aswellasdownturns.
The demand for Timeshare is fuelled by The booming properTy, Tourismand hospiTaliTy secTors in The counTry’as well as The reTurn in invesTorsconfidence
The demand for Timeshare is fuelled byThe booming properTy, Tourism and hospiTaliTy secTors in The counTry as’well as The reTurn in invesTorsconfidence
The demand for Timeshare is fuelled by The booming properTy, Tourism and hospiTaliTy secTors in The counTry as well as ThereTurn in invesTors’ confidence
ThedemandfortimesharesintheUAE
hasbeenoutstrippingsupply,prompting
vacationownershipplayerstolookfor
otherdestinationstomeetdemand.
Thetimeshareindustryisestimatedto
havegrownby15-20%in2013anditis
expectedthatyear2014willsurpassthat
rate,withgrowthslatedat30%year-on-
year.
Thegrowthisspurredbyglobal
economicrecovery,ingeneralandrobust
economicgrowthintheUAEinparticular
buoyedbyastrongtourismandhospitality
sectorandapropertysectorthatisback
totheboomcycle.
However,whiledemandhasbeen
growingyear-on-yearinhighdouble-digit
ratesthenumberoftimeshareproperties
intheUAEhasnotbeenabletocatchup
withthisgrowth.
Thedemandfortimeshareisfuelledby
theboomingpropertyandtourismand
hospitalitysectorsinthecountryaswell
asthereturnininvestorconfidence.In
addition,thereisastronganticipationofa
significantincreaseinthenumberof
tourists,realestatepricesandhotelroom
ratesintheUAEoverthenextdecade.
Oneofthereasonssupplyhasnotbeen
abletocatchbecausedevelopersand
othermulti-nationalhospitalitycompanies
arestillwaitingforthefinalisationofthe
draftregulationforthetimesharesector.
Dubai’sRealEstateRegulatoryAgency
(RERA)hasalreadyformulatedbyInterval
International,aprominentworldwide
providerofvacationservicesandan
operatingbusinessofIntervalLeisure
Group(IILG),andRCI,thelargestofthe
timeshareexchangeagencies.Both
companiesarepartnersofArabianFalcon
Holidays.
IntervalInternational,ArabianFalcon
HolidaysandRoyalClubDubairecently
announcedamulti-yearextensionofthe
affiliationagreementforRoyalClubat
PalmJumeirah.RoyalClubatPalm
Jumeirahwasthefirsttimeshareresortin
Dubaiandhasbeensuccessfully
marketedbyArabianFalconHolidays
since2004.LocatedonDubai’slandmark
PalmitwaslaterjoinedbyRoyalClubat
TheBonningtonTower,anotherInterval
affiliatedresort.
Uponthepassingofthelaw,RERAwill
regulatethetimesharebusinessinDubai
throughitsspecificTimeshareDivision.A
publiclyavailabletimeshareregisterhas
alsobeenproposed.
Amongothers,thetimesharelawwill
seearegistrationofdeveloperswith
RERApriortoanysales;afilingofsales
contractsanddisclosurestatementswith
RERAbeforeadvertisingorsalescan
commence,whichincludespecific
informationrelatingtothetimeshare
developmentsuchthenatureofthe
developmentandallrelatedexpenses
andannualchargesforthefirstyear;a10
daycooling-offperiodforpurchasersto
changetheirmindsinrespectofthe
purchase,withdepositsinescrow.
Intheinterestsoftransparency,owners
willbeentitledtoanitemisedbudgetfor
theirtimeshare,includingrevenueand
expenses.
Wherethedeveloperamendstothe
natureofthetimesharedevelopment,
purchaserswouldhavetherightto
canceltheircontractsincertain
circumstances.Andaswithothersalesof
realestatedevelopmentsunder
constructioninDubai,theremustalsobe
anescrowaccountinplaceintowhichall
purchasers’fundsmustbeplaced
pendingcompletionofconstructionofa
property-onlyuponsuitableassurance
fromthedeveloperinrelationto
completionofthetimesharewouldthese
fundsbereleased.
Inthemeantime,RERAhasbeen
supportingthetimesharesectorby
providingtrainingsandaccreditationto
brokers.TheGovernmentofDubaiLand
Department(LD)hasbeenorganising
trainingcoursesforrealestatebrokers
workingintheDubai’stimesharethrough
acoupleofprofessionalcourses.The
programmeisbeingconductedbythe
DubaiRealEstateInstitute(DREI),the
educationalarmofLDincooperationwith
therealestatelicensingdepartmentof
RERA.
