Branded Residences Report - Knight Frank
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Branded Residences Report 2019
1
Branded
Residences
Report
2019
Global Sales Focus
Cover: One Barangaroo, Crown Residences
Branded Residences Report 2019 Branded Residences Report 2019
2 3
GLOBAL BRANDED
RESIDENCES What defines a branded residence?
As branded residences proliferate, from the Caribbean to China, a growing number of developers, hotel The traditional branded concept is a hotel- offered more flexibly across varying markets
groups and investors are looking to capitalise on this opportunity. But just what are branded residences, led development with integrated or linked and locations and now manifests itself in “Our research shows that there
what underpins their appeal, and what is driving the rapid expansion and diversification of this sector?
residences. They naturally benefit from many ways globally, which fall into five broad are now over 400 branded
the hotel brand (quality), management categories, as demonstrated below.
(smooth running) and services (luxury). In While every scheme is different, one residences across the globe,
essence, this gives the owner the comfort could argue that the impact of the branded the majority of which are hotel
and permanence of a home but with the full concept is diluted the more it moves away
benefits and luxury of a five-star hotel. from the original hotel-driven traditional branded”
The evolution of branded residences This concept has diversified so that it can be model.
he first true branded residence, residential projects in nine countries. It is no coincidence that we are seeing such
T the Sherry-Netherland hotel in
Manhattan, opened its doors in
The birth of the branded concept can be
traced back to the prolonged economic
a renewed interest in the branded concept
given the rapid growth in global wealth
1927. More than 90 years on, the sector has boom of the 1920’s in America. Indeed, witnessed since 2000. Knight Frank’s Wealth
grown enormously and is now to be found in across the years, there is a direct correlation Report highlights that the global ultra-wealthy
over 60 countries across the globe. between wealth creation and demand for population ($50m+ in net assets), grew by
Typographies
Our research shows that there are now branded residences. 18% in the five years up to 2017 and is forecast
over 400 branded residences across the Much of the sector’s expansion has to increase a further 40% over the next five.
globe, the majority of which are hotel occurred in more recent decades. “The With the branded concept well established
branded. Growth in the sector shows market did not really take-off until the by hotel operators, the number and types
little sign of abating: “Marriott alone mid-1980s when Four Seasons opened of operators entering the space is now
has more than 60 branded residential condos next to their hotel in Boston. That expanding and diversifying. Brands such as
projects in the pipeline,” says Daniel von really demonstrated the success of the Versace, Armani and Porsche have all lent Hotel led developments Luxury resorts with Residential led Residential developments Residential developments
Barloewen, Regional Senior Director for model,” says Chris Graham, an expert on their names to developments in recent years. with integrated residences used as developments with hotel with hotel management with remote hotel tie in
Mixed-Use development for Europe at the sector. The Aman hotel group launched In this report, we look at the different types of residences holiday lets adjacent
Marriott International. In 2018 and 2019 the concept in a resort setting in 1988, with branded residence, the rationale behind the
alone, Marriott plans to open 19 branded Amanpuri in Phuket, Thailand. concept, global exemplars and future trends.
Timeline of the branded residence
1927 1985 1988 2011 2000-2018
Sherry-Netherland Four Seasons opens its Aman launches the The Residences at Rapid expansion to over
hotel opens in New York first branded private first resort branded Mandarin Oriental, 400 projects by 2018
marking the birth of the residences in Boston residence with London were completed
concept Amanpuri in Phuket, setting a new world
Thailand benchmark for luxury
Above: Mayfair Park
branded residences Top left: The Royal Atlantis Left: Amari Phuket
Residences, managed by the
Resort and Residences, Dubai Residence, Phuket
Dorchester Collection
Branded Residences Report 2019 Branded Residences Report 2019
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VALUE DRIVERS AND
PRICE PREMIUMS
Supply and Demand Value Drivers
In order to understand the value drivers of branded residences, below we examine the key
motivators from both providers (supply) and purchasers (demand). One Barangaroo, Crown Residences
Supply Side Demand Side
Hotel development cash flow Risk mitigation Value premium of brand Planning benefits Developer quality covenant Service provision and physical amenities Building maintenance and managment
The ability to sell residences Residences can help off-set “Brand involvement can increase The addition of residential “When buyers see marketing for a Ritz-Carlton, “Residents’ services offer the individuals the James Price, vice president of residential at
off-plan and receive significant cyclical and seasonal variations, as project visibility and enhance apartments can be politically St Regis, EDITION or Marriott residence, opportunity to preserve their most precious Four Seasons, adds it is the “management
capital payments upon practical well as extraordinary events that values for residential developers. favourable where the delivery of they know that they’re going to get a quality commodity - time,” says Todd Nisbet, Crown services and guaranteed building maintenance
completion, assist with both pose a risk to any hotel business, This can be something of an apartments into a market product,” says Daniel von Barloewen. Resorts. As individuals increasingly become which also enhances value.” Nisbet adds that
development and operational both in terms of occupation and insurance policy,” says James is a priority. global citizens with diverse business interests, hospitality brands are “always re-investing and
cash flow as hotels will naturally additional service take up. Snelgar, director of global business time is becoming a rare commodity. With a full maintaining their brand.”
