Are branded homes a better investment for property buyers?

They can offer good yields and resale value because of the quality and brand name associated with a development

Residents' pool at Atlantis The Royal Residences. Branded properties often sell for a premium because of the additional luxury features. Courtesy Atlantis The Royal Residences

Lewis Allsopp, chief executive of real estate broker Allsopp & Allsopp, is a big believer in the allure and investment potential of branded residences.

He owns branded homes in projects such as Atlantis The Royal Residences and One&Only One Za’abeel in the UAE as well as the W Residences in Manchester, the UK.

“We have an apartment in London, for example, and it’s a great apartment in a good location and falls within the luxury segment, but despite these attributes, we don’t have any of the facilities and services that branded residences offer,” he says.

“These services such as a concierge and high-quality restaurants attached to the property, to name a few, enable our time in the city to be more enjoyable.

“The convenience that branded residences provide is what most buyers in this segment are paying for.”

A branded residence is generally recognised as a residential property that is associated with an established brand, typically a hotel operator or even a fashion label such as Armani.

The business provides developments with its branding, services and amenities, according to global real estate consultancy Knight Frank.

Often – but not always – branded residences will sell for a premium above their non-branded counterparts.

The premium pricing is justified by the additional features that come with these properties: security; facilities; services; quality assurance provided by the brand; the ease of placing the property into a rental pool; and finally, the “lock up and leave” nature of a well-managed property, Knight Frank says in its Global Branded Residences Report.

The biggest development pipelines for branded residences are in the US, with 36 schemes, the UAE (7), Mexico (7), the UK (5) and Saudi Arabia (4), the report says.

Future demand for second homes, including branded residences, is expected to be driven by rising affluence, increased mobility and the desire of wealthy investors to expand their residential property portfolios, Knight Frank adds.

Mr Allsopp says he recently received an offer for a 194 per cent premium for his branded home at Atlantis The Royal Residences, which he purchased four years ago.

He did not disclose the unit’s purchase price but declined the offer.

For his One Za’abeel home, Mr Allsopp says he has seen a 40 per cent price increase even before handover.

“It’s worth noting that these projects were bought at the right time. This is not a standard market appreciation. This was just good timing as an investor,” he clarifies.

Yields for a rental investment in branded homes can range between 4 per cent to 8 per cent, according to Mr Allsopp.

Service charges are always higher in branded developments due to the facilities, however, so is the rental income, he says.

The premium for branded residences varies from area to area. For example, in Jumeirah Lakes Towers’ rental market, a unit in the Banyan Tree Residences commands a premium of 169 per cent in comparison with a regular one and two-bedroom apartment, Mr Allsopp explains.

“Now on the sales side, a three-bedroom apartment in Vida Dubai Marina sells for Dh6.5 million or Dh3,925 per square foot. In comparison with a non-branded three-bedroom property in that area, this is a 362 per cent increase,” he says.

“A similar sized non-branded three-bedroom in Dubai Marina [Marina Pinnacle] was sold for Dh1.41 million 20 days ago.”

Investor demand for branded residences in the UAE has resulted in more developers launching such projects, especially in Ras Al Khaimah, which was recently ranked as the fourth-best city globally for expatriates to live and work in by global network InterNations.

Wow Resorts, which has more than 25 years of experience developing real estate projects across North America, recently partnered with JW Marriott to announce the launch of the JW Marriott Al Marjan Island Resort and JW Marriott Residences Al Marjan Island in Ras Al Khaimah.

The project, which is estimated to have a value of $1.3 billion upon completion in 2026, will comprise 524 residences, featuring one, two, three and four-bedroom apartments and penthouses, and 300 hotel rooms.

Amenities include seven dining venues, a spa, pools and a fitness centre.

Construction will begin in February 2024 and the project will be designed by Beverly Hills architect Tony Ashai with Dubai-based lead consultants Architecture Design Unit.

“Having a brand on board ensures residents get a consistent experience and the highest living standards,” says Bhupender “Bruce” Patel, co-founder and co-chief executive of Wow Resorts.

“We are also looking at doing projects in other parts of the UAE and Singapore.”

The unit prices will be announced during the project's launch in January.

“High-net-worth individuals looking for an elevated experience are our target buyers,” says Anwar Ali Aman, co-founder and co-chief executive of Wow Resorts.

The project will boost investment opportunities for both home owners and tourists keen on enjoying the perks of waterfront living, according to Abdulla Al Abdouli, chief executive of Marjan.