TheUAEhasbeenverysupportiveof
thetimesharesector.ArabianFalcon
Holidayshavehadanumberofdialogue
withgovernmentagenciesandhave
beenassuredthatthegovernment
understandsthatthetimesharepresents
anewopportunityforinvestorsand
frequenttouristsinDubaiandthewhole
UAEanditwillalsoboosttherealestate
andtourismsectors,alongwithother
relatedsectors.
Withtheapprovalandtheenactment
ofthetimesharelaw,therewillbeclarity
ontheprocedureswhichwillapplyto
timeshares,andthiswillgreatlyimpact
thesectorandtheeconomyoftheUAE
asawhole.
AFH RESEARCH
DemanD outstripping supply
DEcrEE no. 41 of 2013The decree issued by HH Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai, concerning the regulation of the holiday homes market in the emirate of Dubai
December 2013When Decree No.1 was issued, said to be the first step in regularising Dubai’s holiday homes market
The uae in general and dubai in parTicular has Taken acTive aregional leadin acTively formulaTing regu-
The uae in general and dubai in parTicular has Taken a regional lead in acTively formulaTing regulaTion for Theholiday homes markeT
Evenasthevacationownershipmarket
inDubaiisgrowingrapidlyandhasthe
potentialofdevelopingatamuchfaster
clip,thereremainissuesthatareaffecting
itsgrowthnotjustintheemirate,but
CHallenges FaCing VaCationoWnersHip marKet
Globally,owingtoahandfulofconartists
thatabusedthelackofregulatoryoversight
overvacationownershipindustry,the
sectorreceivedalotofbadpress,
tarnishingitsimage.Therearetimeshare
companiesthathavebeenaccusedof
scammingtheircustomers.Oneexampleis
theIncentiveLeisureGroup,aUK-
registeredfirmthathassincebeen
liquidated,leavingitsinvestorschasingthe
legalroutetoreclaimtheirmoney.
Inaddition,theindustry’sreputation
hasbeenscarredbythecomparisonof
thetimesharesalesmantotheusedcar
salesmanintheWest.Asectionof
vacationownershipfirmshavebeen
accusedofhard-sellingtheirproducts,in
effectputtingalotofsalespressureon
theprospectivebuyerto‘buytoday’
perCeptionduringasalespitchorpresentation.
Inaddition,customershavealso
complainedofleavingatimesharetour
(industryjargonforasalespitch)
completelyexhaustedbythebarrageof
salespeopletheyhadtodealwith
beforetheyfinallyexitedthe‘tour’.Ata
timewhentheindustrywasstillnascent
intheWest,suchunethicalsalestactics
wereemployedbyasectionofthe
timeshareindustry,whichhasdone
long-termdamagetotheindustry’s
prospects.
Evenastheregion’stimesharesector
hasevolvedunderalargelyethical
umbrella,small-timecowboyskeep
sproutingnowandthenevenas
authoritiesstampthemoutthrough
activeregulationsandoversight.
TheUAEingeneralandDubaiinparticularhastakenaregional
leadinactivelyformulatingregulationfortheholidayhomesmarket.In
December2013,HHSheikhMohammedbinRashidAlMaktoum,
Vice-PresidentandPrimeMinisteroftheUAE,andRulerofDubai,
issuedDecreeNo.41of2013,concerningtheregulationoftheholiday
homesmarketintheemirateofDubai.
Withtheobjectiveofcontributingtothegrowthofthetourism
industrybybroadeningtherangeofaccommodationsavailableto
visitors,thedecreedictatesthatDubai’sDepartmentofTourismand
CommerceMarketing(DTCM)willberesponsibleforthegrantingof
licensestothosepartieswhointendtorentoutafurnished
residentialpropertyonadaily,weeklyormonthlybasis.
Twonewclassificationstandardswillbeaddedtotheexisting
regulationHotelClassificationframework,withholidayhomesratedaseither
StandardorDeluxe.Analystsmaintainthattheregulationofthe
rentingofpropertiesasholidayhomeswillhaveaconsiderable
positiveimpactontwoofDubai’skeyindustries–tourismandreal
estate.
Industrywatchersbelievethisisafirststepinregularisingthe
emirate’sholidayhomesmarketinanticipationofthemassiveinflux
ofvisitorsexpectedby2020.
However,regulatoryoversightoutsideDubairemainsweak,and
needstobe
bolsteredbyregionalaccordstolendconfidencetoregionaland
internationalholidaymakers.
AFH RESEARCH
DAily, wEEkly or monthly bAsisThe frequency on which furnished residential property can be rented out under the supervision of Dubai’s Department of Tourism and Commerce Marketing
standard or DeluxeThe 2 new classification standards will be added to the existing Hotel Classification framework, with holiday homes rated as either
acrossthewholeregion.Infact,someof
theproblemsthatthetimeshareindustry
facesareglobalinnature,notleastof
themtheperceptionproblemthatmars
itspotential.