take time to operate at optimal development at YOO. hospitality offering, individuals know that the
occupancy rate. day-to-day necessities are taken care of,
be it housekeeping, concierge facilities,
or room service.”
Product diversification and Market differentiation Residential identity Value/Cost benefit Lock up and leave option Holiday rental/Investment yield potential Kudos
brand enhancement In mature or saturated markets, /critical mass On a per square foot capital value Global buyers are prepared to pay a premium “Often there’s a rental pool, which means When all is said and done, people will always
“For a hotel operator, residences or where developers are looking A new hotel can significantly basis, residential accommodation where they know their property is safe, owners can offset their maintenance costs. value a badge that is universally respected and
can be a new theatre for the brand; to set new price records, branding enhance areas with limited can drive a higher value than maintained and serviced in their absence. This Now, 60-80% of buyers put their property in that reflects well upon them.
a way to deepen the relationship and service can therefore be a key residential identity or services. hotel accommodation. There ranges from technical maintenance to having the rental pool, which is double what it might
with the consumers,” explains differential. The sales appeal of a residential could also be cost savings through fresh flowers upon arrival. have been 10 years ago,” says Muriel Muirden
Piers Schmidt, a luxury brand scheme in a commercial area, but greater efficiencies across gross/ of WATG. According to Price, the rental
consultant and commentator at with a trophy hotel attached, is far net area ratios and specification programmes tend to be a bigger driver in resort
The Luxury Branding. stronger. requirements. locations as those buying in cities tend to use
them more regularly.
Does this mean that having a brand results in a price premium?
hile a brand that market. In other markets in Dubai that commanded variation on price differentials Erin van Tuil, Partner at product is where the market location as a comparable non-
W association may there will be price ceilings,” significant premiums for between different global Knight Frank notes that will sit.” branded, with the same exterior
result in a premium says Price. “A variety of factors the developer over luxury, locations and also different “while the branded concept However, assessing a price and interior design.
in any region, the additional can drive price premiums,” residential product in those locations within cities. in the Sydney market is still differential is extremely difficult A deep understanding of
value varies substantially from adds von Barloewen. “Marriott markets.” The data shows that the price embryonic, all the evidence we as there are few cases that micro markets is required in
one place to another. “Where International has, for example, It is important to note that a differentials can vary from as have to date from marketing control for every factor affecting asessing the business case
it’s an entirely new offering, Ritz-Carlton-branded price premium can be location much as 132% in some cities One Barangaroo is that a price. For a true comparison for any branded concept. Put
we might be two or three residences in Kazakhstan and driven. Indeed, our research in Asia, to there being no premium of 25% to 35% ahead there would need to be a simply, will the market pay a
times the price of anything in Bvlgari-branded residences shows that there is great differential at all. of comparable non-branded branded residence in the same premium and why?
