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Dubai: Branded residences offer up to 100% higher rents

Dubai is not a transitional market any more

Branded residences can command double the rent than non-branded residences in Dubai due to luxurious amenities and high demand for units in such projects from high net worth individuals.

Industry executives say that prices also luxury and branded homes have a higher potential for price increases than the rest of the market.

They added that Dubai is not a transitional market any more because high networth individual buyers are coming here to stay, and that’s why the market is maturing.

“Investors, landlords and tenants seem aligned on rental premiums for high-quality ‘branded residences’. These contemporary, well-planned living spaces within desirable residential buildings provide luxurious amenities and can command up to 100 per cent higher rents than ‘non-branded’ units within similar locations,” said Lewis Allsopp, chairman of Allsopp & Allsopp.

Dubai has seen a lot of branded residence launches over the past few years to meet the high demand, putting it at the top spot globally. Local developers such as Binghatti Properties, Danube Properties, RSG Group, Rove and others have launched branded residences to cash in on the demand as the world’s wealthy elites flocked to the emirate.

Binghatti Properties last week launched another branded residence Mercedes-Benz Places, becoming its third branded project after Bugatti Residences by Binghatti’s and Burj Binghatti Jacob & Co. Danube Propeties tied up with Fashion TV to launch Fashionz by Danube, featuring 700-plus apartments spread over 65 floors.

Allsopp anticipated that the Dubai rental market would continue performing well for landlords and investors until such a time ready off-plan rental units enter the market in 2025-27 at a scale capable of addressing the current level of rental demand.

Greater price increases also

Expecting a high level of interest from buyers and investors in the prime and branded residences market segment, Allsopp said luxury homes have a higher potential for price increases than the rest of the market.

“This is due to the demand for readily available secondary inventory, and the limited supply of new prime properties that are expected to come to market in the most prestigious locations in 2024. These conditions will continue to drive sales prices upwards, resulting in sustained capital appreciation and high rental yield opportunities for properties within Dubai’s most desirable residential locations,” Allsopp said.

Knight Frank’s latest data showed that Dubai became the top city in the world in terms of $10 million-plus homes. In total, 431 luxury homes were sold last year in Dubai, surpassing New York (159), London (150), Hong Kong (148) and Los Angeles (13). “Luxury homes priced over $10 million have the potential for greater price increases than the market average due to demand from less price-sensitive buyers looking for long-term investments. Dubai’s stable real estate market also makes it an attractive option for international property diversification,” he added.

Buyers coming to Dubai for quality

Chris Whitehead, managing partner, Dubai Sotheby’s International Realty, said for the past two or three years post-Covid lockdowns, high-net-worth buyers have been flocking from continental European countries like the UK, France, and Germany to relocate in Dubai, in part to benefit from its lack of real estate tax — leading to skyrocketing prices.

“Buyers are coming for the property quality, the value for money, cleanliness, and retail. Dubai was always transient; people came to make money and then left to go back to where they came from. But now, many are moving for the lifestyle and staying,” Whitehead added.

Last year, Dubai also saw record-breaking sale prices, with super-luxury residences selling for up to $4,000 (Dh14,692) per square foot, marking consecutive year-over-year increases since 2020.

Whitehead also expects high demand for luxury properties to continue, as recent political unrest in certain Middle Eastern countries is driving even more buyers toward Dubai for its relative safety and stability.

Lewis Allsopp said that demand for prime residential properties is set to continue well into 2024. Due to a severe lack of new inventory set to hand over in 2024, “we foresee continued growth in sales transactions, capital appreciation and rental premiums across this residential sector,” he added.

Dubai no longer transitional market

Sotheby’s International Realty said the struggle is in finding prime land in Dubai.

“Buyers want the beach lifestyle, not necessarily the city, and the reduced land bank is also pushing the market price up. Buyers are looking for individuality and customisation, as well as turnkey properties. They don’t want to come in and build. They can afford to pay to put down their bags and start living,” Whitehead added.

He added that Dubai is already very undervalued for trophy-asset properties

“Buyers are paying two to three times the price per square foot in London, and Dubai is tax-free. The ultra-high networth individuals of Dubai spend the winter here and the summer in Europe,” he said.

The future of super-luxury properties in Dubai is positive, according to Whitehead. “There isn’t any sign of slowdown. Supply is short, demand is high, and Dubai isn’t a transitional market anymore. Buyers are coming to stay, and that’s why the market is maturing,” he concluded.