The “phenomenal” growth of branded residences in the last 10 years has proved “a real driver of not only luxury hospitality, but now increasingly mid-scale premium and of course ultra luxury,” according to Jeff Tisdall, chief business officer, Accor One Living. From being largely a “classic luxury play”, Tisdall believes that the sector has deepened and matured thanks to the “ability of developers and operators to find brands to reach new segments, new demographics, new psychographics”.
At the luxury end of the market, Adelina Wong Ettelson, global head of residences marketing, Mandarin Oriental Hotel Group, suggests that changes in how “ultra-high net worth individuals are experiencing their lifestyle and how they wish to live”, particularly post-pandemic, have fostered a need for new guest options. “People are expecting experiences, and what better brand can provide you with an experience than a hospitality brand?” she says. “People understand how they could actually live in a brand like that.”
Wong Ettelson also considers that in an environment of elevated competition, “developers are looking for an edge… and we give developers a reason, a story to tell, which makes a big difference. They can really use that to elevate their product.”
Size trends
Jake Pinsof, senior director, global residential development, Rosewood Hotel Group, echoes the sense that consumer demand has shaped the direction of the sector. “I think consumers are looking for larger, more premium units in our projects, and they're also really looking for this service lifestyle living.” He explains that the group has a standalone residential project coming up in Beverly Hills, slated to open at the end of the year, where each unit will average 4,000 sq ft.
He adds: “Buyers are coming from large single-family homes into these condominium units, to find a lot of the comforts from their homes, such as large kitchens with double islands, expansive outdoor areas and even their own private pools in some cases.”
He says that guests are “looking for this deep, personalised service that a brand like Rosewood or Mandarin can really deliver; they just want to move in and know that Rosewood will take care of everything for them.” He adds that the popularity for larger, premium units is coupled with a demand for “high touch” service living.
Abhay Bakaya, chief development officer, SH Hotels & Resorts also thinks that the “experience” aspect is key to the sector’s development, noting that his group has perceived a kind of “reinforcement” success where the residences are physically connected to a hotel. “The hotel exudes the brand and the residences being associated with it, gives them that sort of appeal,” he says. He is also seeing greater demand for “larger units, villa-style properties”, in markets like Dubai, Riyadh, the Maldives and Miami. Speaking about the development partners that SH Hotels works with, Bakaya adds that developers are increasingly motivated by these kinds of projects due to their “sales velocity and pricing premium”.
International growth
Another exciting development for the sector is its increasing internationalisation and adoption, notes Tisdall. “It has proven so amazingly robust and adaptable,” he says. “We're talking about a concept that was really largely Americas based and US based 20 years ago. We’ve now got projects approaching in excess of 45 countries, and we’re entering as a first of a kind offering very often.” Despite often bringing a novel concept to a market, Tisdall notes that the rapid success of a residence will frequently lead to the product proliferating quite quickly. “Generally, when you see that proof of concept, and that first developer enter a market and drive very successful results, you'll see two, three, four developers line up behind that,” he notes. “It sometimes then takes a little bit of time to successfully absorb all that supply, and the next result might in fact be apparent at the beginning of the next cycle.”
Pinsoff also sees value in doubling down on branded residential, even – or when – a hotel might not work in that market. He adds: “In second tier markets where we might not necessarily put a Rosewood hotel, if the market there has a very strong fundamental for luxury residences and there's demand there, we'll very much look at doing a project there.”
He cites a Rosewood standalone residential project in Naples, Florida, where branded residences have proved extraordinarily successful. “The project’s been in active sales for six months, and the average price per unit there is almost $17 million. So, it's a very strong market that's doing quite well, where we might not put a hotel.”