Living in a penthouse is synonymous with living in glamour and luxury. Located at the top of a building, the penthouse is one of the most prominent residences you can find in the UAE. Purchasing one literally means getting a piece of the city’s world-renowned skyline.
A penthouse is usually the most exclusive property in a development, mainly because of its location on the uppermost floor of a building. Buyers of penthouses often desire a swish lifestyle and these properties enhance such a social standing.
This premium unit is therefore generally associated with the well-heeled who can afford the hefty price tag. A penthouse is normally spacious and fitted with luxury amenities such as a Jacuzzi, a lounge bar, a swimming pool and a private terrace garden or multiple terraces that usually offer panoramic views.
Penthouses have become popular among wealthy property buyers looking to invest in a second home in the UAE. Property Weekly finds out why penthouses are uniquely popular in the country.
Dubai ranks second only to London as the most attractive real estate market in the world for high-net-worth individuals, according to Cluttons’ 2013/14 International Private Capital Survey. The story makes it clear that wealthy people have a great admiration for the city’s luxury real estate offerings.
Local, foreign demand
Lucy Bush, Head of Residential Sales and Leasing at Cluttons, says Dubai’s popularity as a global business hub and its ever-growing commitment to develop its tourism sector have helped raise the profile of its real estate market. Moreover, increased government regulation and a more sustainable real estate growth are instrumental in improving confidence in the property market, she adds.
“The UAE is well known as an attractive destination for high-net-worth individuals who seek highly desirable properties and also view the country as one of the world’s most suitable markets for residential investment,” says Bush. With interest from both domestic and overseas investors, demand for penthouses is at a healthy level, she adds.
There are usually two to four penthouses built in each tower, and this is mainly what makes them very exclusive residential propositions. It is also common for penthouse properties to be offered with several extras such as additional parking spaces, ancillary rooms for storage, a driver’s room or a servant’s room and various recreational amenities such as a private pool or Jacuzzi on terraces or balconies.
“These premium units with superior finishes have a relatively specialised demand,” says Mario Volpi, Managing Director of Prestige Real Estate. “Developers realise this and hence make provisions for these units.” In view of the strong demand, certain developers have even tried building penthouse-style apartments on each floor in properties such as Le Rêve or Pentominium, Volpi adds.
“The obvious advantage of a penthouse is generally its size, but this also can become a negative factor,” says Volpi. “This is because the service charges of a building are calculated based on the total area. Therefore, service charges for penthouses would normally be much higher than an ordinary unit.
“In addition, due to the penthouse’s exclusivity, the price can sometimes become a negative factor as sellers tend to quote a very high price.”
Penthouse buyers are mainly end users who prefer to reside in unique, high-class residential settings. Rajiv Ghanekar, Associate Director of Fine and Country Real Estate, says the demand for penthouses among end users is higher than the available supply. Ghanekar mentions the following reasons for this:
• Supply shortage: Not all developments have penthouses since these units usually occupy the full floor space, with only up to two penthouse units on a floor. Developers would rather build up to eight one- and two-bedroom apartments, which can generate sales faster compared with penthouse units. Moreover, the overall status of the development, its quality, location, the market segment it appeals to, etc., should also justify having penthouses in a project or development.
• Personal taste and preferences: Penthouse buyers have unique tastes and preferences, and this means they would often want to see multiple units before they pick one, resulting in a higher demand.
• Self-actualisation or ego: This is a very strong motivational factor, especially with the unprecedented growth in the affluent class, as the nouveau riche look for a bigger property such as a penthouse.
• Global demand: Dubai’s status as an international hub with its packaged lifestyle solution for the expat community has attracted investors and end users from around the world, which is also driving the demand.
• Lifestyle needs: The increase in the number of people with large families and the proclivity of homeowners to entertain guests and friends at home has resulted in a strong demand for larger apartments such as penthouses.
With most penthouses purchased for self-occupation, it is extremely rare to find these units available for rent. Ghanekar says the demand on the rental side is not very high, because the rental rate is normally extremely high and a very limited number of penthouses actually enter the market. Moreover, he says a penthouse tenant usually ends up buying the property.
Although there is a relatively high demand for penthouses in Dubai, due to their limited niche audience, these units normally do not sell very fast. According to Ronnie Comfort, Managing Director of Hanson Estates, penthouses attract selective property buyers who pay a premium for the exclusivity.
A typical penthouse buyer therefore often demands a large footprint, spectacular views and many other perks.
“A penthouse in Dubai can be a shrewd investment, especially when you consider that prices in London can be as high as Dh800 million for the ultimate luxurious living space in Central London,” says Comfort. “This means there is real potential for growth in the Dubai penthouse market.”
Cost of penthouses
There are many areas in Dubai that offer penthouse properties. The prices of these units can be as low as Dh2 million, but could rise exponentially depending on the location.
“A buyer can find a penthouse property starting from Dh2 million,” says Comfort. “Communities such as Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay and Jumeirah Lakes Towers offer the highest concentration of penthouse properties.”