Editor’s comments: Branded residence boom

According to consultancy Global Branded Residences, there are 1,800 completed and announced branded residence projects worldwide. The sector has grown by approximately 140-150 per cent over the last decade, with the Middle East and Europe recording rapid expansion of around 350 per cent and 260 per cent respectively. While North America and South East Asia were the early incubators of branded residential growth, the model is now established across 90 countries worldwide, 25 of which are new markets.

Operators’ experience broadly matches the data. Accor is now delivering one branded residential project every five weeks, with strong momentum in the Middle East where the company says that Dubai has overtaken Miami as the fastest-growing hotspot. Ennismore’s VP of development Europe, Marine Duchesne, recently spoke to BHN about the success of midscale brand sales in Dubai – watch the interview here. 

Europe has also emerged as a top market for future growth, driven by the ability of residential sales to underwrite hotel development. More than 70 per cent of luxury hotel schemes currently in the pipeline across Europe are said to include a residential component as developers grapple with expensive debt. 

Law firm Baker McKenzie says that deals typically fall into three areas: brand licensing and controls, design and delivery against brand standards, and long-term management. Key considerations include co-located versus standalone schemes, what happens if a hotel is de-flagged, foreign ownership rules, buyer deposit protections, and latent defect liability. While contracts are typically brand-friendly, the firm reports a shift in developer mindset. More are seeking to stay visible and involved over the long term, in part driven by savvy end users (high-net-worth individuals) who are starting to ask questions around future resale value, and who are likely to continue spending elsewhere. 

If developers are becoming more focussed on building their own brand, how will this affect the hotel operators and the automotive, fashion and jewellery brands now entering the residential space? We often view non-hotel brands as the disruptive force, but it may be the developers who ultimately reshape the competitive landscape. Binghatti has attached its company name to projects in partnership with Bugatti, Jacob & Co and Mercedes-Benz, and Emaar has an in-house hospitality operating arm. Developers are already starting to position themselves more centrally, and it’ll be fascinating to see how the next 10 years will unfurl. 

Subscribe to the weekly BHN e-newsletter here.