Global Branded Residences bucking real estate trends
Even luxury markets are feeling the pinch as inflation and interest rates continue to rise – so why are branded residences performing so strongly?
3 minutes to read
The Global Branded Residences Report 2023 confirms a market enjoying sustained growth despite significant recent economic turmoil.
Against a backdrop of increased borrowing costs and a slowdown in global house price rises, as shown in the latest Global House Price Index, this section of the market is outperforming.
What are Branded Residences?
Developers will usually team up with luxury hotels to offer residence alongside the services and amenities.
The Knight Frank Global Branded Residences Report analyses the key macro themes impacting demand for luxury residences – including wealth, travel, and property trends.
It reviews the global Branded Residence pipeline, looking at areas for future growth, both by geography and market type.
The report also delves further into the market, with expert insights and opinions from developers, investors funders and designers to discover what the latest trends and themes are in the market.
Key Branded Residence themes Q1 2023
Global wealth decline
The global population of ultra-high-net-worth-individuals (UHWNIs), those with assets of US$30million or more, fell by 3.8% in 2022. Total wealth held by this group fell by 10% in the same year.
Despite this, growth is expected to resume in 2024. Our recent Wealth Populations report confirms that the world population of UHNWIs will rise by 28.5% over the five years from 2022 to 2027.
High-net-worth individuals (HNWIs) covers those with US$1 million+ in assets, a group that saw growth of 2.9% last year and which is expected to grow by 57% over the next five years – taking it from just shy of 70 million to more than 109 million people globally.
A return to pre-covid international travel
Forecasts predict a return to pre-Covid trends over the next five years, despite a slow recovery, travel volumes are expected to hit new record levels.
Global flight data shows total scheduled passenger flights worldwide remained 12% below their pre-pandemic level in the 12-month period to April 2023, but recovered from a 44% drop during the pandemic.
The slow recovery is further backed up by the growth in hotels expected in 2027, with global travel rising by 31% above the pre-pandemic peak, led by rapid growth in Africa, the Middle East and Asia.
Residential property investment
UHNWIs are investing in property, with 33% of respondents from the 2021 Knight Frank Global Buyers Survey confirming the pandemic made them more likely to buy a second home.
The Wealth Report 2023 revealed that around 17% of global UHNWIs purchased a new primary or second home in 2022. This percentage was ahead of the long-term trend and reflected the post-Covid boom in residential markets
The Wealth Report also revealed future purchase intentions. The Attitudes Survey within the report, compiled as interest rates rose sharply in the developed world between Q4 2022 and Q1 2023, revealed that 15% of UHNWIs surveyed were considering a first or second home purchase in 2023.
Branded Residence pipelines
Key locations
The schemes are located across 52 countries, dominated by the US (106 schemes), and with Mexico, the UAE, Thailand, the UK and China all with double-digit numbers of schemes.
Growth markets
In terms of growth markets, 60% of the Middle East market is currently under development, Europe and Latin America follow at 49% and 46% respectively.
In absolute terms the biggest development pipelines are seen in the US (36 known schemes), the UAE (7), Mexico (7), the UK (5), and Saudi Arabia (4).
Within the US Florida is leading the charge compared with all other states, with the highest number of units in operation (1,642) and the highest number of units in the pipeline (1,872). 80% of Florida’s schemes are found in Miami which currently has 11 operational schemes and will have ten more by 2026.
Branded residence opportunities and risks
Contributors to this report point towards the number of opportunities in the market across the world.
This optimism should be tempered with caution - a wider challenge to the sector comes from the need to define and substantiate the added value that a brand can provide.
The sector also needs to provide clear evidence of its commitment to sustainability.