The branded residences sector is thriving, with a predicted growth rate of 55% between now and 2026, according to a report by Knight Frank. Branded property refers to a partnership between a brand and a developer that results in residences being sold to buyers. Examples include schemes by hotel groups such as The Four Seasons, Aman, and the Ritz-Carlton.
These residences are often in desirable locations, designed by star architects, and aimed at wealthy individuals. The US is the largest market for branded residences, but other countries such as Mexico, the UAE, Thailand, the UK, and China are also significant players.
What is Branded Property?
- Branded property is when a known brand collaborates with a developer to create residences.
- Examples: Hotel brands like The Four Seasons, Aman, and Ritz-Carlton offering homes adjacent to their hotels.
- Think of it as buying a home that’s backed by a brand you trust, like wearing branded clothes or driving branded cars. It’s not just about the home, but also the prestige and assurance that comes with the brand.
Market Growth & Locations
- The branded residences sector is booming! It’s predicted to grow by 55% by 2026.
- Top markets: US, followed by Mexico, UAE, Thailand, UK, and China.
Why are People Buying Them?
- Trust: Branded properties provide assurance. If you’re buying internationally, this reduces the risk and uncertainty.
- Easy Renting: Homes with known brands are often more appealing to tenants.
- Turnkey Luxury: The house is designed, furnished, and maintained to the high standards of the hospitality brand.
- Status Symbol: Some people are as attracted to the brand prestige as they are to the property. It’s like owning luxury items – they’re a statement.
Examples & Evolution
- One of the UK’s first branded properties: One Hyde Park. It offered Mandarin Oriental hotel services. A penthouse there sold even before launch for a whopping £140mn in 2010!
- This branding concept isn’t just for luxury. Big brands like Ikea, John Lewis, and Tesco are entering the property world.
The Future & Potential Concerns
- Developers and brands love this because people are willing to pay more for branded homes.
- However, a point to ponder: What happens if the brand agreement ends before your lease? You might end up with a rebranded property that doesn’t align with your preferences.
- Hotspots for branded residences? Asia and the US are ahead, but Europe is catching up. Vietnam is on the rise, but all eyes are on Saudi Arabia as the next big market.
Ultimately, the appeal of luxury lifestyle brands is an important aspect of the modern world, although it may be seen as shallow by some. While branded residences may not appeal to everyone’s taste, there is a substantial market of individuals who are attracted to the lifestyle and aesthetic value associated with these brands.
Branded residences offer an interesting investment opportunity, blending the trust and luxury of big names with the tangibility of property. They’re growing in popularity, and even mass-market brands are getting in on the action. However, keep an eye on the fine print and consider whether the brand’s lifestyle aligns with your investment goals.
So, if you’re looking for an investment that comes with a side of glamour and convenience, branded residences could be your ticket. Just be aware of the potential pitfalls and make sure it aligns with your long-term plans.