A joint venture including Nakheel Hotels recently walked away with the winning bid for the site of a chic London address owned by the Queen of England’s property portfolio – despite the fact that the group’s offer was not the highest on the table.
Emirates Business spoke to Joe Sita, CEO of Nakheel Hotels, about the coup and the group’s plans for a five-star hotel at the site. Looking forward, Sita also shared details of Nakheel Hotel’s expansion strategy and why the group was so eager for a London address.
Can you tell us a little about your recent acquisition of a London property from the Queen of England’s portfolio?
The deal] is a three-way joint venture between Nakheel Hotels, the Libyan Foreign Investment Corporation (LFICO) and International Hotel Investments (IHI). The company that the joint venture has formed is called NLI Hotels. We have paid £130 million (Dh929.3m) for this particular site, which was not the highest bid from what I saw. Crowne Estates [the monarch’s real estate managers] has said in a statement that they had other bids up to about £170 million (Dh1.2 billion) but they liked ours better because of the certainty of our proposal and the nature of it in terms of the hotel-residential mix. I think that we won this bid because the consortium we are in has got a very strong track record in executing these types of complex conversion projects. And our scheme was very sympathetic to the overall design criteria.
Can you tell us a bit about the property itself?
The property is the Metropole Hotel and 10 Whitehall Place, which is part of the same building – they are adjoined – in West London. It’s a 400,000 square foot existing building that is going to be completely renovated into a 283-room hotel, and then there is a small residential piece attached to it. IHI is the company that we have a 33 per cent interest in, which owns and operates the five-star brand called Corinthia, so we will renovate it and launch it as a Corinthia hotel.
Why were you interested in this property in particular?
Each of the parties [in the joint venture] has been looking for a central London hotel for some time. For the past two years Nakheel Hotels has been looking for a site in London for a five-star hotel project to complement our other hotels around the world. London was a key target for us and it fits our strategy in terms of a luxury presence in the market. The second thing is that Corinthia is one of our major partners, so our strategy is to continue to add value to that investment. This is a perfect co-investment opportunity and what we hope will be the first of many with IHI in key European and Middle East markets.
Why is the London property market important right now for Dubai and this region, in light of the world markets right now?
Not withstanding the slowdown that might be occurring in economies at the moment, we still see it strategically as a very long-term important gateway market for us. London is always going to be [important]; it’s one of the major financial capitals of the world. London, New York, Paris and probably Tokyo are the four key major financial and urban markets in the world. So it has always been a target for us to be in those markets, we have been working on it for some time.
Is Nakheel Hotels actively looking for more property in the UK?
Now that we have this project in London we have satisfied our primary requirement, but that is not to say we would not do another similar type of project if the opportunity arose. We do not have any plans at the moment but if we did have an opportunity for another hotel in the market, we would certainly consider it.
What percentage of Nakheel Hotels’ portfolio does the new property represent?
Nakheel Hotels’ portfolio today is about $3bn (Dh11bn) and this investment for us is about $60m (Dh220m) initially, so it does not make up a large proportion of our overall portfolio.
How much in revenues do you expect to come from the property once refurbishment is completed?
This is predominantly our hotel prize so we expect to make a good long-term return on the investment. Actual hotel revenue numbers I don’t have off the top of my head I’m afraid. But we are expecting a handsome return from this project given its prime location and the brand that we have attached to it.
When do you expect refurbishment to begin and when is the hotel expected to be completed?
We take possession of the property immediately and we will go through a planning process over the next six months. I think we have got it scheduled to be completed and open at the end of 2009 or in 2010. We will carry on design and development this year and then aim to have construction finished by the end of 2009, with an early 2010 opening.
Looking forward, can you share with us some of Nakheel Hotels’ long-term plans for 2008?
There are many things coming up, but none that I can share [details] with you about at the moment. We will soon be announcing acquisitions in both South America and North America. We hope to do that in the next couple of weeks. And we also have more that we are doing in Asia and South East Asia, and more in the UAE. So there is quite a lot that we have going on that we can announce shortly.
Joe Sita, CEO of Nakheel Hotels
Joe Sita is the CEO of Nakheel Hotels, which in December merged its assets with Istithmar Hotels to create a fully integrated hotel investment company under Dubai World. Sita has over 25 years experience in financial, operational and development roles within the hospitality industry and has worked with organisations such as Carlson, Accor and Southern Pacific Hotel Corporation. Before joining Nakheel Hotels, Sita worked with Singapore-based Carlson Hotels Asia Pacific as executive vice-president of development, overseeing offices in Singapore, Sydney and Shanghai. He sits on numerous boards of hotel companies including Kerzner International Limited.
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