Male / 29yrs oldSingle / Filipino
arabian falcon holidays (afh) is The largesT independenT Timeshare sales and markeTing company in The middleeasT
Vacationownership,ortimeshareasitispopularlycalled,
comprisesamajorsegmentofthehospitalityindustry.Asof
mid-2013,therewereabout5,500timeshareresortsspread
across108countries,demonstratingthesignificantfootprintof
theindustry.Globally,sharedvacationownershipgenerated
morethan1.1millionjobsin2010andadirectturnoverofmore
than$45billion,whichexpandstonearly$114billionwhen
aBout timesHare
aBout araBian FalCon HoliDays
aBout royal CluB DuBai
aBout interVal international
Disclaimer: This document has been prepared in good faith on the basis of information available at the date of publication without any independent verification. arabian Falcon
Holidays (aFH) does not guarantee or warrant the accuracy, reliability, completeness or currency of the information in this publication nor its usefulness in achieving any purpose.
readers are responsible for assessing the relevance and accuracy of the content of this publication. aFH will not be liable for any loss, damage, cost or expense incurred or arising
by reason of any person using or relying on information in this publication.
AFH RESEARCH
ArabianFalconHolidays(AFH),thelargest
independenttimesharesalesandmarketing
companyintheMiddleEast,wasfoundedin
1999whenthepotentialoftheUAE,Dubai
inparticular,asamarketforvacation
ownershipwasrecognised.
ArabianFalconisapremiereinternational
serviceprovidertothetimeshareindustryin
theMiddleEastandhasbeendelivering
excellentclientservicesandprovidingthe
bestvacationproductsintheGCC
marketsince2003.
AFHhastimesharepropertiesinRoyal
TheRoyalClubDubaiisaluxurybrandofvacationownership
resortsbasedinDubai,UnitedArabEmirates.TheRoyalClub’s
resortsareownedbytwosistercompanies,CaryatidProperties
LtdandDermarrPropertiesLtd.DermarrRealEstateBrokersLLC,
acompanybasedinDubaiistheauthorisedrepresentativeforall
oftheseresortsandanyfutureresortscreatedundertheRoyal
IntervalInternationalisaworldrenownedexchangecompany
withover2,500resortsworldwide,wehaveappointedInterval
Internationalaswefeelthatthereresortsareofasimilarquality
indirectandinducedimpactsincluded.
Theresearchreportsaidfactorssuchasanincreasing
numberofworkingadultsandwomen,earlyretirement,growing
demandforleisureandrecreation,increasingurbanpopulation
andrelativelybettereconomicconditionsareresponsiblefor
enhancedtraveland,therefore,demandofvacationownership
products.
ClubBonningtonHotel,Jumeirah
LakesTower,Dubai;RoyalClubatThePalm,
PalmJumeirah,Dubai;SerenityinLes
JardinsdeZyriab,Marrakech,Morocco;
PalaceoftheGoldenHorses,KualaLumpur,
Malaysia;andGoldenPalmTree,Sepang,
Malaysia.
Thecompanyislicensedtomarketand
selltimeshareintheUAEandhasdeposited
therequiredAED1millionbankguarantee
withtheDepartmentofEconomic
Development,Dubai.ArabianFalcon
HolidaysisanactivememberofDubai
Clubbrand.In2010wealsoopenedasatelliteofficeinVictoria
Island,Lagos,NigeriacalledDermarrPropertiesNigeriaLtd.At
theRoyalClubwebelieveindeliveringthebest,thereforewe
appointonlyofDubai,andforpioneeringthemarketingand
sellingofthecity’sfirstthebestcompaniestolookafteryouand
yourinvestment.
toours,alloffering5starstandards,sothatyoutheclientcan
enjoythem.www.intervalworld.com
ChamberOfCommerceandIndustry,
MembershipNo.53170.
AttheVacationOwnershipInvestment
Conference(VOIC2007),ArabianFalcon
Holidayswashonouredtoreceivethe
IntervalInternationalPioneer’sExcellence
Award,whichwaspresentedtoCEO,Al
MohannadSharafuddinbyInterval
InternationalChairmanandCEO,Mr.Craig
M.Nash.Theawardwasgiven“forvisionary
foresightandrecognitionofthetimeshare
potentialtimeshareresort.
www.arabianfalcon.com
Contact detailsMohannad Sharafuddin
Chairman & CEO Arabian Falcon Holidays
+971 (4) 324 4775 [email protected]
Lucy VicenteAccount Manager
New Perspective Media+971 (4) 236 7033