Branded Residences Report 2019 Branded Residences Report 2019
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GLOBALLY MAPPED
The wide and expanding reach of the branded residence concept, mapped.
o build a global is the highest concentration
T picture of branded of branded residences. With
residences we have operators such as Kerzner
looked at some of the industry’s International, The Address,
biggest hotel operators including The W, Jumeirah and Bvlgari
Marriott, Four Seasons, Accor entering the branded residence
Hotels and many more. Together marketplace, from resort living
Marriott, Four Seasons and Accor on the Palm Jumeriah to urban
Hotels represent over half of all concepts close to Downtown
hotel branded residences, with Dubai and the Financial
Marriot alone accounting for Centre (DIFC). According to
three-quarters of these. The map Piers Schmidt, a luxury brand
demonstrates the geographical consultant and commentator
expanse of the concept with at The Luxury Branding, “the
hotel branded residences present explosion of development in
in over 180 locations across 64 Dubai is down to the fact that
countries globally. developers and promoters have
As the concept originated in a need to differentiate: you can
North America, it is no surprise build it taller, make it revolve
that this market is the most and shimmer, but when you get
developed and has the largest inside an apartment, having a
presence, accounting for a third brand gives an advantage.”
of all schemes. However, the One region in which the
Asian market for hotel branded branded concept is still quite
residences has seen strong small is Europe, accounting
growth, particularly in Thailand for only 7% of branded
and Indonesia, with Asia now residences. In Europe there
accounting for an estimated 30% is “less demand for branded
of schemes. This trend is set to things, period,” according to
continue, “Asia is the continent Schmidt. “Developers are less
of opportunity: there’s a growing prone to license a brand to move
market and rapid urbanisation,” their real estate [in Europe]
says Muriel Muirden, because they know their asset
executive vice president at the has appeal,” he adds. However
architectural firm WATG. as residential markets become
At a more localised level, as a more competitive Europe may
single city, Dubai is where there be another area of growth.
Urban living
The branded concept is a predominantly urban concept, with 62%
of hotel branded residences in cities as opposed to beach/resort
locations. However, this does vary by region. In North America,
two-thirds of schemes are in cities, whereas in Asia it is much more
balanced, with almost half being in resort locations. “Hotel branded residences Over 100 10 to 50 Under 10
As the market continues to expand it is expected that developments
are likely to concentrate in urban areas. Across the global economy
are present in over 180
there is a huge shift towards major urban hubs, for example Aman, locations and 64
the first resort brand, is now moving towards the urban space. This is
driven by the less seasonally affected demand in urban centres.
countries globally”
Branded Residences Report 2019 Branded Residences Report 2019
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LOCATIONS IN FOCUS
We spoke to four leaders in Knight Frank’s global network on their marketplace for branded residences.
New York Dubai
“ Hotel branded
residences have been “The early 2000’s saw a resurgence “ In a city renowned for
its plethora of 5-star
a key segment of New York
City’s luxury market since the
of large-scale hotel-branded hotels, the emergence of branded
residences in Dubai has become
original hotel serviced residential condominiums” increasingly common.
apartments at The Sherry- In recent years Dubai has
Netherland and The Carlyle. transitioned from a holiday
The early 2000’s saw a destination, to a city in which
resurgence of large-scale to invest in a more permanent
hotel-branded condominiums, home. The global citizen is
notably the opening of The looking for a more sophisticated
Residences at Mandarin Oriental offering in Dubai that will
New York in 2003 as part of elevate their living experience
the mixed-use Time Warner to incorporate not only great
Center development perched design and architecture but
on the prime southwest corner also the benefits of resort living
of Manhattan’s Central Park. private beaches, spa facilities,
This revival reflected the rapid concierge and Michelin-starred
expansion of global wealth and restaurants.
the focus of New York as a key The branded residence offering
global city for high net worth in Dubai has raised the bar even
individuals. further, with its first super-prime
In the 15 years since, a number development. Located on the
of hotel branded condominium Palm Jumeirah, directly adjacent
developments have created to the iconic Atlantis The Palm
a popular niche in the prime resort, The Royal Atlantis
and super prime development Resort and Residences provide a
market. While previously selection of 2, 3 and 4 bedroom
clustered in historically prime apartments, penthouses and
neighbourhoods on the Upper garden suites. Not only does
East Side and Midtown, new the development benefit from
hotel branded developments all the world-class amenities
have now extended into the and experiences that one would
prime Downtown market. expect from a best-in-class
Midtown’s Baccarat Hotel and hotel, it also occupies one of the
Residences, which sold out in world’s most prime locations in
2017, boasts the world’s first global real estate terms and is
Baccarat Hotel and views of set to become the new icon of
Central Park. With the crowning Dubai.”
