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Rise of Branded Residences in Dubai: Attracting Global Investor Attention
Mar 15, 2024
Rise of Branded Residences in Dubai: Attracting Global Investor Attention Dubai
By   Internet
  • City News
  • Dubai Property
  • Branded Residences
  • Property Market
  • Real Estate Investment
Abstract: Dubai, as the commercial, financial, and aviation hub of the Middle East, has seen rapid development in its branded residences market. With 51 branded residence projects currently and more in the pipeline, branded residences have garnered attention from investors and buyers, offering luxury properties and investment opportunities. Developers benefit from the introduction of brands, resulting in higher profits and increased sales value.

The report indicates that in the coming years, areas such as Downtown Dubai, Business Bay, Dubai Marina, and JBR will be the primary locations for most branded residence projects. Riyan Itani, Founder and Director of Global Branded Residences, stated that the popularity of branded residences in Dubai is attributed to the availability of land and relative freedom in design and construction.


Dubai is a relatively new market, allowing for large-scale new developments. Compared to historically rich cities in Europe or major metropolises like New York, Dubai has far fewer land restrictions, enabling developers to build what they want where they want.


Branded residences mainly fall into two main categories: investment and lifestyle. While these development projects primarily target affluent clients seeking luxury properties, some hotel brands also offer opportunities for mid-tier investors.


Developers also favor branded residences; despite the high fees required to introduce a brand, they can charge higher prices to buyers. Buyers are willing to pay the extra cost due to the value they place on the brand and the services and amenities offered by such properties. The report notes that construction costs, professional fees, and soft costs globally have risen by 7% to 15%, allowing developers to achieve higher profits by increasing sales value by 25% to 35%. This effect provides developers with a significant multiplier, with a net profit margin of approximately 40% globally. Developers realize they can generate substantial returns without investing equivalent costs.


Rise of Branded Residences in Dubai: Attracting Global Investor Attention

Internet


The report also mentions the "win-win-win model," where developers, brands, and end-users all benefit from branded residences. Branded residences perform well in challenging market conditions due to the security and reliability of delivery and the fact that most branded residence buyers do not need to finance their purchases with debt.


Dubai's real estate market has seen its most rapid growth ever in a conducive environment of economic conditions and policies encouraging long-term residency. According to a report by the real estate consultancy firm Knight Frank, luxury residential property prices in Dubai rose by over 16% last year, making it one of the world's second-fastest-growing markets. Despite record-breaking luxury residential sales last year, Dubai remains relatively low in the list of the world's most expensive major markets.


In Dubai's prime residential areas, $1 million can buy approximately 979 square feet of property, ranking Dubai 13th among the major residential markets globally. In recent months, developers have successfully launched several highly anticipated branded residence projects, including the Armani Residences at Palm Island, the Franck Muller Aeternitas Tower at Dubai Marina, and the Mercedes-Benz Square in Downtown Dubai, with the latter selling half of its properties the day after its launch.


Dubai's branded residences market is developing rapidly, attracting the attention of investors and buyers. This market not only relies on market trends but also succeeds in a sluggish market. This is because branded residences offer good security and reliability, and most buyers do not need to borrow to purchase these properties.

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Rise of Branded Residences in Dubai: Attracting Global Investor Attention
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