Vietnamese real estate developers were recently exposed to the marketing and sales concept of Urban Branded Residences – a popular product in the world that is, for the most part, unfamiliar in Vietnam.
The concept of branded residences first emerged in the 1920’s in New York City when the Sherry Netherland Hotel launched residential apartments. But the market didn’t take off until the 1980’s when Four Seasons opened its first brand residence project in Boston.
Since that time, the number of hotel operators offering branded residences has increased and there are a number of established companies in the marked including Aman, FRHI, Hyatt, Kempinski, Regency, Shangri-La, Six Senses, Starwood and Viceroy
Mauro Gasparotti, Director of Savills Hotels Asia-Pacific, explained that Urban Branded Residences (UBR) are residential products that offer hotel-like facilities and services for residents. According to Gasparotti, “They are typically associated with a third-party brand, which could be hotel brands like Ritz Carlton or Mandarin Oriental, but also non-hotel brands such as Porsche or Aston Martin.”
Figures from Savills stated that there are more than 400 residential brands globally, 85% of which are associated with international hotel brands. Compared to the more classical residences, UBR’s offer a superior set of facilities and services
Gasparotti also said: “Based on our studies, almost 74% of branded residences around the globe are located in urban locations, while in Vietnam, the vast majority of mixed-use residential and hospitality products are located in coastal areas and are defined as condotels.”
“We believe there is tremendous opportunity for developers to embrace this concept and apply it in urban cities as competition in the residential sector will be fiercer and buyers increasingly demand alternative products. This trend has already begun to grow rapidly in the US, Europe, and other Asian countries such as China, Hong Kong, and Thailand. Vietnam is on track to be the next country to see the strong growth of this concept.”
Gasparotti also noted that from a marketing and sales perspective, branded residences have a different client target when compared to condotels. “They are proposed as lifestyle products and are usually less attractive in rental yield but focus on a longer term value proposition and capital gain. Vietnam, compared to other countries, is currently offering considerably higher guaranteed returns, which, in certain cases, will be challenging to deliver if only unit rental revenue is relied upon. We strongly advise developers to conceptualize products that deliver quality and long-term value to the buyers instead of short-term rental gain.”
There are several types of branded residences, such as stand-alone residences, residential buildings and mixed-use developments. In the majority of mixed-use developments, the engagement of a brand in the planning and development phases ensures quality design. Residences are integrated with a hotel component in the same location, which can provide enhanced security and bring high-levels of services to customers in the residences.
Andrew Pang, Managing Director Asia Pacific of Yoo Asia Ltd. said “We believe creative and unique design can add significant value to all aspects of a branded residence project. Yoo’s aim is try to improve the quality of people’s lives through design, whether it is a residence or a hotel room. Design is a platform that can heighten the sense of enjoyment of residence owners as well as hotels guests.”
Karan Kaul, Assistant Vice President of the Langham Hospitality Group said at the seminar that “Hotel brands can add significant value to residential components of mixed-use developments. It is a win-win framework whereby buyers receive the exclusivity of the brand design and amenities from the hotel as well as the possible benefits of a rental pool and professional management.”