In Dubai, branded homes can fetch twice as much rent as non-branded homes because of the opulent amenities and strong demand from wealthy buyers for apartments in these developments.
According to industry executives, luxury and branded homes are more likely to see price increases than other segments of the market.
They went on to say that because high net-worth individual buyers are coming to Dubai to stay, the market is maturing and Dubai is no longer a transitional market.
“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 percent higher rents than ‘non-branded’ units within similar locations,” said Lewis Allsopp, chairman of Allsopp & Allsopp.
Due to the strong demand, Dubai has seen several branded residence launches in recent years, placing it at the top of the world rankings. As the world’s affluent elites flocked to the emirate, local developers like Binghatti Properties, Danube Properties, RSG Group, Rove, and others launched branded residences to capitalize on the demand.
Following the debut of Burj Binghatti Jacob & Co. and Bugatti Residences by Binghatti, Binghatti Properties unveiled another branded residence last week: Mercedes-Benz Places. To debut Fashionz by the Danube, which consists of more than 700 apartments distributed over 65 stories, Danube Properties partnered with Fashion TV.
Allsopp predicted that until ready off-plan rental units at a scale able to meet the current level of rental demand enter the market in 2025–2027, the Dubai rental market would continue to perform well for landlords and investors.
Greater price increases also
Allsopp stated that luxury homes have a larger potential for price increases than the rest of the market and that he anticipates a high level of interest from buyers and investors in the prime and branded residences market segment.
“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
According to Chris Whitehead, managing partner of Dubai Sotheby’s International Realty, high-net-worth individuals have been moving to Dubai for the past two or three years following the COVID lockdowns. Part of their reason for doing so is that Dubai has no real estate tax, which has caused prices to soar.
“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.
Super-luxury homes in Dubai sold for as much as $4,000 (Dh14,692) per square foot last year, setting a record for consecutive year-over-year increases since 2020.
Additionally, Whitehead anticipates that there will be a high demand for luxury real estate going forward due to the recent political unrest in some Middle Eastern nations, which is luring more buyers to Dubai because of its stability and relative safety.
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
According to Sotheby’s International Realty, locating prime land in Dubai is difficult.
“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 customization, 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 went on to say that Dubai’s trophy-asset real estate is already significantly undervalued.
“Buyers are paying two to three times the price per square foot in London, and Dubai is tax-free. The ultra-high net worth 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.