Similarly, developer Durar Group has unveiled Masa Residence, a branded homes project, on Al Marjan Island in Ras Al Khaimah, with Christie’s International Real Estate as the exclusive sales partner.

With a sales value estimated at Dh700 million, Masa Residence features 396 branded homes, comprising studios, one-bedroom, and two-bedroom apartments and eight villas.

The project, which is expected to be completed by the second quarter of 2026, will be developed under the creative direction of French designer Philippe Starck, co-founder of YOO Inspired by Starck.

“We are confident that this project will attract high demand from families and investors looking for a luxurious lifestyle along with brand prestige,” said Eng. Mohammed Miqdadi, general manager of Durar Group.

Aldar Properties, the biggest listed developer in the UAE's capital, recently launched Nobu Residences Abu Dhabi. Located on Mamsha Al Saadiyat on Saadiyat Island in Abu Dhabi, Nobu Residences will offer 88 apartments.

Inclusive of hotel, residential and supporting retail, the development will comprise one, two- and three-bedroom apartments, two-bedroom lofts, alongside penthouses and sky villas.

Adjacent to the Residences, a Nobu Hotel will offer 125 rooms as well as a Nobu restaurant.

While money is generally not an issue for buyers of branded residences, these investors are also smart about how they manage their cash flow, according to Alois Kugendran, general manager for real estate at property technology start-up and mortgage provider Huspy.

“So, typically, we see that down payments are paid fully in cash. These are still significant amounts,” he says.

“Because most of these projects are off-plan, being developed over three to four years, buyers then have time to make arrangements for favourable payment plans. This is where they look at the best payment schedule, with many doing a mix of cash and financing.”

On average, branded homes range from Dh2.5 million to more than Dh20 million and beyond, according to Huspy data.

For example, a 44,000 square foot, eight-bedroom house at the Bugatti Residences by Binghatti in Dubai’s Business Bay is listed with Huspy at Dh750 million.

Some of the most sought-after branded homes projects at Huspy are those with global brand collaborations such as the Bugatti-Binghatti project, Omniyat Vela Dorchester Collection in Business Bay, and the Elie Saab villas in Arabian Ranches 3.

“The mortgage process is exactly the same and follows the guidelines as set out by the authorities. However, luxury residence buyers are more likely to pay a sizeable cash component as compared to regular projects,” Mr Kugendran says.

“Fixed or variable interest rates don’t make much of a difference to such buyers, especially when they have significant cash to fall back on. However, developers work to ensure they get extremely attractive payment plans.”

There was a lot of interest to buy branded homes from Russian and other European nationals last year, according to Oksana Semiletova, senior private client adviser at real estate broker LuxuryProperty.com.

Over the course of this year, the demographics have shifted slightly, she says.

“The majority of my clients are British and from around the Middle East. They are primarily looking to move here for the long term, shifting their business and families to the UAE to take advantage of the excellent business infrastructure and great tax regime. Many investors are also looking to avail of the golden visa,” Ms Semiletova explains.

“There are a lot of buyers who want to experience the Dubai lifestyle and make this their new long-term home. There are others who want to invest in a well-known hospitality brand, especially as brands tend to maintain their value even in adverse market conditions.”

The premium for an off-plan branded residence up for resale can be anywhere from 10 per cent to 20 per cent above an unbranded residence, she says.

The Caesars Residences on Bluewaters Island is a “great example, with units selling out very fast”. They rarely came back to market and that scarcity allowed them to command even higher premiums, Ms Semiletova adds.

Bulgari Lighthouse is another “hot project” right now, with only a few of the largest penthouse units available. The four-bedroom units are currently at a 20 per cent premium compared with a similar unbranded residence.

Wynn Al Marjan Island in Ras Al Khaimah and St Regis Residences in Abu Dhabi are also garnering a lot of interest.

“Service charges for a branded residence are much higher. In some cases, the charges can be double compared with an unbranded residence, due to the high quality of facilities that are provided, as well as five-star services, including housekeeping, valet and concierge,” according to Ms Semiletova.

“Many branded units come furnished, which also adds to the service charge.”

Branded homes have good resale value because of the brand name and quality associated with the residences, she says.

“They can appreciate by around 20 per cent and bring in an average return on investment of 6.5 per cent to 9 per cent, depending on whether they are being put up for long-term or short-term rental.”