duplex penthouse selling for Maria Morris, Knight Frank
more than $42 million in 2016,
condominium residents here
have access to five-star hotel
services and amenities.” “The global citizen
Andrew Wachtfogel,
Douglas Elliman
is looking for a
more sophisticated
Baccarat Hotel and Residences The Royal Atlantis Resort and Residences
offering in Dubai”
Branded Residences Report 2019 Branded Residences Report 2019
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Sydney
“Crown Residences “ One Barangaroo,
Crown Residences
marks the introduction of
have set the benchmark hotel branded residences in
high for Australia and Australia. The arrival of branded
residences at this time into
will compete on a global Sydney is no coincidence.
level to both investors and Sydney continues to attract
high net worth individuals
residents alike” (HNWIs) by taking up a
significant proportion of the
10,000 HNWIs net inflow
into Australia each year, the
highest of any country, for
three years running as reported
by New World Wealth. This
demonstrates Sydney as a
rapidly advancing global city.
Since the global financial crisis
Above: Twenty Grosvenor Square, Four Seasons
in 2008 Sydney has seen strong
growth in prime property prices.
Left: The Residences at Mandarin Oriental Mayfair, London
The lack of exceptional stock
Below: The OWO (The Old War Office), Raffles has plagued the top end of the
market, lifting prices as demand
continues to increase.
One Barangaroo, Crown
Residences, as the country’s first
fully integrated, six-star hotel
branded residences, has received
a very warm welcome from
both Australian and offshore
London purchasers alike since sales
“ Since a global
residential benchmark
commenced. The driving force
behind the on-going interest is
was set at One Hyde Park, the a combination of the lifestyle
first European residences at the offering as well as the design and
Mandarin Oriental, the London location.
market has seen an increase in The full suite of hotel-style
branded residences at the top concierge services, in-room
end of the market. While many dining, priority booking at the
prime residential developments restaurants within the building
actually offer the service level and and the private residents’
amenity akin to hotels, both hotel pool deck, means that the
and residential developers have Crown Residences have set the
identified London as the global benchmark high for Australia
city of desire for ultra high net and will compete on a global
worth individuals and are looking level to both investors and
to take advantage of this focus.” residents alike.
Alexander Lewis, Knight Frank The Wilkinson Eyre designed
building will be globally
recognisable and with floor to
ceiling windows throughout, will
offer iconic views over Sydney
Harbour Bridge and the Opera
House.”
Erin van Tuil, Knight Frank
One Barangaroo, Crown Residences
Branded Residences Report 2019 Branded Residences Report 2019
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THE FUTURE OUTLOOK
As branded residences multiply globally, how and where is the sector expected to grow and diversify?
What are the potential risks and rewards for developers, brands and buyers as it does so? And in an age
of high customer expectation and the on-demand economy, how will branded residences meaningfully
differentiate themselves from the competition?
Expansive demand
randed residences, until the by more than 70% in the next four years.” much from the tangible to the emotional. next stage saw the arrival of designers –
B 1980’s a scarce commodity but
can now be found in almost
“From a consumer perspective, the
power of brand identification is only
It used to be “we can offer more: bigger
pool, bigger gym etc. Those features have
such as Philippe Starck, who co-founded
YOO. “Following the designers have been
every major city and major holiday growing,” says James Snelgar, head of pretty much become a given. There are the ‘starchitects’: Daniel Libeskind, Frank
destination. Having extended its reach, business development at YOO. “The world only so many gold taps and marble you Gehry, Norman Foster and César Pelli
the sector is growing exponentially. The is becoming increasingly design conscious can put into a residence,” says Graham. among them. In some cases, as developers
major hotel brands dominate and expand. and brand aware. We talk about appealing Now, “it’s about creating memories and strive to raise the bar, you can now end
However, smaller hotel groups are entering to ‘a tribe’ of like-minded people, people an emotional link: bringing in a celebrity up with two or three brands on a single
the market and, recently, luxury brands who want to live and socialise with other chef or cocktail maker, arranging a cycle development. The Armani residences
outside hospitality have lent their names people with whom they share things in tour,” he adds. “The focus,” echoes Snelgar, in Miami has Giorgio Armani doing the
to new developments. This adds a new common,” he says. “is now becoming more experience interiors and Pelli doing the exterior,” says
dimension to the concept, one with an As well as reaching into new territories, orientated: for example cooking, climbing Graham. These brands are being pushed
emphasis on pure association rather than hotel developers are attempting to or diving.” forward as part of a scheme’s identity,
a proven service record. expand their customer base. “We are “As well as diversifying the activities rather than just a component part of the
The sector’s growth has been such that, seeing an increasing demand now for they offer, resorts will need to differentiate physical product.
