Location of Hajar Tower
within Abraj Al-Bait
About
INVESTMENT FEATURES AT HAJAR TOWER

Ownership is available to: All Muslims of any nationality.

Objective of the project:

  1. Personal use: By utilizing the unit without renting it out for the 25 years.
  2. Investment: By renting the unit through the Movenpick management in order to get annual returns on investment.

Investment process of the project:

  1. The unit is rented out through the Movenpick Hotel management for one full year renewable annually, through the "share pool system" similar to an investment fund granting annual returns.
  2. At the same time the owner is given a specific number of points redeemable as complimentary free stay whenever the owner wishes to use the apartment, the number of points set depends on the size and view of the unit.
  3. The net minimum annual rate of return expected is 15%; taking into consideration the inflation of rent rates of similar hotels in the centralized area of the holy Haram estimated at 3% annually.

The return calculated by Ernest &Young which is considered one of the biggest companies in the world in conducting feasibility studies and real estate consultations; was based on the following factors:

  1. Rent rates of similar hotels in regards to standards and distance and level of service, such as Intercontinental-Dar Altawhid and Hilton Makkah, also the occupancy ratios of those hotels all year round.
  2. Occupancy ratio estimated as 61%  as a worst case scenario, even though in the other hotels it is around 85% annually.
  3. Appreciation on the return figures is calculated as 3 % annually  as a worst case scenario; however the realistic percentage of the appreciation is 10 – 15 % annually.
  4. One reason for the conservative figures given by Ernst & Young for this study is the fact that this is the first project in this location in its kind, as there are no other similar real estate projects as Abraj Al-Bait project.
  5. taking into consideration that this feasibility study was conducted in 2005, as the rent rates in first class hotels located around the holy Haram has risen in the past 3 years especially since the start of 2008 due to the demolishing of over 1000 properties in the shamiya area and other surrounding areas; creating a big gap between the demand of rooms and the supply available, consequently leading to rapid increase in the rent rates which validates the high figures expected in the operational returns on Hajar Tower investment.
  6. The return is calculated through the "share pool system" which is very similar to an investment fund shared by all owners wishing to invest their units through the Movenpick management. The revenues of all the units placed in the share pool system will be collected and then divided equally to the owners. This is to prevent any predicaments from occurring in the operation process of renting the units, and to guarantee everyone's equal right to gain the same returns on their invested units accordingly based on the size and view of their unit.         

There are 3 types of investment:

  1. Long-term investment: Where the apartment is purchased now and rented out through the Movenpick Management throughout the whole lease period.
  2. Medium-term investment: Where the apartment is rented out through the Movenpick Management for a few years then it is re-sold or utilized as personal use only.
  3. Short-term investment: Where the apartment is purchased now and is re-sold after a short period as prices are expected to increase rapidly through the coming few years.
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