The Rise of Branded Residences: not just luxury

| Riccardo Del Bello | News & Lifestyle

It’s not just serviced accommodations that have become more and more popular these last few years. There is another niche that has been developing fast, mainly in big metropolises. I’m talking about Branded Residences.

This started and still is mainly a luxury segment of the market. The vast majority of names involved in it are high-end hoteliers and an increasing number of luxury brands from other industries such as fashion, design, and automotive. This is an extremely interesting development, but it doesn’t stop here, because lately, names from lower segments have been approaching these developments too.

According to real estate consultant Savills over the past decade, this space has by over 170%. Reaching 52,000 units in over 370 schemes. Even more surprising is to note that 2020 has not affected this market significantly, and with over 100 new developments the year just ended reached a new record growth. This, of course, could be partially down to the luxury-oriented nature of the projects, as the top-end segments generally suffered less from the pandemic impact.

But first, how does it work exactly?

Branded residence

Usually, these projects are developed for both long and short stays if clients don’t buy the property. Hotel marques use structures adjacent to the ‘regular’ structure. As for non-hotel brands, they usually get involved in the project through a licensing agreement with a developer for the use of the name, design features, and other project-specific characteristics that might be exclusive of a specific development. And this is an important factor. Because at the top of the market the competition is getting tough. Especially now that the majority of the offer is concentrated in a few cities

map

So, managers and developers have to constantly come up with new and innovative ideas to lure in clients making their schemes more appealing than others. The association with fashionable brands is naturally an additional strength. That, of course, is until the name remains so. If for instance, the licensed company name happened to decline, that would actually turn into a serious liability.

Overall, the residence is served as a hotel, with pretty much every service, amenity, and facilities imaginable, such as mail and package delivery, restaurants, spa, golf courts, salon, 24/7 security, cinemas, art galleries, meditation rooms, shops, night clubs, and loyalty programs. Additionally, they offer a range of on-demand services such as housekeeping, childcare, laundry, in-home dining, personal shopping, personal trainer, spa treatments, pet services, meeting room services/office equipment, and other Concierge services.

Above that, as someone says, the sky is the limit.

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*Aston Martin Residences, Miami. Source: Aston Martin Residences

 

Naturally, none of this comes cheap. Prices vary from $1 million to a few, up to $50 million, for the most expensive seen so far, in the Aston Martin building.

As for the actual companies involved here in the graph below are the biggest hoteliers ranked from the ones with most projects to the least:

graph brands*Source: Savills

 

These and others not included here account for around 84% of the whole market. So, while they are the majority, there is another consistent share. The non-hotel brands venturing in this segment are extremely varied. Even personalities give their names for these developments. Here are some: Pininfarina, LightArt, Greg Norman, Bulgari, Armani Casa, Aston Martin, Bugatti, Porsche, Roberto Cavalli, Kelly Hoppen, Jade Jagger, Pharrell Williams, Fendi, Mercedes, Bentley, Gianfranco Ferré, Tonino Lamborghini, Swarovski, Nobu, Missoni, Diesel, Baccarat. 

Not Just Luxury

Even with luxury brands dominating, this fast-developing sector represents an important opportunity for lower segments too. Down to upscale and midscale brands account for 20% of the completed projects and over 30% of the pipeline.

Part of these is actually developed by luxury brands too, which for a lower segment use a different brand name.

The US is again the largest market, but like for the luxury segment, the Asia-Pacific region has extreme growth potential with lots of investments.

phuket mgallery2 0*Accor's MGallery Residences Montazure, Phuket. Source: MGallery

As this kind of scheme becomes more popular, it could offer lots of opportunities for both developers and owners, regardless of its positioning in the luxury segment or lower ones.

Top-end marques grant residents and buyers an experience that is on par with the brand and others can’t offer, characterised by unique and exclusive services. Non-luxury brands on the other hand, through specific values, might inspire an audience that relates with them and promote a lifestyle that can bring a community closer together resulting in increased brand loyalty. Much like it happens for Co-Living schemes but with the additional power of an established brand giving a direction to the project.

 

*Article Cover by Accor's MGallery Residences Montazure, Phuket. Source: MGallery


Riccardo Del Bello

Written by: Riccardo Del Bello

Riccardo is the marketing manager and partner of A Designer at Heart. He is in charge of the development and brand definition of the company for its marketing activities.

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