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Dubai branded residences sector soars: 410% growth in 10 years

Discover why Dubai is now the world’s top destination for investors and end-users seeking luxury living with a branded touch

Dubai branded residences sector soars: 410% growth in 10 years

According to a recent report by property consultancy Global Branded Residences (GBR), the branded residences sector in Dubai has experienced a significant growth of 410% over the past 10 years, increasing from ten projects in 2014 to 51 projects currently operating. In the last five years alone, the sector has grown by 122%, rising from 23 projects to 51. Dubai is now recognised as the leading destination globally for branded residences, showcasing the remarkable expansion of this market sector in the Emirates.

Some of the UAE’s most prominent developers, including Emaar, DAMAC, Binghatti, and Arada are realising the benefits of collaborations with hotel and lifestyle brands, while hotel operators including Accor, Kerzner (One & Only Resorts) and the Mandarin Oriental Group are leading the trend. 

Branded residences differ from luxury residential projects in a variety of ways.  They provide a curated lifestyle that is managed by some of the world’s most experienced hotel brands. These brands manage the Home Owners’ Association as well as the services and amenities in the building. 

In most locations, you expect to see a higher and wider range of services and amenities compared to non-branded developments, and there are further benefits to buyers through reciprocal benefits programs in hotels and properties of the same brand. Furthermore, where there is the option for a managed rental program, the owners of the units can benefit from a split of the rental income generated by their unit when not in residence. These rentals and the maintenance of the unit are managed by the operating brand.

The design and fit-out of branded developments also tend to surpass the quality delivered in non-branded projects. In the case of non-hotel brands, the difference is in the quality and branding of the fixtures and fittings and furnishing, which will be curated by some of the world’s leading fashion, design, luxury goods, and automotive companies.

Offering such a premium proposition, what is the cost of bringing a branded residence to market in Dubai?  According to Robert Gill, Director of De Leeuw International, considering construction, professional fees and marketing, the cost for a mid-scale development starts around $2,700 per m2 up to luxury developments at $5,300 per m2.  On a like-for-like quality basis, you can anticipate the uplift from a non-branded development to be between 7-12%, although typically, branding can often increase the quality, which can distort the real margin. 

From an investment and end-user standpoint, does the premium paid for such high-end properties justify the potential returns and long-term value?

Riyan Itani, Director and Founder of Global Branded Residences and author of the “Future of Branded Residences” report sheds some light: “Globally speaking, the premium that is achieved in sales for branded residences versus non-branded is approximately 30%. This premium can vary considerably, for example, it can be as low or lower than 5-10% in some major global cities where comparable non-branded properties benefit from many of the same services and amenities as branded projects (concierge, gym, valet parking, spa, etc.) to over 100% in an emerging global market, where the competing non-branded stock is basic in its offering, design and services.”

Increased sales velocities are also a major draw of developing branded projects, especially at an off-plan level. This increase in sales pace is underpinned by the confidence and security perceived by purchasers through the involvement of the brands. In short, buyers understand that a brand or operator would not have put their name to a project unless they were sure it would be delivered on time and to the highest standards.

“For buyers, branded residences tend to hold their value (capital value) in resales (adjusting for inflation) compared to non-branded products that will tend to date faster and be surpassed by newer, better amenitised non-branded projects in the same market,” he concludes.