The Truth About Branded Residences in Dubai

Hi, this is GG Benitez, a certified international property specialist and a licensed realtor connecting the global real estate opportunities in Dubai with global real estate investors. And today I have my best dressed guest, although that's not why he's on the show. Mr. Thic Gerard, who is an executive director of Devmar, one of the most respected. Thank you so much for joining us today. You always look so handsome every time I see you. Thank you for having me. I'm really excited being here today. I mean I remember when we spoke last week and you told me you would like to have me here. I was really excited so I'm happy to be here today. Thank you, pleasure. I love your energy, I love your history, I love your story. And so if you may, please share. Because these are going to be mostly North Americans who maybe don't know who you are because you're well known here in Dubai. But share a little bit about who you are. 100%. I mean, okay, where do I start from? I grew up in the UAE and around about the age of 14 I moved to the states. I did my high school, university. Graduated in finance and banking and worked for an American bank in New York for about a year and then came back to the UAE. You have a little bit of a New York accent right? Still there? It is kind of still there. So yeah, I came back to the UAE and I started in banking, wealth management. I did about 12 years working in the private banking. And about 2003, 2004, something started to happen. I started losing clients faster than losing my hair. I'm like, hey wait a minute, something is going on. These were private bankers that were closing their accounts, but they were not taking it to competitive banks. They were taking it, they were investing it into real estate in the UAE. I'm like, wait a minute, something is going on here. Now we're talking about a time where there were no laws, no regulations. So before DLD, absolutely unlike today. Today you have a very regulated market. So it's very interesting. And I said, you know what, I think something is going on there and I want to be part of it. And I did the switch and I've been part of it ever since. That is an amazing story. And so now may you share a little bit about, once you made the switch, what your experience has been? Yes. So I started working for, basically, since 2004, I've joined many developers. I work on the developer side. So I have a lot of experience with development and developers, not only within the UAE but across the region, across the Middle East. I worked with the likes of Damac, I worked with Shia, I worked with Majal Fame. All of my responsibility was basically on the development side, selling the project, advising customers on what is the best fit for them. So I've been very much involved in the real estate market and the residential side. And so then that brings us to Devmar. May you share what Devmar does? Absolutely. I mean, I like to keep it simple. Devmar, we are the leading project sales and marketing firm in the region. And we started Devmar about seven years ago. And what we specialize in is what we call the journey to sale. Basically we work very closely with developers to identify the project, to bring it to market and provide them with sales and marketing strategies to actually take the project to market. And then we work with our trusted partners in selling the project to the potential clients. With your vast experience in finance, in banking, and then on the developer side and being in the UAE, how do you select which developments to get behind? That's a great question because that's what makes us special. It's a long process right. I mean we are fortunate enough that we have a lot of developers that have seen our history, our success over the last couple of years, even more. And they want to work with us because they've seen what we can do. And we have to do our due diligence. We have to look into the developer. We have to understand their financial capabilities. We want to know what they're bringing to market, what are their expertise. Although we do provide them with all the guidance in terms of all of these things, their intention is very important. You know, what they're planning to do? Are they here just for one project or they want to bail out? Are they here only trying the market or what's their stay? So you're really vetting them before they even, before you take them on and before you get behind them and bring them to someone like me and say okay, this is what's coming up? 100%. I mean I can just give you an example. So before we take a project to market, that could probably take a year if not more. Because you will have the initial stage where we're getting to know them and they're getting to know us. And then you know, trying to understand what they want to do. And then actually working on the project. You know, so we can bring it to market and then it would resonate with the buyer personas that we have identified for that particular project. With your experience, because obviously you're doing so much of this work, like you said a year before a project comes to market, what do you find to be the top benefits, features and benefits of a project that resonate with North American and other global investors? Well, first of all, I mean, for me to answer that question, I ask myself, okay, what is important to them? Right. You know, first of all, of course, they want transparency. They want to understand that the market is very well regulated. They want to understand the ease of transaction, given the fact that you're not in the country. You want to be able to transact and understand what's going on. You know, if you got a complicated process, you're not going to be interested in it. So let's just touch upon those. Transparency, yes. Dubai