How Dubai is leading the global charge in branded residences
Dubai is forecast to become the world’s largest city based on pipeline branded residential schemes
The growth of branded residences is outpacing hotels in the Middle East, with new projects concentrated in Dubai, according to real estate consultants Savills.
New research shows that 100 branded residential schemes opened this year in the Middle East despite the impact of the coronavirus pandemic and the wider economic slowdown.
Savills said over the past 10 years, the growth of such schemes has outpaced hoteliers, rising from 11 percent of the total market in 2010 to 16 percent in 2020.
Eleven new non-hotelier brands are expected to enter the market by 2025 but hotel brands still dominate and account for 84 percent of current schemes and 88 percent of the pipeline, it noted.
Marriott, whose brands include W, The Ritz-Carlton and St Regis, is by far the leader in the sector and is set to remain so, the research added.
Globally, Miami (32 schemes), Dubai (29 schemes) and New York (25 schemes) are the top three cities for branded residences, Savills said, adding that 12 countries will see their first branded residential projects over the next four years in locations as diverse as Iceland, Paraguay and Nigeria.
Egypt is forecast to grow fastest of any country over the next four years, rising from one to 18 schemes, while other countries moving from a low base include Spain (+83 percent), Bahrain, Belize and Costa Rica (+80 percent).
Richard Paul, head of professional services for the Middle East at Savills said: “When it comes to price, branded residences achieve a premium, on average, of 31 percent over equivalent non-branded properties, although this figure can vary significantly by location.
“If we look at Dubai, it is forecast to become the largest city based on pipeline schemes with a notable increase from Dubai-based master-developer Emaar who has risen to 10th place from 24th in 2007.”
Jaidev Menezes, vice president of Marriott International’s Mixed-Use Development – Middle East & Africa section, added: “The growth of the branded residences portfolio is fueled by developer and purchaser demand for our well-established premium and luxury brands and our proven track record of operating 100+ branded residence schemes globally. We see continued growth opportunities across the region for co-located projects (hotel/branded residences) as well as standalone branded residences across urban, suburban and resort markets.”
The UAE, Mexico and Brazil are expected to add the most schemes by number among the fastest growing countries – those adding at least 50 percent to their existing supply – while Vietnam, the UK, Morocco, Malaysia, Australia and Saudi Arabia also have a pipeline of at least six schemes.
Paul Tostevin, director, Savills World Research, said: “This mixture of emerging and established prime markets illustrates the ever-widening reach of the sector today. Now a proven formula, brands are confident entering new territories.”
According to Savills, the highest brand premiums are achieved in the emerging markets. Recently established markets such as Bangkok, Beijing and Phuket achieve premiums between 40 percent and 45 percent, comparatively higher than more mature markets.
It added that truly emerging markets which have few branded properties can command prices that are double to non-branded stock as demonstrated by Almaty and Belgrade with premiums of 150 percent and 120 percent respectively.