The most recent massive transaction in the United Arab Emirates’ luxury market involved an apartment in the Baccarat-branded residences.
One area of Dubai’s real estate market is becoming more and more popular with wealthy people looking for somewhere to hide their money: flats and townhouses with a brand name, such as Four Seasons, Bulgari, and Cavalli.
As foreign purchasers continue to acquire ultra-luxury homes, sales of those properties are rising in Dubai, which has emerged as the global capital of so-called branded residences. In a property that hasn’t even started construction, a buyer agreed to spend 203.1 million dirhams ($55.3 million) for a five-bedroom apartment with the Baccarat brand. According to Luxhabitat Sotheby’s International Realty, the property’s broker, it is the highest price per square foot paid for a pre-construction apartment at 14,000 dirhams.
It tops the previous record established in February, when a five-bedroom apartment in the Bulgari Lighthouse sold for 160.3 million dirhams, or 13,751 dirhams per square foot, according to Dubai land records. The skyscraper will be constructed close to the jewelry company’s hotel and resort on a seahorse-shaped artificial island.
As the wealthy became even wealthier during the Covid-19 pandemic and as Russians sought safe havens for their money following their nation’s invasion of Ukraine, luxury real estate soared in Dubai. In October compared to the prior year, prime real estate increased 89%, making a quick comeback from a downturn that lasted from 2014 to 2020. Many were caught off guard by how swiftly the market moved higher. Pre-construction, or “off plan,” villas in a Four Seasons Residences project in Dubai that sold for around 40 million dirhams in 2021 are now worth about 100 million.
According to Knight Frank, the surge caused the value of branded flats sold in Dubai to reach a record 25.3 billion dirhams in 2022, accounting for roughly a fifth of the city’s total apartment acquisitions.
Their popularity has been supercharged by the wall of capital from the ultra-rich that continues to target the city’s luxury homes,
Faisal Durrani, head of Middle East research for Knight Frank, said in an email.
Because they can frequently sell the apartments for 30% more than non-branded residences, depending on the region, developers want to partner with luxury names. The standard compensation for putting your name on anything and controlling quality is a commission from each sale plus an annual management fee. Buyers, on the other hand, might be fans of the brand, enjoy the higher standard of amenities that frequently far exceed those of non-branded developments, and have the security of a name they can trust, which is crucial for pre-construction sales and those buyers who are buying the real estate sight-unseen from abroad. Moreover, apartments frequently come furnished.
South Florida was just surpassed by Dubai as the location with the most branded projects worldwide. According to a survey released this week by Savills, there are currently close to 40 branded projects in Dubai, with a few dozen more announced and scheduled to be developed by 2030.
A section of development in and around a man-made section of the Dubai Creek is emerging as a hotspot for these projects in the vast city of Dubai. Some are located right on the creek, such as the 28-unit Four Seasons apartment and townhouse complex that just recently handed over its tenants. According to two persons with knowledge of the situation, tennis player Roger Federer was among the extremely affluent bidders.
The Four Seasons beach resort’s amenities are accessible to residents. Over 40 employees work in the building and provide maintenance, security, valet, concierge, and other services like grocery shopping and event planning.
According to George Azar, chief executive officer of Luxhabitat Sotheby’s, “Those that come from abroad, especially Europeans, they look for quality, they look for seclusion, and they look for services.” I won’t mention them by name, but consider this: There are world leaders and great Formula 1 drivers.
The Burj Khalifa, still the highest structure in the world, is located in Downtown Dubai, where the Baccarat Residences are slated to be built. According to Luxhabitat Sotheby’s, buyers have already occupied half of the 49 available apartments.
There are dangers associated with these assets. Although it’s uncommon, the brand name could be dropped, said to Scott Antel, founder of Scotts FZ, a boutique hospitality legal advisory. There are numerous causes why it might occur: It’s possible for a homeowners organization to decide that the management costs are too high. The hotel attached to the residential portion of the building is either sold or not maintained to a high enough standard. Or, based on the contract, the developer can change brands prior to the delivery of the apartments. If I were a buyer, I find that to be extremely troubling,” he said. I get a Lada and then I get a Ferrari. They respond, “Well, it’s still an automobile,” after which. Even if it’s a car, it’s not what I paid for.
The brand gets involved in a scandal, which is something that may happen as premium fashion businesses enter the market and start to attract scandals. Debranding is uncommon, but it happened in 2016 when residents of Manhattan’s Upper West Side decided to remove the Trump name off their building.
Investors are purchasing—and have even begun to flip some homes—despite the hazards, and more purchases are anticipated. There have already been resales of units in the Four Seasons homes on the stream. A second Four Seasons house is also planned for the city’s financial district.
Source: https://www.bloomberg.com/news/articles/2023-04-05/dubai-luxury-housing-news-baccarat-bulgari-apartments-fetch-record-sale-prices
Posted on: April 5, 2023
