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Why do buyers pay more for branded Dubai luxury homes?

More than 120 branded developments have been launched in Dubai as of this year

Published: Mon 23 Sep 2024, 7:34 PM

By
Issac John

An artist's impression of Bugàtti Residences Binghatti in Dubai. According to a recent report, Dubai now has 121 branded residential developments, with 47 already completed and 74 under construction. — File photo

Dubai’s realty sector is witnessing a sharp increase in branded residential developments, reflecting not only the growing demand for luxury living but also the willingness of buyers to pay a premium for the exclusivity that comes with a branded residence, market analysts said.

More than 120 branded developments have been launched in Dubai as of this year, a sharp increase from just 69 in 2022. On average, buyers are paying up to 69 per cent more per square foot for branded properties compared to non-branded residences in the same prime locations, says Thomas Wan, a real estate expert and managing partner at Refine.

According to a recent report, Dubai now has 121 branded residential developments, with 47 already completed and 74 under construction. The average price per square foot (psf) for these properties stands at Dh3,852, a substantial premium over non-branded residences in the same prime areas, where the average per square foot is Dh2,276. These figures highlight the growing allure of branded living, particularly for high-net-worth individuals who value exclusivity, quality and convenience.

What exactly is driving this interest in branded residences? “Today’s buyers aren’t just looking for a home; they’re looking for a lifestyle. The association with a luxury brand or hotel not only adds prestige but also guarantees a certain standard of service, design, and amenities that discerning buyers expect,” said Wan.

According to property experts, Dubai has emerged as one of the world’s leading hubs for branded residences since the debut of Armani Residences in the Burj Khalifa back in 2010. The luxury segment has since expanded into a thriving segment of the luxury market, attracting top hospitality and lifestyle brands to establish flagship projects across the city.

Buyers willing to pay such a premium comprise a mix of international investors, expatriates, and wealthy residents — many of whom are part of Dubai’s growing millionaire population. “From 2013 to 2023, the number of millionaires in Dubai has surged by 78 per cent, and as the UAE continues to attract wealthy migrants, demand for luxury properties is only expected to grow,” Wan said. “Branded residences are no longer just a niche market; they’ve become a cornerstone of Dubai’s luxury real estate sector. And as more global brands enter the space, we’re only going to see this trend accelerate,” Wan added.

Sukesh Govindan, CEO of 10X Properties, said the demand for luxury branded homes in Dubai far exceeds the supply due to the large influx of high networth individuals (HNWIs). “The shortage in premium home supplies in Dubai reflects the increasing ‘buy-to-stay’ and ‘buy-to-hold’ mentality among affluent buyers. In what appears to be a sign of growing market maturity, the growing trend among wealthy buyers is to use the units as their primary home, or for use as a holiday home or second home. This significant shift in buyers’ mindset will further broaden the luxury and branded segment’s appeal to investors from across the globe,” said Govindan.

According to Knight Frank’s second annual 2024 Destination Dubai report, 69 per cent of the global HNWIs are interested in owning a branded residential property — up from 59 per cent last year.

Property values in Dubai are rising by 21.3 per cent over the past year amid tightening supply as the ‘buy-to-stay’ trend grows, with villas outperforming apartments. Villa sale prices have grown by 24.3 per cent over the last 12 months, reaching Dh1,896 psf, putting them 28 per cent above the 2014 peak.

“These buyers aren’t just after square footage; they’re after a complete lifestyle experience,” Wan explains. “They’re looking for properties that offer not only exceptional design and architecture but also services that make day-to-day living easier and more enjoyable. This is where the branded residence model shines,” Wan said.

High-end amenities, such as private pools, rooftop lounges, and in-house dining options, are no longer enough. Today’s luxury buyers expect a seamless blend of comfort, privacy, and convenience—often with bespoke services tailored to their individual needs.

Branded residences are typically developed in partnership with renowned hotel brands or luxury companies, and this collaboration offers residents more than just a place to live. They enjoy a host of high-end services, from concierge support and valet parking to exclusive access to hotel amenities like spas and fine dining establishments. This combination of luxury living and five-star services is what makes branded residences so appealing, especially to those seeking a hassle-free lifestyle.