BICCMS2018
BICCMS2018

 
Branded residences continue evolving across the world

 

Despite remaining concerns about respective legal frameworks and operation issues in some markets, branded residences continue evolving across the world, a fact that mostly stems from the win-win-win scenario that this dynamic sector offers its three key stakeholders. 

 

Therein, buyers get prestige from an established brand with unique lifestyle and quality assurance for their homes, developers enjoy the maximized profitability from diverse cash flows, while hotel operators are recognized for their brand values combined with operation and marketing efforts.


Branded residences, what is it?

 

Branded residences were originally residential developments linked to an adjacent hotel, pioneered by Sherry-Netherland Hotel on New York’s Fifth Avenue which opened in 1927, providing both guestrooms for rent and apartments for sales. Since the 1980's when Four Seasons Hotels & Resorts sold out its Boston hotel condominiums and Amanresorts International launched Amanpuri in Thailand, the branded residences market has expanded significantly with prevailing places in North America, the Middle East, Europe, and North Asia.

 


 

Today the provision of hotel services has become part of this concept as wealthy buyers demand developments designed with on-site restaurants, bars and leisure facilities, and a famous, "trusted" brand name associated with their properties. It is reported that Four Seasons and Ritz-Carlton currently dominate the global presence, followed by Kempinski, St. Regis and W Hotels, with an estimated tenfold increase in the number of hotels offering branded residences during the decade till 2012.

 

Branded residences - Overview of brands and segments

 

Branded residences are now adding a residential facet in both large metropolises where condo living is the norm and also reach out to regions where suburbia is a way of life. According to a recent research, about 35% of existing branded residences can be found within vacation spots in the forms of apartments, penthouses, townhouses and villas applying rental pool/timeshare programs, considered as “second homes” or “condotels” of owners. 

 

A majority of 65% are situated in metropolitan areas and include apartments and penthouses perched atop of mixed-use developments, which share some facilities with the hotel and are managed by the hotel operator. Such property is considered as “first homes” or “primary residences” of owners. This second concept has existed in the U.S, the Middle East, and Europe for quite a long time and is now slowly growing in emerging markets. Therein, especially Southeast Asia is witnessing a continuing urban-dominant trend on account of perceived “safe haven” investment credentials, driven by the economic growth and improved investment environment including reforms of foreign property ownership. Particularly in metropolises, branded residences capitalize on outstanding features namely prime location, iconic architecture, and cutting-edge interior design with unique furniture and equipment, five-star hotel services and facilities, top-notch safety and security, exclusive accommodation units with like-minded neighbours, and high liquidity of property values. 

 

 
Simultaneously, discerning customers with more traveling experience gradually realize that amenities like amazing spas at a deluxe hotel, proximity to the city’s top restaurants and high-end retail are hard to come by in non-hotel condo properties. Thus, branded residences attract a large number of local elites and wealthy international buyers, who are interested in premium lifestyle that reflects their social status. In addition, a branded residence in prime urban location will achieve a 20% - 30% higher trading price compared to the non-branded equivalent. In some specific markets and under prestigious brands, even 50% premiums over prevailing market values can be achieved.

 


 

Condotels mushrooming in Vietnam

 

Although Vietnam is a new comer in the branded residences market, some of its destinations like Danang, Nha Trang, and Phu Quoc are becoming major regional players in the second home market. In 2016, this market was estimated to reach 16,000 condotel units in supply, mainly coming from the Central region. In this fierce race, domestic developers provide buyers the committed rental revenue of 8% - 10% of the asset value during 5 - 10 years, more attractive than Southeast Asia’s average level of 5% - 7% during 3 - 5 years. Furthermore, buyers can join interesting timeshare programs in which they are guaranteed a good amount of vacation time each year at their properties or other residences in vacation clubs of international operators or developers’ portfolios. By that means, condotels satisfy both consumers’ desire for accommodation units with hotel-quality perks and associated investment potentials.

 

 

On the contrary, the new market segment of branded residences has been almost underdeveloped in Vietnam’s cities where upscale residential projects by domestic developers are dominating the niche market. The projects that are under construction or about to be developed range from 100 units up to 1,500 units with respective prices between US$3,500/sqm and US$6,000/sqm, depending on location and associated fit-out. Such properties are built with synchronous infrastructure including supermarkets, pools, parks, kindergartens, etc., offering their residents, who are mainly high-income intellectuals, businessmen or expatriates, a high-quality living environment fulfilled with utilities and privacy. 

 

Under the circumstances, the number of expatriates living and working in Vietnam reached 320,000 in 2016,and may continue rising by 2017, which is expected to boost the demand for owning property by expatriates in Vietnam during the coming years. This favourable condition in combination with the growing high-income class in Vietnam’s society should bring fruitful seasons for trusted developers who can provide quality products managed by prestigious international operators, despite legal constraints related to title deeds that haven’t been officially approved by the government.

 

The prospect for 2018

 


 

There’s no denying that branded residences will become more widely accepted as the economy gains momentum, and people are realizing that being on both vacation and business deals even when you’re at home is an amazing way of lifestyle and investment. In Southeast Asia generally and Vietnam particularly which are highlighted as testing grounds for leading iterations of the branded residences concept with regards to scale, business models and level of servicing amenities, more and more people travel abroad and experience their vacations in properties abroad which are operated according to international standards. This means that many buyers with higher requirements will stimulate the growth of the branded residences market in Vietnam. This motivation from customers brings more diverse options of products and services, and increases overall market standards. 

 

In terms of the branded residences market itself, together with the global shift from resort properties towards urban mixed-use developments, Vietnam may witness more standalone branded residences during 2018, mostly in a vibrant urban environment. Amid the deeper and broader competition between operators in all tiers, developers in this country will focus less on tangible elements and more on emotional ones with additional wellbeing and healing facilities. This in turn, may gradually change their buyers’ current lifestyle to live in their own homes surrounded by hotel-like services.

 

Content: Rubix Navigation
Photo: Internet
Design: Rubix Navigation
By Reno Mueller
August 08, 2018