Posted inFeaturesResidential

Dubai’s branded residences are smashing records, but who’s buying?

Multiple reports have pointed out Dubai’s impressive portfolio of co-branded properties. But one question remains unanswered — how is demand exponentially rising, and who are the buyers?

Dubai’s branded residences are smashing records, but who’s buying?

The demand for branded residences has surged to an unprecedented level. Not only has it become one of the most talked-about sectors in Dubai real estate, but multiple reports have also cited its exponential growth in value with sales touching $6.9 billion in 2022 alone.

While major players like Cavalli, Trump, and Versace dominate the branded real estate sector, numerous upscale hotel brands are swiftly entering the scene to create a significant impact of their own.

In May, the luxury automotive brand Bugatti announced a collaboration with UAE-based developer Binghatti to create Sky Mansions, priced at $204 million. This revelation came shortly after the sale of a Jumeirah Marsa Al Arab-branded apartment for $114 million, breaking the record set by a Bulgari property on Jumeirah Bay Island for $33 million just days prior.

According to a Savills report, Dubai boasts the highest concentration of branded residence schemes in the Europe, Middle East, and Africa (EMEA) region, surpassing London, the next largest market, by a significant margin. But who is buying these properties, which real estate experts say are outstripping their non-branded counterparts by a large margin?

Burj Binghatti Jacob & Co Residences

Ziad El Chaar, CEO of Dar Global, the globally listed unit of Dar Al Arkan on the Saudi Stock Exchange, revealed that his organisation has successfully sold these properties to individuals from 40 different nationalities. The clientele primarily comprises high-net-worth individuals (HNWIs) seeking exclusivity.

Dar Global’s portfolio prominently features collaborations with renowned Italian luxury brands such as Missoni, Elie Saab, Pagani Automobili, Versace, Dolce & Gabbana, and Automobili Lamborghini. Their developments span across Dubai, Doha, Muscat, as well as locations in Spain and Bosnia.

El Chaar emphasised that the interest in these properties is project-specific, influenced by the associated brand and its location. The appeal is driven by lifestyle choices rather than nationality, with clients often using these properties as one of two or more residences.

He explained, “Many of our clients choose to spend part of their time in their home country and then continue to work in another city for the remaining part of the year. It’s a lifestyle that has evolved from the confines of the pandemic, especially with the flexibility of working from anywhere in the world.”

Safa Two de GRISOGONO

Local hospitality brands like Jumeirah and Address Hotels and Resorts have a substantial presence in the UAE’s branded residences market, however, other major international players such as Accor and Marriott are also making waves with their projects.

Marriott, having entered the branded residences market almost two and a half decades ago, opened its first branded residences under The Ritz-Carlton brand in 2000. Jaidev Menezes, Regional Vice President of Mixed-Use Development for EMEA at Marriott International, notes the company’s sustained expansion in this sector. As of now, Marriott claims the title of the world’s largest branded residential company in the lodging industry, with 129 open-branded residences and 100 projects in the pipeline.

Among these, 180 projects are within the luxury segment, encompassing brands such as The Ritz-Carlton, St. Regis, W, EDITION, JW Marriott, and The Luxury Collection. The remaining 49 projects fall within the premium segment, featuring brands like Marriott, Autograph Collection, Westin, Sheraton, Le Meridien, and Renaissance.

Another hospitality major that has now doubled down on its branded residences component is Accor. Despite being active in this field for the past two decades, it was only earlier this year, during an organisational restructuring, that it introduced Accor One Living — a platform designed to integrate hospitality solutions into mixed-use developments.

Safa Two interiors

Daniel Von Barloewen, Vice President of Accor One Living and Head of Mixed-Use for the EMEA region sheds light on the platform’s purpose, saying, “We created Accor One Living to bring together specialised teams of cross-functional experts who view mixed-use developments from the perspectives of both hotels and branded residences.”

Indeed, the upsides are plenty for investors in these branded residences. However, it is important to acknowledge the potential downsides as well. Knight Frank’s Partner for Residential Sales and Marketing Projects, Mohamad Rabih Itani, urges investors to be aware of both sides of the coin when investing in these properties.

He warned, “Branded residences have higher maintenance and security fees compared to regular projects. Unfortunately, a couple of years after handing over delivery, a lot of the projects failed to provide the promised service. This is why we always encourage clients to make sure to ask about the post-delivery management of the project.”

If Knight Frank’s projection regarding the growth potential of branded residences in the UAE and other major GCC markets holds true, there is much more on the horizon.

Elegance Tower by DAMAC Properties

According to Itani, the evolution of this sector could manifest through various avenues. He suggests, “In the future, there may be a greater emphasis on mixed-use developments that integrate hospitality-branded residences with amenities, such as retail, entertainment, and office spaces.

“Technology will continue to play a significant role in the hospitality industry, and future branded residences could feature advanced smart home systems, virtual reality experiences, and seamless connectivity.”