The global branded residences sector has seen a huge growth of 195% over the last decade to stand at 430 branded schemes globally, with Dubai set to overtake New York as the global branded residences capital by the end of 2019.
According to a report by Savills, there is no sign of the growth in branded residences slowing globally, with a combined total of 65,000 units in existence at present worldwide. A record number of schemes opened this year, with 60 projects delivering more than 9,000 additional branded units across 21 countries. This record is set to be broken again in 2020 when nearly 70 schemes are due to complete, said Savills’ Branded Residences Report.
At a city level, Dubai has 23 completed schemes and a whopping 22 in the pipeline, for a total of 45. Second place New York has 26 completed schemes and five in the pipeline to make a total of 31, while in third place Miami has 20 completed schemes and four in the pipeline for a total of 24. The other cities in the top ten are Phuket, Bangkok, Istanbul, London, Boston, Bodrum and Kuala Lumpur, in that order.
According to the report, the growth is being driven by the hoteliers with hotel-branded schemes accounting for 86% of the completed schemes and 96% of the pipeline supply. Marriot International, whose brands include Ritz Carlton, St Regis and W, is the market leader and is set to remain so. Accor is rising fast and has a pipeline equal to Marriott International. In the Middle East, Emaar Hospitality Group is growing fast with an extensive pipeline across the UAE and wider Middle East under its Address and Vida brands.
The birthplace of branded residences, North America, is home to 40% of all schemes. However, other regions are growing rapidly. Asia Pacific, led by Thailand and Vietnam, currently has the most schemes in planning and under construction (23% of pipeline), followed by MENA (21% of pipeline), where the UAE and Egypt account for most of the forthcoming supply. Latin America is a major growth market. The number of schemes in Mexico are set to more than double in the coming years as new projects are set to open in both resort and city locations.
Paul Tostevin, director, Savills World Research, said: “As market conditions and buyer preferences evolve, there is huge potential for the branded residences sector. Branded property is positioned to stand out in more challenging market conditions.”
Savills’ analysis shows that the average premium for branded residences over equivalent non-branded product, stands at 35%. This varies significantly by location, brand and operator. In emerging cities, such as Kuala Lumpur, the premium can exceed 70%. On the flipside, in the more mature markets where location is a greater determinant of value, premiums can be lower.