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RIYADH: Aiming to reinvent the global living experience through its portfolio of tech-enhanced branded residences, Stella Stays plans to become the region’s largest player in residential hospitality, its co-founder and CEO said.
Speaking to Arab News in an exclusive interview, Mohannad Zikra said the Dubai-based proptech startup, which is disrupting the global residential property sector with its innovative business model, will add around 2,500 apartments in the region this year, 50% of which will be in Saudi Arabia.
“We are adding just over 1,200 apartments primarily focused on Riyadh, but we also plan to launch in Jeddah soon,” he said. “We are also considering Dammam and Alkhobar.”
Zikra added that he is considering opportunities in projects in the Kingdom where they are creating new cities. The Saudi Downtown Co., a master and lead developer owned by the Public Investment Fund, with 12 projects located in 11 regions of the Kingdom, for example, is experiencing strong growth and Zikra is keen to exploit opportunities in such projects.
After starting in 2019 by creating an offering where people can find, rent and move into a home in minutes, Stella Stays has quickly expanded its portfolio. It wishes to continue its expansion in major cities in the Middle East and North Africa region, in Europe and in North America.
Zikra wants to continue to focus on the region over the next 18 months. “We will obviously continue our growth in the United Arab Emirates, Saudi Arabia, Egypt and Turkey, but we also see Morocco as a huge market for us,” he said. “Then we are also looking at Qatar as a potential market after what happened at the World Cup.”
Going forward, he explained, Stella Stays will be looking at some of the emerging markets that offer huge opportunities for growth. Especially countries like India, Indonesia and Vietnam.
“You also have Portugal which introduced independent visas,” he said. “So over the next 24 months, we’ll be going into markets like Asia that have huge growth potential and are among the top contenders for gross domestic product growth.”
When Stella Stays started, there were private investors in the UAE, but today much of what the company does involves partnering directly with property developers. “When we partner with property developers, we’re able to take buildings and rebuild technology that allows us to achieve 100% occupancy in our buildings within eight weeks,” Zikra said.
“Thus, we are able to generate cash flow very quickly from these buildings. And that helped us fund a lot of our growth. So we took a different approach than some of these other startups that just raise money to raise money.
Unlike many startups that struggle because they focus on growth without worrying about profitability, Zikra has always been clear about building a profitable business from the start.
Unsurprisingly, Stella Stays is not only profitable, but also cash flow positive.
“We are growing faster and faster,” Zikra said. “Our average growth rate is around 250-300% per year from our start in 2019 through 2022.”
Having managed to use his funds, Zikra is now also working with banks to help build a strong base and grow the team.
Stella Stays is also considering partnering with real estate investment trusts because, according to Zikra, they have often struggled to find the right real estate investments. His company could be a good match for these funds as it has a thriving business model with around 80% of its furnished apartments at full capacity at all times.
We are growing faster and faster. Our average growth rate is around 250-300% per year from our start in 2019 until 2022.
By all accounts, there is a lot of demand for such apartments and people are also ready to pay a premium for them.
He added: “By 2024, we plan to add around 5,100 units. And for that, we are starting to look to strategic partners and investors in the region, including investment fund-backed investors. sovereigns, because we see that there is a very close relationship between what we do and what we can contribute to a lot of government initiatives from a housing perspective.
“You look at Saudi Arabia and Vision 2030, there is a huge plan to increase the population,” Zikra continued. “And with that, they need to add over 100,000 homes over the next three years. And that means those homes are going to have to be rented out. And they’re looking for partners who can simplify that process.”
That’s where a company like Stella Stays comes in. “We want to come in as a professional serviced apartment operator where we can step in and provide that consistency that you get in a hotel and provide that service,” said said Zikra.
Technology-driven brand experience
“We don’t just take individual apartments, we actually work with property developers and take over buildings,” Zikra said.
“When you book a serviced apartment with Stella Stays, you are entering a fully managed branded technology operator, where from the moment you enter the building, it is our brand,” he added.
“Across all the apartments we manage we offer the same consistency where you know you are going to have a clean place and you know there will be 24/7 support for your stay whether it is for a night, a week or a month or more.
To its credit, Stella Stays has digitized the entire customer journey. It did much the same with house rentals that Uber did with ride sharing. Many of his guests and residents visit his app or website, see all the different apartments they have in the different cities, and choose the one they want.
“They can then choose their dates and pay by credit cards or pay by crypto,” Zikra explained.
“Then they get information to check in. We have smart door locks in all of our units and access. They find the place, they pay for it, they move in, they can request services and all of that without ever having to to do business with a person.
He added: “There is no need to deal with estate agents, no need to pick up the phone and make calls. Instead, we’ve completely digitized the experience.
When asked who his competitors were, Zikra replied, “Our competitors today are nothing but traditional landlords who own properties and rent them out on Property Finder and all these different marketplaces or landlords. “buildings that want to rent their apartment on theirs. That’s what we want to take back.”
“And that’s why more than anything, we’re partnering with them and saying, listen, we can take back your assets,” he explained. “Just like Amazon did with shopping products, we can do it with serviced apartments.”
He added that they have entered a whole new space which they call “residential hospitality”. According to Zikra, residential hospitality is the possibility of renting a residential apartment in a personalized way.
“We want to pick up the slack and become the biggest landlord in the world with our concept of allowing people to come forward and start living,” he concluded.