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Dubai: Under-construction branded residences 10% cheaper than ready units

Transaction volumes year-on-year for branded residences have surged by 44 per cent, a study revealed

Branded residences in Dubai which are under construction are approximately 10 per cent cheaper on average than their ready counterparts, offering investors an attractive margin for capital gains, according to a new study released by Morgan’s International Realty.

“The lower prices of under-construction branded residences provide an entry point for buyers looking to benefit from future value appreciation once the properties are completed. This dynamic highlights the strong confidence in the market and the appeal of branded residences as a long-term investment,” said Elias Hannoush, managing director of Morgan’s International Realty.

It said the branded residences market in Dubai exhibited exceptional growth and resilience in the first half of 2024 as a total of 5,592 branded residences were sold, amounting to a total value of Dh28.8 billion – representing 7.2 per cent of all property transactions and 12.6 per cent value of all transactions.

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Additionally, transaction volumes year-on-year for branded residences have surged by 44 per cent. The total value invested in branded residences has seen a 25 per cent increase compared to the previous year, further underscoring the robust performance and growing appeal of these luxury properties.

The most expensive property sold within the branded residences niche during the first half of 2024 was a 47,700 sqft villa in The Ritz-Carlton Residences at Creekside which was sold for Dh165 million, equating to a Dh3,472 per square foot, highlighting the market's ability to consistently attract high-net-worth individuals who’re willing to invest in premium, high-quality properties.

Standalone projects

According to Morgan’s analysis, standalone projects constitute 34 per cent of all branded residences in Dubai. These projects represent the simplest form of partnership between a brand and a developer, wherein a brand lends its name and prestige to a development without necessarily engaging in the deeper, more integrated aspects of property development.

“This straightforward form of collaboration is particularly appealing for brands that are new to the real estate sector and are looking to establish a presence without the complexities of full-scale branded residence schemes. As the market continues to grow and evolve, we anticipate an increase in such standalone branded projects. Brands seeking to enter the industry and test the waters are likely to find these partnerships attractive, paving the way for further expansion and diversification in Dubai's branded residences landscape,” Hannoush said.

Premium

Hannoush said a notable aspect of Dubai's branded residences market is the substantial premium buyers are willing to pay.

“On average, property buyers pay 69 per cent more per square foot for branded residences compared to non-branded properties within the same locations. This premium significantly exceeds the global average and underscores the trust and confidence that investors have in the branded residences niche. This willingness to pay a premium showcases not only the appeal of the concept but also the strong faith in the brands associated with these properties,” he said.

The highest premium for branded residences is witnessed in beachfront developments located in areas such as Umm Suqeim, Jumeirah Beach Residence (JBR), and Pearl Jumeirah.

“These areas command significant premiums due to their prime coastal locations, offering exclusive waterfront lifestyles. The allure of beachfront living, combined with the prestige of branded residences, drives up the value significantly in these locales.”

Conversely, it said the lowest premium for branded residences is found in villa communities such as Dubai Hills, Jumeirah Golf Estates, and Arabian Ranches, where the premium remains below 10 per cent.

Highest concentration

Morgan’s International Realty study revealed that the highest concentration of branded residences in Dubai is found in three prime locations – Palm Jumeirah, Downtown, and Business Bay.

“These areas are renowned for their luxury appeal, high-end amenities, and prime real estate, making them ideal locations for branded residence developments,” it said.

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