The financial downturn has hit the real estate and the hospitality industry and luxury hotels the hardest. Even with the economy stabilizing somewhat these sectors are finding it hard to bounce back. For them, the priority still is to cut losses and consolidate their position to take advantage of opportunities in future. The Palazzo Versace hotel in Dubai has cut the price of its apartments by half. A high number of defaults have meant that several properties in the Dh2 billion (US$544.4 million) development have come back to the market with scaled down prices.
This is being pitched as a great opportunity for buyers as there has been no skimping on the fittings, features, furnishings or accessories including the $120 drinking glasses designed by the Italian designer Versace himself. The project was promoted by Emirates Sunland Group before the downturn set in. Buyers from the UK, Russia and around the region showing great interest in the project 80% of the residences were sold immediately. But with the economic conditions changing dramatically many of the original buyers could not follow through with the payments.
Soheil Abedian, the managing director of Emirates Sunland Group explained that the defaults, which were as high as 50%, had to be cancelled through a prescribed process by Real Estate Regulatory Agency. Those apartments can be resold now. These processes compounded with financial problems have slowed down the construction of the luxurious development on Dubai Creek. However the project should be complete in 12 to 14 months.