Pope Francis visit, defense show boost Abu Dhabi hotels in February

Hotels in the emirate took advantage of the sudden increase in demand during Pope Francis’ visit by raising, and some even almost doubling, their room rates. (AFP)
Updated 13 March 2019
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Pope Francis visit, defense show boost Abu Dhabi hotels in February

  • Pope Francis’ visit saw up to 170,000 Catholic faithful thronging to Abu Dhabi’s Zayed Sports City to hear the Papal Mass on the pontiff’s final day
  • hotels in the emirate took advantage of the sudden increase in demand by raising, and some even almost doubling, their room rates

DUBAI: Pope Francis’ papal visit to the UAE and the International Defence Exhibition and Conference (IDEX) in February helped boost the performance of Abu Dhabi hotels, as daily room rates sharply rose despite a dip in occupancy levels.
“The year-over-year increases in ADR [average daily rates] and RevPAR [Revenue per available room] were mainly driven by Pope Francis’ visit to Abu Dhabi (3-5 February) and the 2019 (17-21 February),” industry monitor STR said in its preliminary report.
“A jump in rates were seen during the seven-day period surrounding IDEX.”
Pope Francis’ visit saw up to 170,000 Catholic faithful thronging to Abu Dhabi’s Zayed Sports City to hear the Papal Mass on the pontiff’s final day, and hotels in the emirate took advantage of the sudden increase in demand by raising, and some even almost doubling, their room rates.
The high demand for hotel rooms during IDEX to accommodate up to 1,300 exhibitors and more than 105,000 visitors from 142 countries also contributed to higher rates during the month, especially for hotels near the Abu Dhabi National Exhibition Centre venue.
For the month, ADR – the average price or rate for each hotel room sold for a specific day – rose 31.6 percent over the year to $153.86 (565.07 dirhams) while RevPAR – or the ADR multiplied by occupancy rate – went up 29.1 percent to $121.84 (447.46 dirhams).
The February occupancy rate slipped 1.9 percent to 79.2 percent as the increase in room supply (9.3 percent) outpaced the rise in demand (7.2 percent).
STR will release full February results later this month.


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 23 April 2019
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.