The data revealing that 69% of HNWIs around the world are now interested in owning a branded property in the emirate, up from 59% in 2023
Dubai’s branded residences emerged as a top choice for high-net-worth individuals (HNWIs) around the world, according to Knight Frank’s 2024 Destination Dubai report.
The data reveals that 69 percent of high-net-worth individuals (HNWI) around the world are now interested in owning a branded property in the city, up from 59 percent in 2023.
Knight Frank’s second annual 2024 Destination Dubai report surveyed 317 HNWI – 217 globally and 100 GCC-based expats – collectively, the respondents have a net worth of $5.4 billion and own 1,149 homes worldwide.
The desire to purchase a branded residence is higher among non-GCC HNWI at 83 percent, compared to 46 percent for GCC-based expats. According to Lars Jung-Larsen, Partner – Luxury Brands at Knight Frank MENA, this reflects the growing appeal of Dubai’s branded residential offerings.
Jung-Larsen 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 AED16,283 per square foot for a 6-bedroom Bulgari Ocean villa in the summer of 2022”.
The report also highlights a key trend in the emirate’s third freehold residential market cycle – the increase in purchases by genuine end-users, second-home, or holiday-home buyers. This is playing out in the branded residential segment as well.
Faisal Durrani, Partner – Head of Research, MENA, explained: “14 percent of HNWI would like to secure a branded residence as their main home and this figure rises to 22 percent among 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 among 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 HNWI 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,” he added.
The report found that 23 percent of HNWI would use a branded residential purchase in Dubai as a holiday or second home, while 12 percent would treat it as a retirement home.
HNWI also have high expectations when it comes to price appreciation. Just over a third (36 percent) believe any branded residential purchase in Dubai will appreciate by 5-10 percent in the first year, with this expectation highest (50 percent) among those with a net worth of $10-15 million. A further 30 percent expect prices to rise by 10-15 percent within 12 months.
“The expectation amongst the HNWI 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,’ Durrani added.
This premium pricing is justified by the additional features that come with these properties, such as security, facilities, services, quality assurance provided by the brand, the ease of placing the property into a rental pool, and the “lock up and leave” nature of a well-managed property. However, Durrani warned that this premium is not guaranteed, and developers need to work hard to justify its existence, especially with 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 really 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, jewellery 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”.
The report found that GCC-based expat HNWI appear to want to spend relatively low amounts on branded residential real estate in the emirate, with 91 percent wanting to spend between $600-999 per square foot. In contrast, global HNWI are more likely to splash out, with nearly a fifth (17 percent) ready to spend over $5,000 per square foot. This figure rises to 23 percent for those with a personal value of more than $20 million.
Shehzad Jamal, Partner – Strategy & Consultancy, MEA, said, “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,” Jamal concluded.