in some areas, the development type a more affordable offer catering for themselves: they’ll need to be more
has almost become ubiquitous. They the millennials,” says Snelgar. Resort eco-focused in design and operation. Positive outlook
were once “the exception rather than the developers in particular, says Muirden, Branded residences will have to be far The growth of the sector will not be
rule,” says Chris Graham, an expert on “are looking at the behaviour of millennial more holistic, with beautiful gardens and without potential pitfalls. There is a
branded residences, “but look at Thailand parents and what they want: they really a wellness focus, as well as being more danger that in democratising the concept
today, where almost 40% of all new want a good, well rounded experience for multi-generational,” says Muriel Muirden of branded residences, developers also
developments are now branded.” “Marriott their kids.” of WATG. risk devaluing it. The concept has always
International sees demand for co- With a crowded market providing the been aspirational. Now hotel companies
located residential product in the luxury Different offerings impetus to differentiate, developers are are offering brands at a 4-star level also.
and uppermost tiers gaining traction,” Increasingly, operators are looking at also aligning with renowned brands for That risk may be unlikely to stall
says Daniel von Barloewen of Marriott experiences, rather than just services more and more aspects of any residential developers, however, with industry
International. “The company expects to or facilities, as a way to tempt buyers. project. The model originated with hotels commentators saying that it is unlikely
expand its branded residential portfolio “The hospitality industry has gone very lending their name to developments. The that we are going to move to a world where
suddenly buyers are no longer concerned
with the offerings of branded residences.
The future of the branded residence The market will undoubtedly get more
competitive, and there will be a few
developers and brands squeezed out as
a result, but that is unlikely to stop them
trying to capitalise on a market which still
offers substantial benefits. The crucial
question, as Graham puts it, is this: “the
bar gets raised every year – more facilities,
more experience, more tech: if everyone’s
doing that, how are you going to to offer
something different?” “Increasingly, operators are looking at experiences, rather
2018 Potential new offerings and More experiences, rather than More eco-focused in design than just services or facilities, as a way to tempt buyers”
onwards technologies to cater for services or facilities and operation
Market growth different demographics One Barangaroo, Crown Residences
Branded Residences Report 2019 Branded Residences Report 2019
14 15
DEVELOPING VALUE How Knight Frank’s consultancy services can
add value to developments
There are wide ranging factors that determine the value placed on hotel branded residences and these
factors must be considered at all stages of planning and development. Understanding what drives decisions
is key to optimising profit. This is an area of focus for Knight Frank’s consultants across the globe.
Global network In-depth market Data and insight Advice on which Spatial planning Marketing
with a presence in research to provide on buyer services and and mix analysis strategies
60 territories global benchmarks preferences amenities add value
Erin van Tuil Maria Morris Carolyn Sebba Alexander Lewis
Partner, One Barangaroo, Partner, Residential Sales, Senior Vice President, Douglas Partner, Residential
Knight Frank Knight Frank Elliman* Development Marketing Development Consultancy, “Luxury is expected from our clients; the most important element is how
Knight Frank
to raise the bar across every aspect of the overall offering”
Maria Morris
efore any residence is brought to be the right operator that aligns with the are not enough to create a best in-class Lewis. “In the first instance, you have to through to completion. Our goal is to add of our job is working with different design
B to the market there are years of
work; from concept planning
level of service that buyers expect.”
