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Spotlight: Branded Residences – 2019

Global expansion of the branded residences sector continues as more brands participate


Foreword

The branded residence sector reached new heights in 2019. A record number of schemes opened, delivering more than 9,000 additional branded units across 21 countries. This record is set to be broken again in 2020 when nearly 70 schemes are due to complete.

Branded residences offer many advantages in a crowded global marketplace for luxury property. Globally mobile, brand-conscious, wealthy individuals are attracted by quality design, security and the level of service branded residences offer. For hotel operators, adding a residential component can improve income streams with royalty fees from sales in the early stages and a more diversified hospitality inventory, while also allowing them to be more competitive when pitching for new projects. Developers, meanwhile, have come to recognise the value-add of a brand in a competitive global marketplace.

Significant opportunity remains. Branding a residential development lends a point of difference that will become ever more important in challenging market conditions. We have identified a number of city markets in Europe and the Middle East that offer potential, where wealth is forecast to rise, but there is little or no branded supply.

Last year, we predicted that new lifestyle, non-hotel brands, outside the realm of what has been seen to date, would enter the sector. Our prediction has played out: media company Condé Nast has plans to move into the branded residence sector. This, together with rapidly rising participation by hoteliers including Hyatt, Hilton and Accor underscores the depth of the sector’s potential in the years to come.

Raffles, Old War Office, London

Raffles, Old War Office, London

Summary

  • The number of branded schemes has grown by 198% in the last decade. Over 65 projects will open by the end of 2019. Nearly 70 are due to open in 2020.

  • Growth is being driven by the hoteliers. Hotel-branded residences account for 85% of completed schemes, but 96% of pipeline projects.

  • North America, the birthplace of branded residences, is home to 39% of operating schemes, but only 19% of the global pipeline. Asia Pacific, Europe, MENA and Latin America are adding more projects as the sector globalises.

  • New York is set to be toppled by Dubai as the global branded residence capital by the end of the year.

  • The range of brands is diversifying. Luxury hotel brands dominate, but the share of ‘Upper Upscale’ brands is set to grow, now accounting for 22% of the pipeline.

  • Savills analysis shows the average premium for branded residences over non-branded product stands at 35%, and can exceed 70% in emerging markets.

*Figures have been updated to exclude fractional ownership projects

Read the articles within Spotlight: Branded Residences below.

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