Urban Branded Residences are typically a residential product that offers hotel-like facilities and services for the residents. They are typically associated with a third-party brand, which could be hotel brands such as Ritz Carlton or Mandarin Oriental but also non-hotel brands such as Porsche or Aston Martin.
It is reported that there are more than 400 residential brands globally of which 85% of schemes are hotel brands. They all offer a superior set of facilities and services compared to the more classical residences. Based on our studies, globally almost 74% of the branded residences are located in urban locations, whilst in Vietnam, the vast majority of mixed-use residential and hospitality products are located in coastal areas and are defined as Condotels.
Miami is home to more non-hotel branded residences than any other city
However, we need to distinguish what is Branded Residences and Condotels. Branded residences are proper apartments/homes being associated, designed or managed by a well-known international brand, often these residences are part of a mixed use development that includes a hotel managed by the same brand. Proper management under an established brand can give residences a premium in sales prices and offer buyers the value add of international standard services. Condotels are mostly purpose built hotels or small units for sale, managed by the developers themselves. Pure condotel projects need to be analysed careful by both investors and buyers as often the focus is on generating unit sales, rather than the long term viability and operating forecasts of the property once built and opened. At the upscale and higher segments of the market a hotel with additional and separated branded residences often makes more sense to develop than a condotel.
Urban Branded Residences usually have a different target client compared to the Condotels. They are proposed as lifestyle products, and are usually less attractive for rental yield but focus on a longer term value proposition and capital gain. Vietnam compared to other countries is currently offering considerably higher guaranteed returns which, in certain cases will be challenging to deliver if only unit rental revenue is relied upon. We strongly advise developers to conceptualise products that deliver quality and long-term value to the buyers instead of short term rental gain.
We believe there is tremendous opportunity for Developers to embrace this concept and apply it in urban cities as competition in the residential sector will be fiercer and buyers increasingly demand for alternative products. Branded Residences are attractive through offering the value add of a brand and enhancing experiences for the home owners. The engagement of a brand ensures the quality of design, security and high levels of services. According to Mr Andrew Pang from Yoo, “We believe creative and unique design can add significant value to all aspects of a Branded Residence project. Yoo’s aim is try to improve the quality of people’s lives through design, whether it is a residence or a hotel room. Design is a platform which can heighten the sense of enjoyment of residence owners as well as hotels guests.”
Branded Residence is a good development concept in emerging markets with immature residential property sectors through offering more competitive products. However, it requires a thorough understanding of the concept and structure of the involved parties.
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