has it. It has 100% right. The legal and regulations. Yes, can I just add one thing to this? This is very important. You know, a lot of people bought properties around the world and in other countries, which I have either bought or tried to buy property, you can't move without a solicitor. You can't even look at the property without it. So true. Here you don't have to. You don't need to. No, absolutely not, right. Yes. And then, and I know you've been working since before DLD and then after DLD, but now we have the DLD with RERA that's overlooking all real estate transactions. The other thing you were talking about is the ease of transactions, right. Now I will say there's one hiccup that's been coming up with the US, and I think I have a way to overcome it, which is that initial EOI or that initial payment. If we're trying to use a credit card from the US, it is coming up as an issue. So what we've decided is we're just going to start doing the bank transfers right from that initial EOI situation. Are you finding any other issues coming up when Americans are investing? Absolutely not. I mean, let me quickly talk about the expression of interest phase. Now it's not probably one of the most important, it is. First of all, it's not with all projects. I mean, some projects you might go to a direct booking or reservation. And of course, depending on what is the payment, you know, bank transfer. So even with having an expression of interest right, you can still use the approval of payment from the bank that the money has been wired without having to hit the account. Absolutely. And so that's why from now on, instead of doing the credit card, just shoot that. Show that. And that way you are in position in that first come, first serve basis without that delay. After that, everything is smooth sailing. So even most of my investors haven't even come to Dubai, which they should, they shouldn't miss out on the opportunity. I mean, to come and experience the lifestyle here. But they are investing and you're able to do everything digitally online. Even with the rest app, to be able to watch the progress and monitor the progress of their off-plan construction can be done online, right? So these are all amazing factors to your point about what makes the hot buttons for Americans. 100%. I mean, again, you can go into the app and not only do you make sure that the project exists, you make sure you confirm the project registration number. You know, you get all the breakdown details even the plot size. And then you get the progress of the project. So why is this very, you know, handy or important? If you buy an off-plan property, because you know that if the developer is asking you to make the third installment or the fourth installment, have you reached that construction milestone? Correct. And then you go in and you can validate that. Love it. Right. And it's not an app where the developer is the one providing the information. That's the government. Absolutely, exactly. And so thank you for sharing all that. I think we need to hit a little bit more about the EOI. How important it is because that's been one other struggle for me. Because we're comparing different types of markets. Off-plan is not necessarily what I sell back in California because I'm also a licensed realtor in California. You having come from the East Coast, you'll understand this as well. I'm trying to share a whole new business model and template for purchasing, which is off-plan. Benefit is you're getting in at pre-construction pricing. Gives you more opportunity for that capital appreciation. Brand new projects, amazing amenities. It's the best investment decision I think we would both agree upon this. 100%. But that EOI is one of the most important strategies. May you share a little bit about what happens if you miss out on that EOI? Well, first of all, the expression of interest stage, it's like an option. If you're into stocks or whatever, it's like an option. You can convert it if you're satisfied with what you're going to end up buying. But it is important because it's like you're guaranteeing your first place in the queue. And not only that, you're getting a very attractive pricing, initial pricing, exactly. And in addition to that, sometimes the developer has a promotion, okay, before the official launch. And that promotion could mean a number of things to your investor. It could mean reduced prices but also a different extended payment plan. So these are all the benefits. And then, as I said, you're the first in line. You get to choose the unit you want. And it's fully refundable. It is 100% fully refundable. But without it, and then there may be projects that you don't need any, but then you have to kind of question, in this market with the high demand that's happening, why would there be a project where there are so many units available? Don't worry about it. So that leaves me with my next question to you. We've discussed this a little bit when I visited you in the office. That although Dubai is a safe real estate market, although we don't have to worry about scams or fraud thanks to the DLD and RERA, that does not mean that all developers are made equally and that each project is going to provide you a max ROI. Do you agree with that? Well, you see the smile on my face. And let me set up for this one. Yes. Because yeah, you got to understand, I've been in the market for almost 20 plus years. And I was there when there were no regulations. And there were a lot of people coming into the market. And yes, there's a lot of regulations that are going to protect you. And here I'd like to clarify something that is very important, right? When escrow account, or let's call it the fiduciary account, trust account, right, where it makes sure that if you're transferring money