There is a growing demand for branded residences globally, and the Middle East is among the hotspots where the world’s high net worth individuals (HNWI) are splashing their money in exchange for living in premium properties associated with luxury marques.
According to Savills’ Spotlight on Branded Residences report, the Middle East’s projected supply is expected to increase by 86% by 2027, well ahead of Central and South America at 71% and Europe with a projected 55% growth in supply during the forecast period.
“The ubiquity of brands in the region and the lifestyle afforded by branded residences provide for a very compelling value proposition. This is accentuated by the leadership driving the various economies in the Middle East who have made key cities, including and especially Dubai, attractive places to live and work,” says Rico Picenoni, Director - Global Residential Development Consultancy, Savills.
Market overview
The UAE has 39 completed residences and is among the countries with the greatest number of projects planned, especially in Dubai, which has seen a strong demand for branded residences, which accounted for 61% of Dubai’s off-plan apartment sales in 2022 according to Knight Frank.
Among the most recognizable branded residence developments are the Armani Hotel and DAMAC’s Cavalli Tower in Dubai Marina.
Commenting on the growing appeal of branded residences, Sean McCauley, CEO, The Devmark Group says, “These properties cater to discerning buyers by providing amenities, services, and distinctive design elements. Additionally, they are located in desirable communities that offer connectivity, premium views, and exclusivity, all of which appeal to those seeking a high-end lifestyle.”
Branded residence hotspots
The more popular districts for branded schemes based on their location, according to McCauley, are Palm Jumeirah, Dubai Canal, Business Bay, Downtown Dubai, and JBR (Jumeirah Beach Residence). “These locations offer stunning views, connectivity, and access to vibrant communities, making them particularly appealing to buyers looking for quality and convenience,” he adds.
Recently, Marriot International launched eight new branded residences as part of its aggressive expansion plans in this sector in the Middle East.
Saudi Arabia is also aggressively developing branded residential projects, with its largest listed developer, Dar Al Arkan, among the most active. It already has launched collaborations with international luxury brands such as Roberto Cavalli and Versace, while also partnering with premium fashion brand Elie Saab for a branded residential project in Qatar.
Picenoni estimates that there are roughly 100 branded residential developments that remain in the pipeline, which will account for 140% growth over the existing network of branded residences in the Middle East. “Developers will measure success according to their own respective strategic goals, but generally branded residences across the region have demonstrated tremendous success,” he adds.
Business sense
While HNWIs find great satisfaction in purchasing branded residences for a premium living experience, McCauley also notes that branded residences have seen impressive growth because it makes business sense. “There is also a substantial contribution from the tourism and hospitality sector, particularly in Dubai, to the growth of branded residences. As a global tourist and business hub, these residences present an exceptional investment opportunity by combining the demand for premium accommodation with the potential for attractive rental income,” he continues.
Aside from the obvious benefits afforded by brand equity association, developers see more tangible benefits in developing residences with luxury brands. Steven Leckie, Senior Off Plan and Investment Consultant, haus & haus Real Estate, explains, “The brand turns a relatively standard house or apartment into a luxury offering, the lifestyle by brand association which they offer to buyers means faster sales and possibly higher profits.”
Competitive landscape
With the branded residences sector getting more competitive, the question developers and luxury brands must address is, ‘How to achieve differentiation when every development is now being anchored on premium brand association?’
For Lars Jung-Larsen, Partner – Luxury Brands Advisory at Knight Frank, “The point of differentiation will be how well the developer can deliver the complete package of an extraordinary blend of outstanding location, architecture, luxury branding, interior, exclusive tailormade services and the integration of leading F&B, wellness and hospitality concepts, the project offers.”
The next frontier, it seems, is going back to basics. In the words of McCauley, “Deliver on the promises of quality that customers expect from the brand and can contribute to strong resale values.”