The lifestyle component of hotel
residence. All aspects relating to the
residence must be considered carefully
remember that you are still designing a
residential scheme. Space and function
value to the entire development chain,
from spatial planning and mix analysis,
disciplines to ensure the value of both
hotel and residential are optimised,” adds
through to detailed design. Maria Morris branded residences is key to buyers’ and each stage in the development will always outsell frills. Scheme concept through to advising on the amenities Lewis.
states that the consultancy services decisions. Erin van Tuil remarks that hotel process interrogated as to what is going and space planning, from building form required in each building.” Sebba adds “Most importantly,” van Tuil concludes,
provided by Knight Frank throughout the branded residences offer “ease of living to add the most value to the buyer. to detailed layouts, must be perfect. that “with access to an immense network, “we work as a global team. Branded
process “optimise the residential offering through having all of the facilities on your “Having the right architecture, right Branded residences can also throw up including high and ultra high net worth residences cannot be designed in isolation
by aligning every aspect of the residence doorstep,” van Tuil continues that “a hotel location, superior interior designers, and problems such as onerous service charges clients, we can provide in-depth market without considering global exemplars. Not
with what the buyer is looking for.” concierge offers a different service than extras, such as landscape gardening, and security issues. Cost control and research, intelligence from the brokerage only the residences, but the hotel brands
Wealthy individuals buy hotel branded what you can find in serviced apartments. marry together as real value drivers,” specification analysis is also critical in an community, knowledge of the market and that lie behind them. The reality is that our
residences as a lifestyle option but also For example if you want to organise a notes van Tuil. “In my view, it has to inflationary environment.” buyer preferences, all valuable input to clients, whether they are buying in Dubai
with an eye on capital appreciation. sommelier or private chef they can do that have a combination of great design “Designers can get carried away with all create the perfect design, amenity and or Sydney, will have likely experienced the
Carolyn Sebba comments that high-end for you - a normal concierge wouldn’t.” and tremendous architecture, top class the niceties and latest gadgets,” adds van service offering.” very best across continents. They will be
hotel brands represent “prestige, an extra- Sebba adds that the list of services interiors, plus the right amenities and Tuil. “Focus must be on what the buyer “Good hotel design and good residential comparing a scheme offered in London
ordinary level of services, aspirational available are endless and hard to replicate experiences. Luxury is expected from our places value on, not just expensive gimics.” design do not always go hand in hand to one offered in New York. Our greatest
lifestyle and convenience.” In addition, outside this space, “for example, amenities clients; the most important element is how Morris remarks that our work can “ensure though, as they are both specialised strength as a firm is working together to
Morris notes that is also important to include having a butler service, a to raise the bar across every aspect of the every project is designed with the end user markets that until recently have remained ensure our clients schemes are globally
ensure that the brand is right. “It is simple seamstress, translation services, personal overall offering,” adds Morris. in mind, which is crucial in an increasingly separate, and sometimes follow opposing competitive.”
for a developer to enter in to a license shopping, flower delivery, catering, child- “There are some more practical elements competitive global marketplace.” principles. Design grids, service runs,
agreement with any operator, but for the care, and all of these are on call.” that need to be analysed in the concept She continues saying that “we offer basement requirements and external light * Knight Frank’s residential alliance
branded residences to be exceptional, it has However, the added facilities alone phases as well,” highlights Alexander consultancy services from conception treatment may all conflict and a key part partner in the United States
Branded Residences Report 2019
16
Contacts – Research
Liam Bailey
Global Head of Research
liam.bailey@knightfrank.com
Flora Harley
Senior Research Analyst
flora.harley@knightfrank.com
Contacts – Residential Sales
Sydney
Erin van Tuil
Partner, One Barangaroo, Crown Residences
erin.vantuil@au.knightfrank.com
Dubai
Maria Morris
Partner, Head of MENA Residential
maria.morris@me.knightfrank.com
London
Alexander Lewis
Partner, Residential Development – Consultancy
alexander.lewis@knightfrank.com
New York
Stacey Watson
Partner, International Residential
stacey.watson@knightfrank.com
Important Notice
© Knight Frank LLP 2018 – This report is published for general information
only and not to be relied upon in any way. Although high standards have been
used in the preparation of the information, analysis, views and projections
presented in this report, no responsibility or liability whatsoever can be
accepted by Knight Frank LLP for any loss or damage resultant from any use
of, reliance on or reference to the contents of this document. As a general
report, this material does not necessarily represent the view of Knight Frank
LLP in relation to particular properties or projects. Reproduction of this report
in whole or in part is not allowed without prior written approval of Knight
Frank LLP to the form and content within which it appears. Knight Frank LLP
is a limited liability partnership registered in England with registered number
OC305934. Our registered office is 55 Baker Street, London, W1U 8AN,
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