Dubai’s real estate sector is evolving, moving towards ‘branded residences’

Dubai’s recent crown as the ‘global leader in branded residences’ is also accompanied by high occupancy level in luxury hotel rooms as the Gulf city welcomes high net-worth individuals that are looking to take advantage of a booming real estate market as well as developed infrastructure.

“The hospitality sector in Dubai has 151,000 hotel rooms in Dubai today with an occupancy level in the high 70s which is one of the highest in the world,” Faisal Durrani Partner, Head of Research, MENA at Knight Frank, the global real estate consultancy, told Business Recorder in a recent interview.

“This is possibly why we are seeing possibly the reactivation and development of offshore island projects such as Palm Jebel Ali, which are expected to have 80 hotel resorts, each, when completed.”

Why Dubai’s current real estate boom is here to stay

In a recent report by Savills Global Residential Development Consultancy earlier this month, it was stated that global hotspots such as Dubai, Miami and Phuket have the largest number of branded residences when it comes to sun-and-sea resort destinations, making up 14% of the market share among resorts.

“On a more focused level, Dubai retains its place as the most active market internationally for branded residences and it is followed by hotspots in Miami, New York, Phuket and London,” the report stated.

But its prominence for luxury and branded residences hasn’t come in a vacuum.

Dubai’s luxury real estate sector has already been booming, and is also taking along the hospitality sector.

Dubai currently boasts branded residences across different spheres with names like Bulgari, Armani, Cavalli, with more planned by luxury automakers such as Mercedes Benz, Bugatti as well.

Currently, there are 740 completed branded residences worldwide, with a further 790 anticipated by 2031 across 100 countries, according to Savills.

Dubai alone has nearly 140 projects, including completed and projected, demonstrating the city’s ability to attract global brands and deliver developments that cater to a diverse international clientele.

These projects range from hotel-branded residences offering five-star amenities to non-hotel collaborations with renowned designers, catering to luxury buyers and investors alike.

A veritable lifestyle choice, branded residences represent a relatively easy way to access the ‘Dubai Life’ and are accompanied by access to world-class facilities, amenities and property management, usually courtesy of an adjoining luxury hotel, according to Knight Frank.

Knight Frank’s Destination Dubai report earlier this year found in a survey of global HNWI, that 49% of those with a personal net worth in excess of $20 million (UHNWI) would like to make a real estate investment in the UAE in 2024.

Of them, 69% are keen to secure a branded residence in the glitzy gulf.

The likelihood of acquiring a branded residential property in Dubai is highest amongst global HNWI survey respondents (83%), when compared to GCC-based HNWI expats (46%). Among HNWI respondents, East Asians (91%) have the strongest desire to own a branded residential property in Dubai, revealed Knight Frank.

The current real estate trend, which has been defined by analysts as not a mere “bubble”, is also dictating trends in the hospitality sector. In the last year alone, the 5-star hotel industry saw a whopping 111.8% growth, according to Cavendish Maxwell.

Dubai has already hosted over 9 million tourists in H1 this year, putting it on track to surpass numbers of 2023.

According to Rico Picenoni, Head of Savills Global Residential Development Consultancy, the branded residences concept is diversifying and entering new geographies.

“Over the next five years, we anticipate the entry of 60 new brands into the market, expanding into regions such as Romania and Tanzania. The Middle East, and particularly Dubai, remains at the forefront of this growth, reflecting how the sector continues to evolve and adapt to the demands of a discerning global clientele.”

Andrew Cummings, Head of Residential Agency, Middle East, added, “Dubai’s position as the global leader in branded residences is no surprise. The city offers an unmatched combination of luxurious amenities, innovative architecture, and high-quality services, all of which resonate strongly with both end-users and investors. With nearly 140 branded residences projects, the emirate sets a global benchmark for how these developments can integrate seamlessly into a vibrant and fast-growing city.”

Global footprint

Dubai is also on track to becoming fourth largest financial center globally, behind London, New York and Singapore, crucially overtaking Hong Kong, according to Knight Frank data. Besides its real estate and financial sectors, tourism has already been on a steady rise since the world opened up after the pandemic.

Last year, Dubai was the third-most visited city in 2023 with 17.2 million arrivals in 2023, behind London at 18.8 million visitors and Istanbul, which welcomed 20.2 million tourists according to Euromonitor and the Government of Dubai.

Dubai’s favourable tax regime, ease of doing business, and evolving visa restrictions regarding its coveted Golden Visa, have also made it an expat haven and has drawn much foreign investment over the years. This is not quite unlike from the tiny French principality of Monaco, whose legendary tax-free regime has been attracting the global rich for decades to reside and park wealth.

While growth is strong at the moment, beyond 2031, Asia-Pacific markets such as Vietnam, Thailand, and China are expected to challenge North America’s dominance in the branded residences sector, according to Savills.

However, Dubai’s consistent performance and its strategic appeal to both investors and global brands are expected to secure its leadership in the branded residences market for years to come.

Copyright Business Recorder, 2024