2020, in spite of the pandemic and wider economic situation, is set to be another record year with over 100 schemes opening.

The pipeline is more diverse and exciting than ever. A new wave of brands is emerging from the art, design, culinary and celebrity worlds including the likes of Nobu, Tonino Lamborghini and Pharrell Williams.

Which brands are set to dominate?

Non-hotel brands are a growing segment of the market. Over the past 10 years, the growth of such schemes has outpaced hoteliers, rising from 11% of the total market in 2010 to 16% in 2020. 11 new non-hotelier brands are expected to enter the market by 2025.

However, hotel brands still dominate and account for 84% of current schemes and 88% of the pipeline.  Marriott, whose brands include W, The Ritz-Carlton and St Regis, is by far the leader in the sector and is set to remain so.

Savills Head of International Development Consultancy, Riyan Itani, said, “We are seeing hoteliers bringing more of their brands into the sector. The diversified income stream that the branded sector provides is more valuable than ever as the hospitality sector faces its challenges.

“In the longer term, the sector could also benefit from the behavioural changes we are seeing. More flexible working practices could mean that owners make greater use of what are often second properties. There may also be increased demand to rent hotel-branded residences from tourists seeking self-contained accommodation yet with the amenities that a hotel offers.”

Which regions are growing fastest?

Miami, Dubai and New York are the top three cities for branded residences however, brands are looking further afield for new opportunities. Twelve countries will see their first branded residential projects over the next four years in locations as diverse as Iceland, Paraguay and Nigeria.

Egypt is forecast to grow fastest of any country over the next four years, rising from one to 18 schemes. Other countries moving from a low base include Spain (+83%), Bahrain, Belize and Costa Rica (+80%).

The United Arab Emirates, Mexico and Brazil are expected to add the most schemes by number amongst the fastest growing countries (those adding at least 50% to their existing supply). Vietnam, the UK, Morocco, Malaysia, Australia and Saudi Arabia also have a pipeline of at least six schemes.

We believe Australia is still in its infancy when it comes to luxury branded residences as historically buildings have been given their own identity in contrast to the super brand approach.

Leaders in the field have focussed on large scale mixed use properties in the capital cities and a good example is Crown Sydney at Barangaroo which combines a Casino, Hotel and Luxury accommodation.

This mixture of emerging and established prime markets illustrates the ever-widening reach of the sector today. Now a proven formula, brands are confident entering new territories.

Price & premium

When it comes to price, branded residences achieve a premium, on average, of 31% over equivalent non-branded properties, although this figure can vary significantly by location. The highest brand premiums are achieved in the emerging markets. Recently established markets such as Bangkok, Beijing and Phuket achieve premiums between 40% and 45%, comparatively higher than more mature markets.

Truly emerging markets with few branded properties can command prices that are double to non-branded stock as demonstrated by Almaty and Belgrade with premiums of 150% and 120% respectively.

We also believe there is a gap in the Australian market for this type of brand collaboration, especially for projects targeted at non-local purchasers where they see value in trusted names.