from wherever you are into the project, it's not going into the pocket of the developer in the sense of the individual company account. It's going into escrow, going into the account that is governed by the DLD. And money cannot be withdrawn without certain specification basically taking the money out to pay for the construction, right. However, that money, once you paid the money in, and let's say 50% have been constructed, and something happens right to the market, to the developer, whatever it is, your money is there. Your money is in the ground. So yes, the laws are there to protect you. And of course, the laws and regulations of the country ensures that a developer will not reach that stage or launch the project unless they have adequate financial profile, money in the bank and all that kind of stuff. But again, it is still very important that you do your due diligence about the developer, about the area, about the location and about the project itself. Agree. And that's why working with, and this will lead me to the next question, not all agents are made equally either. So working with an agent, I'll ask you, do you believe that investors should go directly to the developer or work through a real estate agent? Okay, so first, I'm going to try to answer the question about, you know, agents and working with agents in this market without basically getting in trouble or getting censored here. It's a topic that is close to my heart. And I think it's crucial, it's very very important. And I'd like to take a minute to educate our listeners. The market is regulated 100%. The laws are there. And of course, the level of entry, okay, to a broker in the market is not as strict as it is in the US, correct? So that's why it becomes very important which broker are you working with, actually, it is which brokerage company. And of course, the broker that you're going to be working with, individual, individual, right, because that's the person that you're going to have that working relationship with. That's the person who is going to represent your best interest. Now, that is, that's even, I wouldn't use the word stressful if you're here, so imagine when you are away, right, and if it's foreign to you, right, and as an American, for example, overwhelmed when they're looking and googling, you know, how to buy property in Dubai, who do you work with? Do you go directly with the developer? There are all these brokers. And I find that it's a very transient business here, right? You have, because of the opportunity and the ease of entry to become a real estate agent, which I believe there are going to be more regulations placed in, but you have people that are coming trying to make it and maybe three, four months they don't and then they disappear. So how do you avoid that? And how do you find? Well, you let me just answer that because no matter how much restriction you have or how high you raise the bar for people to get into the industry, and let's say you do like the states with their exams and their staying power, how long they want to stay in the industry, they can't guarantee that. True. And that's why it becomes very important that you look for brokers in the market, been in the market, understand the market. And you can tell how they work. You know, the way they operate. That is very crucial. Because especially with off-plan properties, right, it is important to every property, but with off-plan property, your relationship with that broker is going to be for the long term, correct? Right. And if you have a broker that only wants to make the commission and bail out, that's not the person you want to work with. Absolutely not. Because what about timing the resale of your project? What about when you want to finance it? Property management, connecting with an international tax account, an attorney. And that's where working, not with the developer, and again, this is a misconception I'm trying to overcome. It's the developers that pay the commission for the real estate agents. We call them brokers here. In the US we want to be called brokers, unless we actually have an additional certification. But it's the developer that pays it. So they're not losing money. But they're losing services by not using a real estate broker here. And then not using. 100%. I mean, I remember, you know, a lot of times when you know people would come to me, like a clients will come and say they came, they were introduced to the project through a broker. And they'll come around and say, what if I buy directly now? First of all, we do not, or personally I will never entertain such a thing. Because I believe the brokers deserve, you know, the deserve to get paid for the work. That's a principle that we have as a company and I always had as an individual. But I explain it to the clients. I say, listen, you're not paying anything extra. And if I don't pay the broker, I'm not going to give you a discount. That's not going to happen. You know, however, on the other hand, you're going to get all of these services and it's not going to cost you anything. And there's something that I always like to say. Buying a property should be a pleasant experience for sure, right? And if you have the right broker, they're going to make sure that it's not a stressful experience. I love that. So now we can dive into a little bit more. I have had success, thank God, I don't want to jinx it, selling Devmar projects that you have been promoting. From the Peer Residences in Maritime City, which is sold out. Yes, it is. But can I just tell you that when I met with you last week? My American clients were in town, had purchased sight unseen. They are very seasoned global real estate investors based in America and they invested in different places around the world. We talked, they ended up investing