Mercedes-Benz Group AG insignia flashed on screens as thousands of guests thronged a hotel best known for hosting Dubai’s biggest horse race. The glitzy event marked the unveiling of the city’s latest luxury tower, where some apartments will cost up to $10 million apiece.
The $1 billion development with unobstructed views of the world’s tallest tower, Burj Khalifa, is being built by Binghatti Properties in a first-of-its-kind tie-up with the German automaker. Featuring 150 apartments starting at $2.7 million, the building is another high-stakes bet on Dubai’s property market, which has emerged as one of the world’s hottest over the past few years.
The project is the latest in a series of branded developments, a pocket of the market that now makes up a big chunk of all apartment sales in the city. Last year, Binghatti broke ground on a tie-up with Bugatti Automobiles SAS on a project that will include elevators to transport cars to penthouses. The firm is also partnering with jeweler Jacob & Co. on a 500-meter (1,640 feet) tower that’s set to become the world’s tallest residential building.
Those high-profile projects — and the return of the lavish parties to announce them — are reminiscent of the days leading up to the 2009 crash, which ended a speculative boom built on debt and brought Dubai to the brink of bankruptcy.
While no one has so far predicted a crash, some analysts have forecast less of a boom in 2024. Binghatti isn’t worried about a possible slowdown, and its CEO, Mohammad Binghatti, expects prices to climb 12% to 18% this year.
To cash in, the builder is set to complete 20,000 homes in 18 months — twice the number of properties it built in the past five years. Binghatti owns a contracting business, with 5,000 employees handling everything from engineering to construction, enabling it to build quickly. Most of its projects are completed within 18 months, with luxury developments like the Mercedes-Benz and Bugatti towers set to finish in three years.
The firm has been snapping up land, spending about $330 million in the past three months alone, and is considering raising $500 million from a bond sale to finance projects.
“We’re definitely going to see more growth this year and the following year,” Mohammad Binghatti said in an interview. “There is clear wealth migration coming to Dubai and an increase in the population, which provides room for organic growth in the market.”
The growth in prices hasn’t been limited to the luxury end of the market. Since January 2020, rentals have surged about 45%, while average home prices have jumped roughly 35%, according to the property advisory firm CBRE Group Inc. Villa rentals have seen some of the biggest increases, hitting an average of $88,400.
“Usually, the beginning of the year is a good indication of what’s to follow, and I haven’t seen any slowdown in activity or downturn in the prices,” Mohammad Binghatti said. “I don’t see a possible crash on the horizon, and when interest rates soften, we will see more borrowing.”
The firm has already sold 32 of the 182 residences at the Bugatti Tower, with buyers shelling out as much as 9,624 dirhams ($2,620) per square foot — some of the highest prices in the city. For the Mercedes tower, the developer said it had sold all apartments available in the first phase, without disclosing a number.
“People who come to Dubai, a lot of them already have the liquidity to deploy,” Mohammad Binghatti said. “They want a safe haven to invest.”