What are Branded Residences, and Why People Buy Them?

In 2021, branded residences stood out as the global real estate trend of the year. Additionally, the hype shows no signs of letting down and could well continue to dominate in 2022, as more luxury real estate buyers turn to this type of property purchase. According to Savills, 400 branded schemes operate worldwide and combined; they feature more than 55,000 units.

Prominent countries featuring the branded property schemes include the USA, UAE, Mexico, Indonesia, and China. Out of the 40 major hotel operators, Marriot International takes up a significant market share with a staggering 31%. Non hotel brands like YOO are also getting into the action. So, let us look at what they are, whom they appeal to, and the reasons why investors snap them up.

All about Branded Residences

The key as to what this type of real estate purchase is, in the name. Brands matter, especially these days in an age where the internet on our mobile phones instantly shows us leading trends. Typically, developers team up with branded hotel names to offer brand-conscious buyers the best service, décor, experiences, security, and design. It is a win-win business model for everyone.

why do people buy brand residences

Developers get to use a branded name, the brands themselves have the developers to build properties for them, and buyers get the ultimate in residential living. Most branded developments centre themselves in tourist resorts or major cities and often offer guaranteed rental returns. However, Savills says that despite growing popularity, there is still much potential in the market to go mainstream. They also reckon more brands will jump onto the branded concept.

Benefits of Branded Residences for Hotels

  • Instant relationships with customers
  • Additional income streams from management fees and licensing

Benefits for Buyers

  • Hassle-free ownership
  • Quality living with top quality services and amenities
  • Professional management of the home
  • Potential guaranteed rental income
  • Loyalty programs give discounted stays across the hotels’ network

Benefits for the Developer

  • Buyer confidence because of brand association
  • Premiums prices for developers
  • Higher visibility of the project
  • Consistency across the board
  • Access to the hotel’s customers

what is a branded residence

Buyer Profile

Average buyers of branded residences are HNWI, which stands for high-net-worth individuals. Profiles show a net worth of roughly 1 million USD. The branded concept appeals to them because they are generally cashed rich but time-poor; therefore, the advantages of having someone manage and run their home and the luxury branded experiences and services make this a good buy and worthy investment.

The Luxury Model

Most branded residences operate on a luxury model, with owners required to buy the standard fixtures and furniture package to enter their home into the rental scheme. Additionally, the hotel services offered instantly make this a luxury standard of living, and they can also purchase extras such as housekeeping or on-site chef.

As with any residential ownership on large complexes, owners pay an annual fee for the upkeep of communal areas and fixtures. The only time this has proven a downside is when the hotel brand charges exceptionally high prices. However, this type of home is a mark of success and a trophy for many branded buyers.

developer and hotel concept

Typical Services and Amenities offered by Branded hotels

  • 24-hour security
  • Valet services
  • Concierge, reception, housekeeping
  • On-site dining
  • Entertainment, travel, and golf reservations
  • Personal trainer
  • On-site spa and wellness facilities
  • Childcare and pet services
  • Indoor and outdoor swimming pool

The Future of Branded Residences

As mentioned before, this type of real estate purchase shows no signs of slowing down, and the potential geographical spread could boost its popularity even more. Currently, constructions are happening in the Middle East, Latin America, Europe, Asia, and Africa, but the UAE, China, Israel, and Qatar also promise growth.

Other brands like travel, car, food, and fashion are also jumping on board to take advantage of the brand concept and install buyer confidence when it comes to real estate. Many industry experts also suspect that as buyers seek a more bespoke service, the brands will turn to boutique living rather than out of the box branded residences.

Also, Read

Overseas Property Investors Guide: Many people look to being overseas property investors to diversify their real estate portfolios. And why not? Looking abroad means tapping into hundreds of new markets and much potential. However, this is not the time to be diving straight in at the deep end. Instead, this article talks about careful research and homework to ensure any future investment property pays off and does not become a money pit, especially if you plan to rent it.

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