Demand for branded residences in Dubai is expected to remain strong as wealthy buyers continue to boost spending amid a boom in the real estate sector, according to developers and analysts.
Dubai, the commercial and tourism hub of the Middle East, is developing a number of branded residential projects in partnership with hotels, fashion and automotive brands, such as Bugatti, Pagani and Mercedes-Benz.
“The demand (for branded residences) is there and is growing year-on-year,” Haider Tuaima, director and head of real estate research at ValuStrat told The National. “This was probably the third or fourth year, since Covid- 19 that the demand for high-end luxury properties continues to grow.”
Branded residences refer to property developments that carry the stamps of iconic brands.
The business provides developments with its branding, services and amenities, according to global real estate consultancy Knight Frank.
Often – but not always – branded residences will sell for a premium above their non-branded counterparts.
High-net-worth-individuals are investing in the branded residences as they “would like to have something that is managed or that is branded, or that is associated with the brand, in order to ensure that every time they visit the country or they visit their property, it's always at a high standard and well maintained and well managed.”
Branded residences also offer investment opportunities for buyers as property prices continued to rise across the UAE amid government initiatives and overall growth in the economy.
Prices of $10 million-plus homes in Dubai grew at one of the fastest rates globally, as overseas demand for prime residences in the emirate continues unabated.
Dubai’s prime residential market, which includes The Palm Jumeirah, Jumeirah Bay Island and Emirates Hills, saw prices grow by more than 26 per cent last year, property consultancy Knight Frank said in a report in April.
“The main drivers for branded residences are prestige, brand identity, international appeal, being part of the brand’s global hospitality network, superior levels of service, design, furniture packages, finishes along with investment potential through premiums and rental pools,” Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core, said.
“Typically, branded residences command price premiums of about 25-30 per cent compared to non-branded residences of similar build quality," she said.
Branded residences in Dubai are currently transacted at an average of around Dh6,500 ($1,769.9) per square foot, with pricing influenced by factors such as location, waterfront or beach access or views, brand associations, service levels and concepts, she added.
Currently, there are a number of branded residences that are being constructed in Dubai. These include Armani Beach Residence at Palm Jumeirah with 53 units, Cavalli Casa tower at Dubai Marina with 436 units, Mercedes-Benz Places with 150 units at Downtown, Bugatti Residence at Business Bay with 182 units, and Bulgari Lighthouse with 31 units at Jumeirah Bay.
The starting unit price at Bulgari Lighthouse is Dh64 million, while the starting price at Bugatti Residence is Dh19 million, according to Knight Frank data. Mercedes-Benz Places, which is being developed by Binghatti Properties, is being sold starting at Dh8.8 million per unit.
Armani Beach Residence by Arada is being sold at a starting price of Dh21 million per unit.
"Branded residence as an asset class is enjoying sustained growth across the world, with markets in the Middle East, specifically Dubai witnessing a significant rise in demand, fuelled by UAE’s global reputation, appealing lifestyle, safety, and strong investment potential. Dubai also boasts the highest inventory of branded residences compared to any other global city," Ms Gurrapu, said
More than 4,600 branded units are expected to be delivered in Dubai in the next five years, with more projects in the pipeline, according to Knight Frank.
Damac, as well as Dar Global, said they are planning to launch new projects amid higher demand from buyers, senior executives at the company said.
Dar Global, which is developing projects in partnership with global brands, including Missoni, Aston Martin, Pagani and W residences, plans to launch another project in the UAE after selling most of its units in its four projects.
"The market continues to be strong and the demand fundamentals have not changed," Ziad El Chaar, chief executive of Dar Global told The National.
"The demand for investing is increasing and the UAE population is increasing at the same time... you still have a lot of people who are still finding their second home in the UAE because they are setting up a lot of businesses in the UAE," he said.
Safety and security is one of the main elements driving people to choose the UAE as a home for themselves and their families, he added.
Global HNWIs are expected to spend $4.4 billion buying Dubai property this year, up 76 per cent compared to last year, says a Knight Frank report following a survey with 317 wealthy people, with an average net worth of $20 million globally and $8 million in the Gulf region.
GCC-based HNWIs are projected to spend $3.1 million buying a house in Dubai, while the global ultra-rich will allocate $36.5 million, on average, on property deals, it said.
The global arm of Saudi Arabia’s biggest developer Dar Al Arkan this month launched a beachfront residential community worth $250 million on Al Marjan Island in Ras Al Khaimah, in partnership with British luxury brand Aston Martin.
Damac Properties is also looking to build new projects focusing on branded residences amid higher demand. It is currently developing branded residential properties in Dubai in partnership with brands such as Cavalli and Swiss jewellery brand de Grisogono, which it acquired in 2022.
"We will continue to serve this demand and enrich our portfolio with branded residences across key locations in Dubai," Mohammed Tahaineh, general manager of projects at Damac, said.
He expects an "exponential rise" in demand for branded properties over the next four years as investors in the UAE increasingly seek high-end real estate.
"We have seen the market mould towards this trend, supported by reports that indicate that Dubai is going to see the number of branded residences double over the next five years."
The company's buyers include a mix of investors, home seekers, and HNWIs from diverse markets, including the US, Europe, India, China, and Russia, he said.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - June 2024
