Branded Residences. The trend is your friend or is it? 

In recent times, the fascination and excitement surrounding branded residences have led to this particular sector experiencing rapid growth within the luxury real estate industry. Within this article, we will delve into the advantages and potential warning signs to be mindful of, whether you are a buyer or a property developer.

The current trend of branded residences brings to mind the early days of the internet, when everyone seemed to become an expert in web design. Similarly, it appears that everyone now claims to be a specialist in branded residences.

First and foremost, we must emphasise that we strongly support brand residences. In fact, we have dedicated an entire platform to promote this sector. 

What are Branded Residences?

Generally speaking, the benefits of brand residences far outweigh any drawbacks. They can provide significant advantages to property buyers, developers, and brand partners. Some articles even describe them as a “win-win-win” situation.

Branded residences are essentially formed through a contractual partnership between a residential developer and either a hotel operator or a non-hotel brand. Additionally, the brand offers interior design and technical services, along with managing a range of lifestyle-oriented amenities and services like concierge, valet parking, pools, gyms, and various wellness facilities.

Branded residences offer a luxurious, high-end property that comes with the added value of a well-known brand. For buyers looking to invest, these residences offer a hassle-free, professionally managed option. 

They also have the potential for higher rental income compared to non-branded properties, thanks to the additional perks of hotel services and management. 

Whether it’s for personal use or investment purposes, branded residences provide buyers with a sense of security in terms of quality finishes, services, and amenities.

Branded Residences A Buyers Perspective

It is crucial to recognise that branded residences vary in complexity and are not all identical. To navigate this complexity, it is advisable for buyers to engage directly with the developer or a master agent exclusively appointed by the developer. 

There are several key considerations that buyers should address before committing to a purchase. Engaging directly with the developer can provide buyers with a better chance of obtaining answers to these critical questions. 

These considerations may involve:

– Whether the project is managed by the hotel or brand

– The nature of the branded contract (management agreement or franchised license agreement)

– Duration of the brand agreement

– Access to exclusive owner facilities

– Shared facilities between property owners and hotel guests

– Management of individual properties (by the branding partner or through a HOA/Juristic)

– Existence of rental pools

– Implications on property name and status upon expiration of the license agreement

– Responsibility for maintenance of facilities and communal grounds, particularly in mixed residential and hotel developments

– Allocation of maintenance costs

– Oversight of these costs

These are just a few examples of issues that we recommend clarifying during your due diligence process, as they may differ depending on the region.

While we do not discourage the use of property agents, engaging directly with the developer could potentially offer benefits in gaining a comprehensive understanding of the project.

Branded Residences. A Developer’s Perspective

Earlier in this analysis, we previously mentioned that branded residences pose a challenge for property purchasers and developers alike.

We will delve deeper into the essential considerations for developers in a future more detailed article.

However, it is strongly advised that developers seek unbiased guidance from reputable branded residence consultancies.

The rising popularity of branded residences has led to an increase in self-proclaimed “specialists” in the field.

Developing a branded residential project requires careful planning, as success, quick sales, and high ROI are not guaranteed solely based on the branding.

Numerous factors must be taken into consideration, making collaboration with an independent company crucial.

A proficient specialist should be able to provide guidance on various aspects of development planning, such as Market & Feasibility Studies, Brand/Operator Selection, Due Diligence, Marketing Advice, Owner Representation, and Contract Negotiation.

There are notable experts in this field, including Riyan Itani, formerly of Savills and now director and founder of Global Branded Residences. Riyan and his team at GBR have worked on numerous projects and boast an impressive portfolio of clients.

Jason Payne director of BR Asia has worked in the sector since 2011 and was responsible for developing the sector very early on in Thailand and SE Asia.

Knight Frank and Savills have specialists and international departments dedicated exclusively to the sector.

While there are other competent companies and individuals in the industry, the aforementioned experts come highly recommended.

In conclusion, branded residences are an increasingly exciting addition to the real estate market, offering great rewards for all parties involved when thorough due diligence is conducted by buyers and diligent planning and execution are carried out by developers and consultants.

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