Bangkok, Thailand – C9 Hotelworks, a leading hospitality consulting firm in Asia, has released a report highlighting the explosive growth of the Branded Residences market in Asia, with Thailand emerging as the top market and Phuket as a leading destination.
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Bill Barnett, Managing Director of C9 Hotelworks, stated, “Thailand is the number one Branded Residences market in Asia, surpassing China, Singapore, and Vietnam, accounting for 23.3% of the total market value.”
What are Branded Residences?
Branded Residences are residential developments, including condominiums, houses, and villas, affiliated with renowned global brands. These are often luxury hotel brands like Four Seasons, Mandarin Oriental, and Banyan Tree. However, brands from various sectors, such as fashion and automotive, are increasingly entering the market. A prime example is the Porsche Design Tower Bangkok, with units priced between US$15 million to US$40 million.
Factors Driving Thailand’s Branded Residences Market
- Surge in demand for luxury urban living: The post-COVID-19 era has seen a shift towards urban living, driving demand for city residences, particularly luxury condominiums.
- Brand value and premium pricing: Partnering with renowned brands adds value and commands premium prices. For instance, the Mandarin Oriental Residences project boasts prices nearly 40% higher than comparable projects.
- Attracting foreign investors: Foreign ownership of condominiums is permitted in Thailand. Coupled with the country’s attractive lifestyle, international schools, and favorable visa policies, Thailand draws significant foreign investment, particularly from Singapore, Eastern Europe, and other regions. Phuket, in particular, is highly popular among foreign buyers.
Future Trends in the Branded Residences Market
- Doubling of units: In the next 3-5 years, the number of Branded Residences units in Asia is expected to double from 40,000 to 80,000 – 90,000. Vietnam has the largest pipeline of upcoming units (11,390 units), followed by Thailand (12,656 units).
- Rise of Standalone Residences: While most Branded Residences are currently part of hotel developments (86%), the future will see a rise in Standalone Residences separate from hotels (30%) to cater to diverse customer needs.
- Brands from diverse sectors: Beyond hotel brands, brands from other sectors like fashion, automotive, and lifestyle are increasingly developing Branded Residences, accounting for 5% of the market, with 90% of these being urban projects.
- Higher prices in urban areas: Branded Residences in cities command higher prices than those in resort areas. For example, in South Korea, urban condominiums are priced almost three times higher than resort condominiums. In Thailand, urban condominiums average US$8,323 per square meter, compared to US$4,614 per square meter for resort condominiums.
Opportunities for Thai Developers
Barnett stated, “The growth of the Branded Residences market presents a significant opportunity for Thai developers to develop luxury residential projects, particularly in Bangkok, Phuket, and Pattaya, which are key high-potential markets.” Phuket currently has the highest number of Branded Residences units in Asia (4,771 units), followed by Manila and Bangkok.
The rapid growth of the Branded Residences market presents a golden opportunity for Thai developers to expand their businesses and generate revenue, particularly in the luxury market, where Thailand has a high competitive advantage in terms of location, lifestyle, and development costs.
Targeting diverse customer segments: Thai developers can cater to various customer groups such as families, working professionals, and investors by focusing on design, amenities, and services that meet their specific needs. For example, family-oriented projects may emphasize large common areas, parks, and children’s activities, while investor-focused projects may prioritize rental management and returns.
Adding value with innovation: In addition to collaborating with renowned brands, Thai developers should leverage innovation and technology to enhance project value. This includes incorporating smart home systems, energy management, green spaces, and sustainable designs to appeal to modern lifestyles and enhance project attractiveness.
Expanding opportunities to foreign markets: Leveraging their reputation and expertise, Thai developers can expand their Branded Residences businesses to foreign markets such as the CLMV countries or other regions. This presents an opportunity for growth and revenue generation by capitalizing on their strengths in management, design, and service to differentiate themselves and gain a competitive edge.
For Investors
Investing in Branded Residences is an attractive option due to the potential for high returns from premium pricing and lower risk compared to investing solely in hotels. However, investors should carefully consider project details, location, and brand strength before making investment decisions. Wyndham Hotels & Resorts is the brand with the highest number of Branded Residences units, followed by The Ascott Limited, Banyan Group, and Marriott International.
Branded Residences are an attractive option for investors seeking high returns and stability due to several positive factors, including brand reputation, location, and market growth potential.
Lucrative returns: Investing in Branded Residences offers the potential for returns from future resales as property values tend to appreciate, especially for projects in prime locations and with strong brands. Additionally, rental income can be generated, particularly from high-end clients seeking quality accommodation and hotel-level services.
Risk mitigation: Investing in Branded Residences carries lower risk compared to investing solely in hotels. Revenue from sales helps mitigate the volatility of hotel income, which can be affected by external factors such as economic conditions, natural disasters, or pandemics.
Investing in leading brands: Investors should consider selecting Branded Residences projects from reputable brands with experience and expertise in management. This ensures quality, standards, and investment returns. It is essential to research, compare, and analyze the potential of each brand before making investment decisions.
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