The global market for luxury residential schemes linked to high end brands has taken off dramatically, with growth of 170 per cent in the last decade. In this short series of blogs we look at the themes and trends that are shaping this expansion, offer tips for developers and answer some of the most frequently asked questions by our clients.
To start with the basics, a branded residence is a for-sale residential property that is attached, usually by design and/or servicing, to a brand.
Traditionally, hotel brands were the popular choice for schemes as the amenities and services of a co-located hotel could be utilised by the residential component of the development.
Increasingly, we are seeing luxury goods and design brands contributing to the design of a scheme and, should the scheme require servicing, a white brand operator brought in to provide those elements.
Why have branded residences become so successful? Put simply, the concept allows all three parties involved in the development of a property to increase their beneficial interests.
Developers
- Are able to sell units at either higher prices or at a higher velocity – sometimes both
- Gain a USP over competitor developments within the market
- Benefit from the design expertise, experience and loyal customer base of an established brand
- Comply with zoning laws, for example, if a mixed-use scheme is required
- Establish cash flow throughout the stabilisation period of the hotel leading to a significantly de-risked development in most cases (if the development is hotel led).
Brands
- Grow their global reach by establishing more brand flags
- Receive licensing fees from the developer
- Can supplement their hotel inventory with residences
- Deepen relationships with their customer base, creating a truly immersive brand experience and lifestyle.
Owners
- Have a managed property with convenient lock-up-and-leave potential
- Can lease-back their unit to the hotel inventory as an investment – without the hassle of property management
- Are guaranteed a high-quality fit out in alignment with brand standards
- Often join the top tier of a hotelier’s rewards programme
- Benefit from best-in-class servicing and facilities
- Gain the prestige associated with the extra design skills, the brand alliance, the amenity provision and the a la carte services.
This win-win-win situation has been the driving factor in the rapid rise of the industry, which continues to grow at pace. More and more brands are now entering the market – up from 60 in 2010 to 120 last year.
Next month we will make some predictions for the future of the branded market – which brand segments to look out for, the democratisation of the branded concept and whether hotelier or non-hotelier branded residential is likely to grow more.
- Pictured top: W Algarve Residences, Albufeira, Portugal.
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