An astounding 69% of global high net worth individuals (HNWIs) are interested in owning a branded residential property in Dubai, up from 59% in 2023, according to a report released on Tuesday.
According to Knight Frank’s second annual 2024 Destination Dubai report, non-GCC-based HNWIs are more likely to want to buy a branded residence in the emirate (83%), than GCC-based HNWI expats (46%).
Knight Frank surveyed 317 HNWIs – 217 from around the world and 100 GCC-based HNWI expats – to learn about their attitudes, appetites, and aspirations for investing in real estate in Dubai. The HNWI respondents have a combined net worth of $5.4 billion and own 1,149 homes worldwide.
Lars Jung-Larsen, partner – luxury brands, Middle East and North Africa (Mena) said: “Branded residences offer access to a luxury lifestyle that is now synonymous with Dubai and luxury branded residential operators such as the Ritz Carlton, Bulgari, Dorchester Collection, and the Four Seasons are all moving to capitalise on the demand for high end homes in Dubai. The depth of demand for such homes is reflected in the achievement of a record Dh16,283 per square foot for a 6-bedroom Bulgari Ocean villa in the summer of 2022”.
According to Knight Frank, one of the key defining features of the emirate’s third freehold residential market cycle has been an increase in the number of purchases by genuine end users, such as those looking for a second or holiday home. This trend is also reflected in the city’s branded residential markets.
Faisal Durrani, partner – head of research, Mena, said: “14 percent of HNWIs would like to secure a branded residence as their main home and this figure rises to 22 percent amongst those with a net worth of over $15 million would like a branded residence in Dubai to use as their primary home. This mirrors our findings amongst the ultra-high-net-worth-community who appear to have a particular penchant for purchasing Dubai’s most expensive homes and turning the city into one of their many global bases. Indeed, 23 percent of HNWIs would use a branded residential purchase in Dubai as a holiday home, or second home, while 12 percent would treat it as a retirement home.”
High expectations
According to Knight Frank, slightly more than a third (36%) of HNWIs believe that any branded residential purchase in Dubai will increase in value by 5-10% within the first year of acquisition. This expectation is highest among those with a net worth of $10-15 million (50%). A further 30% of GCC-based HNWIs, expats, and global HNWIs expect prices for any branded residential purchase to rise by 10-15% within the next 12 months.
Durrani continued: “The expectation amongst the HNWIs community for strong price appreciation of branded residences is likely linked to the fact that branded residences traded for a premium of 86 percent when compared to the rest of the market, compared to a global average of a 30 percent premium.”
Knight Frank says that this premium pricing is justified by the additional features that come with these properties: security; facilities; services; quality assurance provided by the brand; the ease of placing the property into a rental pool; and finally, the “lock up and leave” nature of a well-managed property. However, this premium is not guaranteed, and developers need to work hard to justify its existence, especially with the increasing competition in this segment.
Jung-Larsen added: “The feeling of ‘owning a part of a hotel’ having full access to the amenities and hospitality of the hotel, but in your own private environment is what sets branded residences apart for the ultra-rich. The next point of differentiation of a residential property could be the branding by a non-hospitality brand. This would typically be a brand from fashion, jewelry or automotive segments. The exciting thing about this format is that buyers of non-hospitality branded residences are able to ‘live the brand’ 24/7 with the furniture and decor designed by the brand, with exciting amenities and hospitality partnerships which would be in the same positioning of the brand, and also includes tailor-made services and members-only benefits.”
According to Knight Frank’s analysis, for those with a net worth of more than $15 million,’service provision and physical amenities’ is the most important factor (75%), followed by ‘brand identity’ (63%).
Big spenders
Shehzad Jamal, partner – strategy & consultancy, Middle East and Africa, explained: “Branded residences represent a relatively easy way to access the ‘Dubai Life’ and are more often than not accompanied by access to world-class facilities and amenities, usually courtesy of an adjoining luxe hotel. Owners also have the added benefit of being able to take advantage of world-class facilities and property management, which is crucial for those that do not reside in Dubai and want assurances that their asset is being treated with the utmost of care.”
Knight Frank discovered that the majority of GCC-based expat HNWIs prefer to spend relatively little money on branded residential real estate in Dubai. In fact, 91% of this group intends to spend between $600-999 per square foot (psf) on a branded residential property in Dubai. The average budget for this group is just under $950 per square foot. Global HNWIs, on the other hand, are more likely to spend more than $5,000 per square foot on a branded home in the emirate, with nearly one-fifth (17%) willing to do so. This figure rises to 23% for those with a personal wealth of more than $20 million.