Dubai Future Hospitality Summit and The Branded Residences Sector in MENA & UAE

Last month, Dubai hosted the Future Hospitality Summit (“FHS”) where international hospitality industry leaders, experts and investors, including many hotel owners and operators, came together to discuss the latest trends within the industry. FHS was a great opportunity to learn about the continued growth in branded residences, with a forum dedicated exclusively to this area. 

What are branded residences?

Branded residences are a collaboration between property developers and well-established luxury brands, covering the build, design and management of properties that bear the intellectual property of the brand and in some cases capturing its “look and feel”.

The growth in the branded residences sector has been attributed to its perceived attractiveness for all parties involved, including developers, brand owners and investors: 

• Developers see opportunities to obtain significant sales premiums on residential sales by leveraging association with the luxury brand; 
• Brand owners can monetise their brand goodwill through licencing and management fees while further enhancing that goodwill;  
• Investors acquire status, prestige, and brand assurance, i.e. confidence that the design, architecture and fit-out will be carried out to a high standard (and in the case of hospitality brands - expectations on the delivery of maintenance, management and other hospitality services). 

The majority of new branded residences are being developed in conjunction with hotels operated by hospitality brands. This allows for convenient utilisation by the owners and occupiers of branded residences of the hotel’s amenities and facilities (which is another significant selling point for developers, and an attractive inducement for investors). Whilst there is a growing trend for the development of standalone branded residences without a connecting or adjacent hotel property, it continues to be more typical for hospitality brands to develop a mixed-use property with both a hotel and branded residence.

Branded Residences in MENA & UAE

The Middle East and North African (“MENA”) region has a high concentration of branded residences, with 44% of the global supply now here in the Middle East and North Africa or Asia. The United Arab Emirates is widely recognised as being a key location for global branded residences, and within the Emirate of Dubai, there are more than 130 projects either completed or under construction. Dubai’s prominence can be attributed to the increasing numbers of high-net-worth individuals choosing the UAE as their primary or secondary place of residence and the city’s establishment as a global tourist destination synonymous with affluence and luxury hospitality.

In the UAE, the majority of branded residences continue to be with hospitality brands (including local brands such as Address Hotel + Resorts by Emaar Hospitality Group and Jumeirah Hotels by the Jumeirah Group). “Tie-ins” involving non-hospitality brands such as automotive, fashion and jewellery brands currently represent a minority but it is expected they will become more prevalent in the coming years.  

In summary, it is expected that the development of branded residences will continue to grow because it has been seen as an attractive model to developers, brand owners and investors. In the UAE, we can expect more branded residence projects to be launched as developers complete the many branded residence developments that are currently under construction throughout the country.