In last month’s blog (Branded residences: what are they and why are they so successful?) we explored the concept behind branded residential property and identified some of the key drivers for the success of the industry over the last 10 years. Here we look ahead, but first a reminder of the current landscape.
Hotelier brands dominate the market, representing 84 per cent of all developments. They are well positioned for success due to the number of brands at their disposal which can be deployed into a variety of different developments at very short notice. In addition, hotel branded residences are often (but not always) co-located with a hotel. The advantage of this is that there is already an operational capacity by association, with servicing, such as housekeeping and room service, already on hand.
By contrast, non-hotelier brands are generally still establishing their identities with regards to real estate. The primary advantages a non-hotelier brand provides are typically design driven. If a developer intends to have servicing associated with their non-hotelier branded residence, then a white-glove operator is often utilised to fulfil concierge, housekeeping and valet services. Given the design-driven nature of these schemes, brands within the luxury goods or luxury vehicle sectors have transitioned with a good deal of success into branded residential property.
A recent trend within the hotelier sector is the emergence of upper upscale (typically four or five-star) branded residential. Schemes were originally the domain of luxury hotel brands only. However, in the last five years, hotelier parent companies have expanded their branded residential portfolios to include brands that sit lower down the luxury chain scale. This process is one that we have been calling the ‘democratisation’ of branded residential property as the concept becomes more accessible to a broader purchasing base. This democratisation could well continue, both into lower chain scale brands in the hotel segment and into industry segments such as high street fashion and interior design.
Beyond the hotelier brands, the most prevalent sector is design led, accounting for 68 per cent of non-hotel developments. This is primarily down to the success of the YOO brand, which often partners with celebrated designers such as Philippe Starck, Jade Jagger and Kelly Hoppen. After design comes fashion followed by the automotive sector. Fashion and automotive brands align well with the branded residential concept as purchasers are buying into a lifestyle and this has led to success at developments branded by Armani, Bulgari, Porsche Design and Aston Martin, for example.
Looking to the future, there is arguably a market gap for brands that deliver lifestyles to consumers. Food and beverage brands are vastly underrepresented within the industry, although Nobu has broken ground and sold units very quickly at its scheme in Toronto.
The tech industry is not represented at all, and this is somewhat surprising. As real estate modernises, and smart homes become more accessible, tech companies could provide not only design elements, but hardware and software to make the home as functional as conceivably possible.
At this stage it is tough to say whether hotel or non-hotel brands are best poised for more growth. Certainly there are far more of the latter, and success is likely to create a domino effect. However, in the short term, the benefits of adding a residential element to a hotel development leaves the hotels in prime position for more growth, especially with dedicated resources to develop a branded residential product.
In the longer term, non-hotelier brands which have had success in the industry will mobilise the appropriate infrastructure to be able to develop large numbers of schemes and, given the numbers of brands available, could well grow beyond the hotelier sector in time.
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