in the Peer Residences. And we timed our visit at the same time. And I got to go show them the experience center that you have as well as the plot. It brought tears to my eyes to see the joy on their faces when they saw that property in Maritime, which is one of the last waterfront, right, in one of the most amazing, up and coming opportunities. And then also working on the W branded residence. So what that leads me to, and I've done a previous podcast on this topic, but maybe because I was talking about it by myself and as a talking head, I don't know if it resonated as well. So I'm going to ask you. Because I know you're passionate about this. And it's not necessarily something that's well known to American investors. Why branded residences? Okay. Now me and you spoke about that at length, right? And there are tons of information out there, white papers, reports, all that kind of stuff. You know, people that can go and research and find out why branded residences take a different place compared to other. And the actual numbers, like Knight Frank shows, I believe it was 30% greater capital appreciation upon handover for branded. And then there are different varying numbers for the additional rental returns. Actually, the premium that you can get can go anywhere from to 90% additional. Absolutely. So the way I would like to look at it, or the way I'd like to explain it without getting into too many numbers. I'm not good at numbers. My memory cannot handle numbers. But I look at it and I'm going to explain it from a point of view of an investor and from a point of view of an end user. So from a point of view of an investor, let's state the obvious. Quality and standard assurance. What does that mean? Well, very important. When you're buying a branded residence, especially if it's an off-plan, right? When you're buying an off-plan, there is an element of uncertainty in it, sure. So I can show you a beautiful brochure and I can show you that you're going to have you know, marble and all the works, but you're not, it's not guaranteed that you're going to get that at the end, okay? But when you're dealing with a branded residence, the branded resident gets involved. Depending on the brand, but more so with the hospitality brands, right. Thank you for talking about that. Hospitality versus some of the other brands that's happening. Okay, and differentiate that. Actually, please. May you just expand upon? Okay, real quick, right? So I always like to say that branded residences are not created equal, right? So if you take a hospitality brand, and this is a brand where basically it's a hotel brand like you know, Marriot and all the other luxury brands underneath it. So you get the Ritz Carlton, you get the W, which I'm here to talk about, you know, and other brands, okay? For Banana Tree residences and so on. That's a hospitality brand, okay? Versus versus a lifestyle brand or a fashion brand. So for example, if you have Versace, Armani, you know, these are a branded residence but these are not hospitality brands, okay? And now what we're seeing here in Dubai and I think also in Miami, because I was reading a report about Miami recently, you started seeing car manufacturer brands like Aston Martin, Mercedes Benz. Here these are, and that's very controversial, right? Because they're brands, they're wildly recognized global brands. But they don't have the proven track record in hospitality. I can go on for hours about that, you know? Absolutely. I mean, listen, when you got to look at it, a hospitality brand, okay, and I always give that example. And I'm not saying that other why Darque has chosen the W, there's a strategy behind it. And that's what I'm trying to understand. It depends on what you want, right? I mean, it depends on what you want. I mean, I was talking to a guy the other day, an investor, the other day, and he decided to go for an automotive brand, okay? And I said, which I'm aware of and I know, and I said, can I ask you a question? I'm just intrigued. Why did you go for it? He said, well, because I have the car, okay? And I just. So that was his. Yeah, you know, it works for you, fantastic. But you know, I'm just talking about the hospitality brand and what does it bring to the table? The hospitality brand brings a lot of things to the table because there is a direct link between the brand reputation, okay, and the actual physical asset, right? So let me just explain that. Let's say we have the W branded residence, okay? And I'm talking about another distinction I'd like to make, okay? A standalone branded residence. There's no hotel component, okay? So this is a W, the one I'm going to talk about, okay, is a W residences, right? But it's branded and that's a W brand. Okay. If let's say three years from now, hand it over and you have the people there managing it and taking care of it, and you happen to say, I want to stay in Dubai. I want to rent a one bedroom apartment, and you walk in and then you have an unpleasant experience, right? Because of the service, okay? Or the upkeep or the quality or whatever. You're going to go out and you're going to say, I had a bad experience at the W, okay? So that's a big difference. So that goes with that quality assurance, the quality I was talking about earlier. So the quality assurance is not only in terms of the upkeep and the running of the property, you're talking about from the beginning, okay? Some brands get really really really involved in everything. I'll give you an example. When we were working on one of the brands, okay, the Ritz Carlton, Marriot as well as the W, I mean, we actually had to be coached as salespeople on what to say and what not to say. That messaging, I mean, they obviously know what they're messaging. This is how protective these brands are. So going back to