Coming straight off the runway, branded residences are winning high-net-worth investors

The arrival of “limited edition homes” as an asset class started in 2010 with the opening of Emaar and Giorgio Armani’s first international project, and with Bulgari the latest to join the Dubai real estate scene the city is now home to a sought-after collection of curated European brands.

Viva Italia

As a result of the emirate’s developers playing on the love for labels, there has been a steady stream of mainly Italian designer names partnering up on Dubai projects. Damac Properties is positively brimming with a top-drawer line-up that is adding stylish sway to developments such as the Fendi-styled villas at Damac Hills, Damac Residenze in Duba Marina with its Fendi Casa furnishings, and the Ettore 971 Bugatti-styled Villas at Akoya Oxygen, providing a touch of French pizzazz.

Its latest push is the Just Cavalli Villas. Part of the Akoya Oxygen proposition, the three- to six-bedroom homes exude Roberto Cavalli’s plush touch with luxurious silks and bold velvets matched with impeccable craftsmanship — and remarkably they start at a very design-reasonable Dh1.35 million.

Occupying its own private island on the Jumeirah waterfront, Meraas’ Bulgari Resort and Residences Dubai was the sixth location for the Italian lifestyle brand with 15 mansions, 165 apartments and eight penthouses designed by Antonio Citterio Patricia Viel and Partners.

The Bulgari aesthetic is woven into the collection of one- to six-bedroom homes with the use of light woods, limestone, silk and sandy gold stone, plus plenty of high-end Italian furnishings from the likes of B&B Italian, Flexform and Flos.

A year before the project was even handed over, Meraas nabbed the record for one of Dubai’s most expensive penthouses, with a full-floor residence sold for a whopping Dh60 million.

Commenting on the appeal of brand partnerships, Niall McLoughlin, senior vice-president of marketing and corporate communications at Damac Properties, says, “Designer branded properties cater to the needs of customers with particular taste and, as bespoke products, it’s not every day one has the opportunity to own a branded home to live in, or as an investment. This is why our branded partnerships have delivered a stronger proposition for customers, reinforced by the fact that we work with names that have strong brand values.”

Royal success story

One project that has been a “label of love” is Enshaa’s Palazzo Versace Dubai, where 169 one- to five-bedroom simplex, duplex and penthouse residences rub shoulders with 215 luxury hotel rooms. Ranging in size from 1,548 sq ft to in excess of 12,000 sq ft, the residences’ aesthetic is top-to-toe Versace, from soft furnishings through to artworks. Stone mosaic tiling, parquet flooring and a colour palette with a choice of salmon, azure or beige, add a degree of individuality, while residents can even opt for branded bedlinen, towels, crockery and glassware.

Currently starting at around Dh4 million for a two-bedroom residence, Sumesh Nair, executive assistant manager, Palazzo Versace Dubai, has seen constant demand for units since the project was handed over in 2015.

“Buyers, then and now, know that unlike other developments in Dubai, Palazzo Versace would not be constructing and selling identical branded residences in the near future, and this keeps its desirability high and asset value strong,” says Nair. Primary buyers had the option of purchasing a fully furnished or unfurnished residence, and Nair reveals that 135 out of the original 169 owners went for the full offering, cementing the appeal of a high-end design brand in the market.

Nair reports that the majority of these furnished units are either owner-occupied or rented out on short- or long-term leases, which “shows that these residences were not mere trophy purchases”.

“The immense interest shown by both short- and long-term tenants is also a clear indication that there is huge demand for this asset class, and even though not everyone can afford to buy one of these units, their limited availability gives tenants an opportunity to live the Versace lifestyle,” he says.

Limited supply is also beefing returns, while Nair says that in the last two and a half years there has been less than 2 per cent resale, with investors committed for the long term.

Luxe love affair

Brigitte Tenbergen, luxury expert for high-end brokerage firm Luxhabitat, doesn’t see branded residences as a trend, with luxury residential projects like Armani Hotel Dubai on the scene since 2010. She says: “The branded residences market in Dubai is starting to get pretty saturated and these world-renowned brands are an added asset to a new investor or end user in Dubai, as they’re already aware of a certain kind of standard. This, combined with a good developer reputation and location, is the secret sauce to a good branded residence.”

For these reasons, she doesn’t expect to see any more high-end brands joining the residential fray any time soon, with buyers already spoilt for choice.

Jeffrey Gullbrand, business development director of Prestige Real Estate, is of the opinion that it is end users, and not investors, who are driving demand; something that developers have been counting on since the asset class took root.

“As end users make up the majority for the foreseeable future, this is why developers are pulling out all stops on luxury-themed residences,” says Gullbrand.

When it comes to analysing the value-add for Dubai’s luxury residential market, and the real estate landscape in general, Gullbrand points to the “resiliency of the luxury market in a softening economic situation,” with demand from high-net-worth individuals consistent due to the specialised nature of the product.

While the target investor is obvious, those with extremely deep pockets, Gullbrand notes: “Today, it’s high-net-worth end users with extra liquidity who are looking to make Dubai their new home, along with clients looking to add to their portfolio of international holiday homes. Luxury high-end properties do not generally produce high yields, so end users are the typical client profile.”

Talking about investors, Tenbergen adds: “The target investor is a person who understands luxury, who is adding a signature property to his portfolio and who may be a frequent business traveller or looking for a holiday home. By investing in a branded residence, they understand they will get a unit that has a great standard of quality and invests without worry.

“Branded residences also often attract first-time property buyers in Dubai, due to the universal appeal and some investors splurge on a branded residence because prices remain comparatively inelastic. They can always avail of capital gains because of this. A lot of brand-conscious investors often buy these properties in order to build prestige value.”

Leading the popularity stakes, according to Luxhabit, are developments with a prime beachfront community location. “Bulgari is exceedingly popular because of its location, and other design-led but not designer-labelled developments [are also popular] such as Nikki Beach, because of its quiet environment, and Alef on Palm Jumeirah, which serves as the quintessential luxurious holiday home,” says Tenbergen. “The branding, developer and location hold equal weight in terms of making a branded residence a success.”

Gullbrand agrees, noting similar high-level interest in the Bulgari Residences and also referencing Damac Hills’ line-up of European designer-styled projects.

But it seems Dubai isn’t done importing couture names just yet. Earlier this year, Italian lifestyle accessories and design label Tonino Lamborghini confirmed its entry into the emirate’s real estate scene via a partnership with Oriental Pearls for the 4.6-million-square-foot Royal Pearls master-planned community in Meydan.

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