Growing appeal of branded residences

Branded residences emerge as a strategic investment opportunity to unlock revenue streams or recoup project costs.

Nikhil Shah

In recent years, the concept of ‘Branded Residences’ has gained significant momentum in the real estate market, with over 10+ inquiries surfacing in the last year alone. This model offers a unique way for developers and hotel brands to optimise their revenue streams or recover development costs, especially in markets that crave exclusivity and luxury. The concept has been steadily attracting Indian clients lately.

Understanding branded residences

Branded Residences are residential properties that are managed or co-branded by established hotel chains. These residences can either be integrated with a hotel or resort component, the preferred option by most brands, or can function as standalone residential units without any hotel affiliation.

There are two main models:

• Hotel/resort: The most popular model, wherein residential properties share amenities and services with a hotel or resort under the same brand.
• Standalone residences: Operate independently of a hotel or resort, offering the exclusivity of a branded residence without hotel features. Marriott, for instance, is one of the major brands in India offering this concept.

In branded residences with a hotel component, brands typically prefer that the developer finishes the hotel or resort project first before starting on the residential units. However, developers often see it differently; they usually want to focus on selling the residential units first to fund the hotel construction.

The typical difference between serviced apartments and branded residences is that branded residences are often sold to individual investors, while in serviced apartments, ownership is usually retained by the company or operator.

Additionally, in urban areas, the residents of branded residences are typically the end-users themselves, living in the units. However, in leisure or vacation destinations, these units may be grouped into a rental pool, where they are rented out when the owners are not using them.

Brand fee components

Branded residency projects come with various fee structures, primarily:

• Sale fee: 3 per cent to 5 per cent of the unit’s topline sale value
• Service fee: Usually, this is put as a component of common area maintenance services (CAMS)
• Operating fee: If the branded residency operates similarly to a hotel, there may be an operating fee charged by the brand

Emerging trends

Initially, branded residences were predominantly seen in metro locations, such as Delhi, Mumbai, Bengaluru, Hyderabad, Chennai, and Kolkata. However, even leisure destinations like Goa, Jaipur, and Lonavala have recently started to see a rise in branded villa concepts. These locations are emerging as hotspots for luxury vacation homes and retreats, giving a boost to branded villa projects.

Key players in the market

Several hotel brands have entered the branded residency market, including:

• Four Seasons
• Leela
• IHCL: Taj
• Marriott: JW Residences, Westin
• Hilton: Conrad, Waldorf Astoria
• Accor: Sofitel, Fairmont, Raffles
• Oberoi: Trident Residences
• Hyatt: Park Hyatt, Grand Hyatt, Andaz
• Wyndham
• Della

Branded residences typically fall within the upscale, upper upscale, and luxury segments, as lower-tier brands lack significant appeal, demand, and pricing power. Most domestic brands are not involved in this market, which is primarily dominated by international brands.

Among these, Marriott stands out as a key player in this category, offering options with and without hotel components. This flexibility enables varied project developments across different real estate markets.

Existing projects in India

The branded residency market in India is witnessing a surge with several completed projects. Some notable existing projects include:

Upcoming Projects

Several exciting developments are in the pipeline, showcasing the rising popularity of branded residences in India.

Benefits of branded residences

Globally, branded residential projects can command a premium of up to 30 per cent over typical residential prices. In India, while exact numbers may be difficult to ascertain, these projects serve as a catalyst for moving inventory and recovering development costs. Branded residences are especially beneficial in mixed-use developments where residential properties are coupled with hotel or resort amenities. Even though they might not command the same premium as their global counterparts, they are still instrumental in recouping partial or full project costs.

Transformation on cards

Branded Residences are more than just a trend; they are becoming a strategic investment vehicle, especially in high-demand luxury and metro markets. For developers, partnering with a hotel brand not only boosts marketability but also helps recover project costs through increased sales velocity and premiums, even if marginal compared to the global market. As more hotel brands explore this space in India, the landscape of residential real estate is set to undergo a significant transformation, offering buyers the allure of both exclusivity and exceptional service.

(The views expressed are solely of the author. The publication may or may not subscribe to the same)

Branded residences work well in mixed-use developments where residential properties are coupled with hotel or resort amenities

Nowadays, even leisure destinations such as Goa, Jaipur, and Lonavala have started to see a rise in branded villa concepts