why me as an investor would care about that? Absolutely. Because you have the assurance of the quality. You have the assurance of the quality from the beginning, during construction, on the handover, and after that, which is quite important, right? And so that's number one. Now how does this compare to non-branded residences? Well, it depends from one developer to the other. And even with the same developer, it depends from one building to the other or one community to the other, correct. So for me as an investor overseas, looking at buying an off-plan property, I want the additional protection that is the brand making sure that I'm going to get what is promised on the brochure. Do may you explain a little bit more of the difference between a standalone branded residence versus the hotel branded residence? In summary, the difference is that when you have a branded residence that has a hotel component, just has a hotel, like for example, you might have one building that is the branded residence and the other building is the hotel. And that's a hotel, that's a hotel with hotel rooms where guests can come and stay in, okay? From an investor's perspective, do you differentiate between those two? It, I can tell you from experience, and it might not be the case in all branded residences, sometimes if you have a hotel component or you have a hotel of the brand within the building, they you might have certain requirements where you cannot rent it out. You have to give it to the hotel to rent, what people refer to as a rental pool, got it. And as I said, the jury are still out on this one, but that's an important differentiator for investors to make the most wise decision. Of course. Speaking of the W branded residences that Devmar has gotten behind, and I'm helping promote as well, because I'm so intrigued by it and impressed by it and the amenities, it's in JLT. Yes. And I would like you to share why JLT is one of the top investment locations right now in Dubai with the W residences. Well, first of all, if you look at Dubai and you look at the map of Dubai right now and you see there's all the new projects that are coming up are actually moving away from Sheikh Zayed road, the main highway, because basically all of that stuff has been built. All the units are there. There's only so much land. There's no much land, right? I mean, you can't go to the right, the left, you have Charger Ababi. JLT, first of all, is in the heart of Dubai. I mean, I kind of laugh because a lot of people every time they launch project even if it's in the middle of nowhere, say it's in the heart of Dubai. No, this one is in the heart of Dubai. JLT is a great community. It's one of the earlier communities. And as I said, it's on the metro main metro line. So you're talking about accessibility, connectivity, very important. Very important for your property. And then of course, your location within the old and new Dubai. Now what does that mean? Well, it translates to capital appreciation, translate to occupancy rate, to rental yield. But also another reason why JLT, because JLT is one of, and I, and probably maybe this is not the right word to explain it, but I would say it's one of the most underrated communities that has a great potential for capital appreciation. And you as an investor, you want to get in early and you want to make a lot of money. May you actually expand about the JLT and the connection with DMCC and what that means for an investor? Yes, I'd love to do that. Because I, you know, when because of my financial background, when I look at places like DMCC, Dubai Multi Commodity Centre, or the IFC, Dubai International Financial Center, I look at it from a completely different perspective. I'm like, okay, who's the target audience? Who are working there? Who are operating there? And if you look at DMCC, DMCC is where the money is being made. You're talking about traders that are trading in gold, diamonds, oil, any kind of commodity that you can think of. And there are high flyers there, people that are worth a lot of money. And so far, until recently, in JLT, you didn't have that option for them to actually want to live there. And we know that people love to live next to where they work, right? Especially with the traffic in Dubai. Well, I was going to get to that. I was going to get to that. I mean, that becomes very important. The traffic impact, yes, becomes becomes crucial. And again, that's what takes me back to why JLT. Because on road, but why the W and that particular plot is because of its connectivity and accessibility to different roads. So you do not have to suffer and get stuck in traffic for almost like 45 minutes trying to get in and out of your community. That just makes a huge difference. I mean, for anyone who's been driving around Dubai, which I know there are so many plans that the government is implementing quickly to ease the traffic. But what I mean, the population expansion in Dubai, the tourist destination that Dubai is, the amount of people that are moving in, it is going to impact traffic just as it does in any major city. But what Dubai does, unlike any major city, is able to recover from that. And then we have to strategically guide our investors on properties that are going to be more conducive to their lifestyle if they're planning on living there, right? And not even for planning, living there, for that resale value, you know? For the end user, it's important as well. It is, because I, you know, I was talking to a client the other day. And I was saying that, and I was laughing. I said, I never thought, you know, growing up in this part of the world or in Dubai, that I would ever come and say, oh, you got to factor in the traffic impact on you probably didn't think about that, right? Yeah, absolutely. So but it it is true