Branded Vs. Non Branded Properties

Branded residences are simply defined as the residential developments that form part of or are adjacent to a hotel with a brand name. The key themes that surround a branded residence are the emphasis on design, high-end facilities and architecture. In Dubai, (where brands hold a great deal of importance not just in terms of fashion) this creates an impressive market for those who want to live a five-star lifestyle all year round. Advantages of being part of a branded development, include top-notch facility management, 24-hour concierge service, security, secure parking, integrated entertainment systems, concierge, laundry and various hotel services. But of course, these services come at a premium.

To start with, there seems to be a dearth in the presence of branded developments, with the exception of the Downtown area, where there is a concentration of The Address hotels. Emaar appears to have recognized the extra value added by these branded developments. “The catalyst for this growth was definitely Emaar’s Downtown “ Lake Hotel” which was later rebranded THE ADDRESS. This 63 floor 302m tower was completed in 2008 and really was Dubai first fully fledged freehold hotel apartment development. From this hugely successful concept Emaar have since completed a further 2 Address branded towers and have a further 3 Downtown projects comprising of 6 towers in the pipeline.” Says Andrew Cleator, Luxury Sales Director of LUXHABITAT.

Luxhabitat performed a comparative analysis on the prices of branded developments and non-branded developments in Dubai with the help of data provided by REIDIN. The key areas we looked at are Downtown Dubai, Culture Village and the Palm Jumeirah.

Culture Village features the Palazzo Versace, a high-end development fully furnished by Versace down to the cutlery. The 5-bedroom penthouse alone costs AED 26.5 million. A similar development that features Versace design is currently underway in Battersea, London by the DAMAC Group. A three bedroom apartment would cost about £1.7 million (AED 9.5 million).

The Kempinski Hotels and Residences on the Palm Jumeirah was completed by the end of 2009. It was then lauded as one of the most successful projects completed during that time and some sales had achieved one of the highest prices on the Palm. Even though the property was completed by the end of the financial crisis, the development did not face any default payments from buyers as told to Emirates 24/7.

The key hotels identified for the analysis were Armani Residences in Downtown Dubai, Palazzo Versace in Culture Village, and Kempinski Hotels and Residences in Palm Jumeirah. The proximity of the hotels to the closest residential development was used as a comparable.

Do these high-end services play a role in price premiums in comparison to non-branded developments?

According to Knight Frank’s report as of 2012, prices between branded and non-branded developments in Dubai had an overall price difference of 58%. The total price change between branded and non-branded development accounts for 46% in terms of price per square feet as of this year, based on Luxhabitat analysis.

Luxhabitat analysis reveals that in the Downtown area alone, Armani Residences are 73% more expensive than an apartment at the Burj Khalifa in terms of price per square feet. The Armani Residences opened in 2010, and despite a price drop of 70% in the Burj Khalifa, it’s prices remained comparatively inelastic as reported by Arabian Business. Branded properties offer less fluctuation and higher investment returns, as it appears.

On comparing the D1 Tower and Palazzo Versace in Culture Village, the price differences are twice as much, with Versace offering apartments at AED 3,799 per square feet. The Kempinski Hotels & Resorts on the Palm Jumeirah also is priced twice as much as the Shoreline Apartments. The price per square foot for Palazzo Versace apartments appear to have still comparatively dipped. While prices of the apartments slashed to half in 2011, it was selling at a price of AED 4,500 per square foot. That’s almost a 16% drop in prices.

To read more, view the press release here.