A Close Look at the “Branded Residence” Trend In Thai Real Estate
Ever wondered whether a fancy condo project with a hotel chain’s name was really a condo? Or was it actually a hotel? Even more confusing, we see housing projects named after high-end fashion brands, leading automotive brands, even using the names of famous architects and designers trailed by the word “Residence.” What do these projects have to do with those brands?
Such projects are called “branded residences,” and exemplify a powerful trend catching the attention of real estate communities worldwide: a growing business model in which developers participate with leading brands in response to lifestyles in the “High Net Worth Individuals (HNWI)” customer group.
Outside of countries such as the USA, where the concept originated, Thailand was, surprisingly, the first country where prominent hotel chains began to seriously expand business into the real estate market with “hotel-branded residences.” To this day, statistically Thailand ranks as the 3rd most important branded residence market in the world.
What is a “branded residence?”
The branded residence concept traces back to one of the flourishing periods of prosperity in the USA with the auspicious 1927 opening of the Sherry-Netherland apartments in New York, the world’s first apartments serviced by a hotel chain.
The concept took off with a boom in the 1980s: in Boston, the Four Seasons Group debuted a condo right next to one of its own hotels. This was followed by the Aman Group, which in 1988 penetrated the market in far-off Phuket, Thailand with the first resort-branded residence, under Amanpuri name.
Responding to increasing HNWI customer demand for lifestyles even more luxurious and exotic than 5-star hotels, famous product brands in various categories – big names in fashion, vehicles, and “starchitect” artists and designers were brought in to play roles and stamp their own brands on new residence projects.
The definition of “branded residence” today has clearly changed from the time it originated. Once representing only a living space managed and serviced by a luxury hotel chain, it has come to mean a place of residence with value both as real estate and in offering psychological/spiritual benefits similar to art collections or “limited edition” works from acclaimed artists or brands.
Branded residences classified by type:
The following references are drawn from the Savills Branded Residences Report 2018, which divides branded residences into 2 primary groups:
1. Hotel Branded Residence
These are residential projects such as condominiums or villas managed by and offering exceptional services from hotel groups that own the brands. They may be either stand-alone units in a hotel building or located in another zone within the same property. Some such projects may offer additional investor services, such as legally sanctioned leasing and daily rental management in the usual way of hotels. Here the person with ownership rights may receive rental income as well as rights to stay in projects in the hotel brand’s network, and other services. In 2018 the hotel group with the largest proportion of branded residences was Marriott International, which owns the Ritz-Carlton, St. Regis, and Sheraton brands, among others.
2. Non-Hotel Branded Residence
These are branded residences not directly controlled by hotel groups, though some may utilize the services of hotels or hospitality companies. They include a large number of brands representing a variety of industries, such as- - Automotive groups. Aston Martin Residences, for instance, offers posh condos conveying the swank and elegance of a more-than-100-year-old British luxury car brand. Add Tonino Lamborghini Residences Dubai, inspired by colors and sleek lines of Lamborghini luxury sport cars.
- - Fashion, jewelry, and luxury industry groups such as Armani, designer of Residences By Armani Casa in Miami, with the identity of an eminent French crystal glassware brand represented by Baccarat Hotels & Residences.
- - World-renowned designers and firms such as famed architect Daniel Libeskind, designer of the luxurious Verve Villa in Germany, and Philippe Starck with YOO Studio, owner of the YOO Residence brand, which has done acclaimed work in 36 countries around the world. YOO is considered a top-drawer major brand among non-hotel branded residence groups, listed in 2018 with 52 projects.
Why branded residences?
As noted, branded residences began in the 1920s, a period of great prosperity in the USA, and naturally reflected lifestyles of the nouveau riche, newly wealthy people as they shifted from spending only for basic necessities of life to seeking more spiritual and esthetic value from life. This became a continuing trend.
The economic situation may have deteriorated somewhat since, but data in Knight Frank’s The Wealth Report 2019 suggests that the number of the very richest people – the UHNWI (Ultra High Net Worth Individual) population – will increase by 22% in the next 5 years. Besides this, by 2023 the number of people with assets reaching 30 million USD will increase by more than 43,000.
In Thailand the extremely wealthy HNWI group is a small fraction of the national population, but holds as much as 67.6% of the country’s wealth, more than half the 2018 GDP. (Data from SCB Julius Baer Wealth Report Thailand 2019)
Consequently, various capital groups are seeking out new services or products to offer in response to the lifestyle needs of these groups. In this connection, the strongly trending branded residence trend in real estate is especially useful to the following groups:
1. Brand owners who get benefits from selling rights and brand promotion, including expanding the customer base into other circles
2. Project developers, who get benefits from higher project valuation brought by famous brand names, and benefit from customer loyalty towards those brands
3. Project customers, who are confident of a project’s quality and service. A branded residence has a naturally higher value than an ordinary project, adding to both psychological and monetary return on investment.
Where Are the Branded Residences?
According to Savills 2019 Branded Residences Report, branded residence projects are currently found in 420 locations, with 65,000 units worldwide.
The city with the most finished and future projects is Dubai, surpassing New York, the previous year’s champ. Miami remains in third place.
Phuket brings up 4th place, with 16 branded residences, closely followed by 5th place Bangkok, with 12 completed and 2 more in the works for a total of 14, as Thailand catches top honors among Asia-Pacific countries in the branded residence market.
3 hot brands to keep an eye on in Thailand:
The big three brands, with the largest proportion of completed and future Thai projects, are led by YOO non-hotel branded residences, which has the largest number of projects in the Asia-Pacific, Europe, and Latin America regions.
Following in order are the two hotel brands Four Seasons and Banyan Tree Residences. All three brands have made a comfortable expansion into Thailand.
Four Seasons and Banyan Tree Residences are familiar names, so Thailand’s long association with hotel-branded residences should not be surprising.
The non-hotel-branded residence concept and the YOO brand are, on the other hand, fairly new to the Thai real estate market.
However, YOO has recently debuted a full-service project called “KHUN by YOO,” a luxury condo in the heart of Thong Lo, one of the Sansiri Luxury Collection From Sansiri and BTS Group Holdings.
A YOO first in Thailand: the “KHUN By YOO” Project.
The first design-branded residence of Sansiri and BTS Group Holdings, Pcl., and the first location in Thailand featuring a Yoo Studio codesign, is named “KHUN by YOO inspired by Starck.” This is one of 36 Philippe Starck productions designed under an “industrial heritage” concept.
Yoo Studio’s furniture selection and ornamentation helps harmonize the interior décor in the luxurious common areas with the characteristically playful touch of Philippe Starck. From the greeting hall chandelier, through each book carefully placed in the reading lounge, to the scent of fragrant candles used in various facilities, the atmosphere is reminiscent of an art gallery replete with famous designer collections and luxury furniture from every corner of the globe.
The resulting creation answers the needs of luxury-oriented customers as well as art enthusiasts. It makes a suitable “passion investment” and guarantees fame for the YOO brand, which is known for adding as much as 30% to property value.