and it is here. And yes, the government is doing a phenomenal job. I've never seen bridges that can come up. And so, but like, you, Dubai is very very popular. People want to come here. People move here. People are living. And the population growth is not organic. I mean, it's not like you have to wait till someone become 17 to get a car. You get a whole family moving into Dubai. Everyone gets a car. So you know, so it's very important, again, to where the broker is playing the role of telling them, listen, I looked into it. I know where it is. I know the community. I personally been there. Drove my car. Got stuck in traffic. You know what I'm saying? So all of these things are very crucial. They do. So what's next? Next for Devmar? What what plans do you have next? All right, putting me on the spot here. Yes. What can you share? What can you share? I can only tell you something right now. I mean, because we don't have all the information. And you know, when we go to market with a project, and especially you'll be first to know about it, we would like to have all the details. But one thing I can tell you first of all is that we have a lot of interesting projects in the pipeline, okay? The one I can talk to you about today is we have an amazing project that is coming on the palm, the most iconic neighborhood in the globe. And you have a project coming on the palm. It is. And there's no availability. You can go and check it out and you can see that. So we're very very excited about it. And we'll let you know soon. And again, I cannot stress enough, please get those EOIs in right when I let you know that we have the announcement. We're able to accept those EOIs. Get them in. Because I'm going to just assume that that's going to sell out even before launch, probably. Probably. I mean, you know, I don't want to sound arrogant and tell you, but it's just Palm Jumeirah. It's all about. Yeah, it's the Palm. I mean, the Palm Jumeirah is a great project, but this one is there. And the infrastructure is there. The difference, right? Completely different. Palm Jumeirah is phenomenal. I actually just went to the launch event for that. But that's going to be you know a few years out, right? Whereas for this, this is already existing. And just one last last thing I'd like to add about the expression of interest. It's not a gimmick to get people early. The prices are very attractive and the prices do increase, okay? Because that's the way. Explain that, please. Explain that process. Well, I I can talk in general, okay? You know, what we refer to as a pricing and release strategy, okay? Right. Like if you're a developer, provided you know your business and what you're doing, you're not going to dump all of your property availability in the market, okay? Right. You're going to phase it out. Yeah. So that's why they'll say, you see for example, phase one sold off, phase two sold off, phase three sold. Now when you go through the phase one and phase two and phase three, okay, the developer, I'm assuming developers that want to extract maximum value from the project, they will increase the prices, okay? So when you come early, because you've been rewarded for being early in the project and buying, you will get the initial prices. So even for example, a one bedroom, same square footage, if it's part of phase one and you get your EOI in and you get to secure that unit in phase one, then let's say a few months later, same bedroom, same square footage, but it's phase two, it's going to be potentially 5% maybe even more. More, it depends from one developer to the other and the location. I'm well, it it probably more of how fast they sold the inventory and how much is left of it. But any developer would increase the price. And I have a lot of clients coming to me. And I'm like, oh, you know what, you know, you know, we, you know, it's only been a couple of months. Why are the prices up? And I'm like, if you were in my place or you're in the place of the developer and your units are really moving fast, wouldn't you increase the price? I mean, it's a business, not a charity. It is a business. And so going back to the expression of interest, expression of interest, are there for a reason. And it is to reward you, call the early early buyers. So let me ask this question because I think this is a great question. I'm told by some clients, let's wait and see until launch day and see what happens. And I'll wait to get more information. I've got one word for good luck. Wait. I mean, listen, I've seen it happening. So have we. So have we. And our clients have had to learn the hard way. And what I'm trying to do is get in front of it to share with them so that they make the best decisions because that's what I'm passionate about. Don't sit and wait. Again, on launch day, comes the EOI is fully refundable. But if you want that opportunity, you must submit your EOI. So with that, I am so glad that you graced us with your positive energy, your presence, your expertise. And I'm really looking forward to continuing to work with you, with Devmar, with the beautiful agent, Ipam, that I've been working with. Because I really believe in Devmar based on some of what you share today. When you get behind a project, that gives me the confidence because there are thousands of projects launching. Not all are made equally. And I'm doing my due diligence on behalf of my investors to really try to maximize their investment dollars by making the best decisions. And I feel when Devmar is behind something that's a good decision. Thank you so much. I appreciate it. I'm you know, looking forward to working with you. It is a pleasure. Thank you. And with that, please make sure to like, subscribe, and follow and stay tuned for the next episode of The Dubai Connect podcast. Happy investing. Good.