From Bulgari to Versace: Dubai’s rich splash out on branded homes

armanihoteldubai.com

• UAE is third on global list for number of branded residences
• Roberto Cavalli and Elie Saab getting interest in Saudi Arabia
• Average price ranges from $680,000 to $6.8 million

The UAE is expected to attract the largest net inflow of high net worth individuals globally in 2022 – and with that comes a growing demand for luxury housing.

Catering to this income bracket, the branded residences sector has grown by 230 percent across the world over the past decade.

Savills, the real estate services provider, defines a branded residency as: “a partnership between a brand and a developer. The brand grants a licence to the developer to market and sell residences incorporating their brand.”

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Dubai has the largest market among cities globally, while the UAE is third in the country list.

“The percentage of high net worth individuals is increasing, and branded residences offer an appealing lifestyle, extraordinary value and hassle-free ownership,” Riyan Itani, head of Savills Global Residential Development Consultancy, told AGBI.

“We see good demand for luxury residences and believe this trend will not change any time soon.

“The global macroeconomic shocks can still impact the luxury end of the market, but we find branded residences to be incredibly resilient even in adverse market conditions.”

Expansion and diversification of the sector is forecast to continue over the coming five years.

There are 580 branded residence schemes worldwide with almost 100,000 units between them, and the market is predicted to exceed more than 900 by 2026.

The UAE has 39 completed residences and is among the countries with the greatest number of projects planned, alongside the United States and Mexico.

“Dubai is, and is set to remain, one of the key branded residence locations globally,” Itani said. 

“One could even go as far as to say that Dubai is an incubator and testing ground for the sector, with many brands making their debut there. Our research shows there are more than 80 completed and pipeline branded residence developments in Dubai, representing almost 50 individual brands.”

Itani said that “extraordinary diversity” is primarily driven by hotel brands and non-hotel brands from the fashion world.

“We should distinguish between the two broad categories of branded residences: hotel brands like The Ritz-Carlton, for example, or non-hotel brands like the Roberto Cavalli residences.

“The primary appeal of hotel brands is the quality of service and asset protection, while the buyers of non-hotel branded projects primarily seek the lifestyle associated with the brand.

“There are naturally also developments and collaborations trying to bring the two together, such as the Bulgari and Marriott International or the Accor and Faena strategic partnerships.”

Brands have spread rapidly into the Middle East over the past decade where economic growth and rising domestic wealth among a globally mobile, high net worth population seek a high service offer and hassle-free ownership.

According to the investment advisory firm Henley & Partners’ latest Global Citizens Report, which tracks private wealth and investment migration trends, the total number of people with fortunes of at least $1 million in Dubai rose by 18 percent to 67,900 in the first six months of this year.

That puts the city on track to break into the world’s top 20 wealthiest destinations by 2030.

With the total number of millionaires in Dubai, Abu Dhabi and Sharjah forecast to reach close to 100,000 this year, UAE cities are currently among the fastest-growing wealth markets in the world, the report said.

About 4,000 more millionaires are expected to move to the Gulf state this year than those who will leave — one of the country’s largest millionaire net inflows on record.

“The deep interest in the limited editions has evolved a lot in the last 10 years,” Ziad El Chaar, vice chairman of Dar Al Arkan Real Estate Development, Saudi’s largest listed developer, said.

“You can see it in bags, you can see it in watches, you can see it in cars – so why not limited editions in real estate?

“In Saudi we have already launched collaborations with Roberto Cavalli, Elie Saab [and] Versace, and the market definitely engaged.”

Dar Al Arkan last year also launched an $217.85 million DaVinci Residential Tower in Dubai in partnership with Italian Hypercar manufacturer Pagani Automobili, renowned for its production of limited edition cars.

The project will feature a bespoke line of interior furniture by Pagani.

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“It’s in our desire as human beings to own something very exclusive,” El Chaar said.

“With these designer [projects] you need to restrict the number of units because they are the limited edition of real estate in every city.”

According to Mo’asher, Dubai’s official Sales Price and Rental Performance Index, Dubai’s real estate market recorded 8,897 sales transactions worth $6.19 billion in June, the highest volume for the month in the past nine years.

Mira Estate, a residential property consultancy based in Dubai, published research in June that showed investors from Russia and the 11 other Commonwealth of Independent States (CIS) countries now represent more than 20 percent of potential homebuyers in Dubai.

The average ticket size ranges from $680,000 for individuals and $6.8 million for HNWIs.

Real estate experts say wealthy Russians are snapping up luxury homes in Dubai in a bid to sidestep the sanctions imposed by Western nations after President Vladimir Putin invaded Ukraine.

“Russian [buyers] mainly go for luxury branded products,” Saleem Karsaz, group CEO of AEON and Trisl Real Estate, said in May.

“Anything which is branded with a nice designer label or hotel is doing well.

“We’ve seen the St Regis Residences being sold out, Atlantis the Royal Residences sold out, One by Omniyat sold out, and Emaar Beachfront increasingly close to being sold out – with most purchases from Russia.”

He added that properties in Palm Jumeirah, Dubai Hills and the W Residences have also been selling well and that Russian clients typically look for penthouses and four-bedroom apartments as large as 5,000 square feet.

Savills Itani added that many buyers of branded residences do not hold a single nationality or reside in a single country.

“These discerning buyers are mobile, global nomads, often owning multiple residences and dividing their time across continents,” Itani said.

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Pallavi Dean, founder and creative director of boutique interior design studio Roar in Dubai, added that the demand for luxury branded residences is also linked to the city’s architecture and design sector.

“Dubai has a history of using architecture as a draw for tourism, so branded residences are a natural kind of progression from that,” she said.

“I really think it’s about brand resonance. It’s that extension of the values that the brand carries and you just want a safe pair of hands when you are buying a residential property, especially if you are an international investor or if you are buying that property for Airbnb.

“People are looking for the Marriot or the Hilton experience, but they want to be able to cook breakfast or lunch for their family.”