We welcome you to the Third Edition of our Hospitality Thought Leadership series. In this edition we have provided an industry update for April 2023 and shared our perspective on the growth of ‘Branded Residences’ as a real-estate asset class. 

Industry Update for April 2023 (Dubai):

According to Dubai Tourism Commerce and Marketing or DTCM, Dubai welcomed approximately 6.02 Mn overnight visitors for the period of January – April 2023 with the highest number of visitors coming from India (806K), followed by Russian Federation (474k) and the UK (391k). The total number of visitors were circa 18% higher as compared to the same period in 2022. 

The total number of available rooms increased by circa 26% from 118,449 in April 2019 (pre-pandemic) to 148,949 in April 2023 with the average occupancy at 79.8%. Average Occupancy in April 2023 was marginally lower at (-3.7) ppt than pre-pandemic level despite the circa 26% increase in room inventory. The ADR and RevPAR at AED 599 (USD 162) and AED 478 (USD 130) respectively has also shown an increase of 22% and 16% respectively as compared to January 2019. 

   Focus Topic of the Month- Branded Residences

According to Statista, the real estate market is projected to be valued at circa US$ 613.6 Tr in 2023. The residential real estate dominates the market with a projected market value of circa US$ 498.60 Trillion in 2023, which is circa 81.25% of the total estimated market size.

Branded Residences are a type of luxury real estate development that is an outcome of collaboration between a real estate developer and a well-known brand, typically from hospitality, fashion, or lifestyle sectors. The brand grants a licence to the developer to market and sell residences incorporating their brand generally for a finite period. These projects essentially combine the expertise and reputation of the brand with the high-end specifications and amenities of the residential properties.

Dubai, Miami and New York are the top three locations for branded residences globally. This is primarily due the fact that these cities have an established luxury real estate market and have the infrastructure in place to attract domestic and international buyers.

These cities also have individuals and families with a high disposable income wherein the people can afford the premium price.

Cities such a Dubai and Bangkok which are tourism hubs are dominated by luxury hotel brands. Sao Paolo on the other hand which has the highest pipeline growth is dominated by the non-hotel brands.

Branded Residences

Dubai is the premium location for branded residences with the highest number of projects in pipeline across the world. The UAE had the highest number of millionaires across the Middle East in 2022. As per the Residential Real Estate 2023 report published by Altrata, there are approximately 830 Ultra High Net-worth individuals in Dubai. These are the primary buyers for such branded residences owing to a high disposable income and luxurious lifestyle.

 Property Consultant Knight Frank estimates the quantum of sales from Branded Residences in Dubai to be over AED 25 million in sales in 2022. There are approximately 2000 units coming up in 2023 alone. By 2026, it is expected that there will be approximately 4,000 units added to the inventory with prices ranging from AED 2,000 per sq. ft. to over AED 6,000 per sq. ft. For example, an apartment in Bvlgari Lighthouse, located on the Jumeirah Bay Island was sold for a record AED 13.8k per sq. ft.

Conclusion

In conclusion, branded residences have emerged as a significant trend in the real estate market of Dubai, offering a unique fusion of luxury living and renowned hospitality. With global luxury brands partnering with reputable developers, the distinctive features, impeccable services, and prime locations, associated with these residences provide an exceptional opportunity for individuals seeking an elevated lifestyle experience or investors looking for high-value assets in one of the world's most dynamic and cosmopolitan cities.

RSM UAE Contacts:

 

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