Rental programmes can be a huge selling point in branded residences, helping owners offset purchase costs and creating an income stream. However, the question industry side of the table is when to include these rental programs and how to make sure there’s no misalignment.
Put simply, can rental programmes coexist with the exclusivity promise and residential experience that the branded resi product itself is built on, particularly in urban markets where the influx of transient guests can blur the distinction between a private residential community and a luxury hotel?
Product positioning
The answer, according to industry experts, depends on positioning. According to Savills, 2025 saw a year-on-year growth in branded residences of 19 per cent, with 39 new hotel brands and 19 non-hotel brands entering the space. And with more brands chasing growth, maintaining clarity around product positioning is becoming even more critical.
The growing diversity of branded residential products means that there are a range of buyer cohorts that are looking for different things. At one end of the spectrum, there are highly exclusive residential products where rental programmes are effectively out of the question, and on another end are investment-led products where rental participation is a core part of the proposition.
“The industry is reaching a point where branded residences need to become much clearer about what they are actually selling,” says Gregoire Nallet, development consultant and transaction advisor at Global Branded Residences as he notes some inconsistency in how some brands position their residential offerings.
“The words 'investment product' and 'exclusive residential product' don't always sit comfortably together. If you're targeting ultra-high-net-worth buyers seeking privacy and exclusivity, then leading with projected yields and rental returns can send a conflicting message.”
For Nallet, it’s about making sure that any decisions around rental programs are aligned with the product being sold to the buyer rather than trying to satisfy different buyer groups in one project.
“If a project is marketed as an exclusive luxury/ultra-luxury residential community focused on privacy, service and long-term ownership but owners find themselves living alongside a continuous flow of short-term guests, then the product is no longer delivering what was promised.”
In order to deal with the challenge of rental activity undermining the feeling of exclusivity and the overall experience, Nallet notes some projects impose minimum stay requirements, rental caps or restrictions on which units can participate.
Balance and alignment
According to Chris Graham, managing director of Graham Associates, the long-term success of a project relies on “maintaining a healthy balance between developers, operators and homeowners”. However, that balance can quickly become strained when rental programmes pull projects in conflicting directions.
Nallet agrees. “Someone is always disappointed when expectations aren't aligned between the developer, the brand and the buyer.”
But in a sector trying to get its head around the topic, rental programmes remain enormously popular among owners. Nallet estimates that participation rates frequently exceed 70 per cent in projects where rental pools are offered. That appeal explains why developers continue to favour rental-enabled projects.
According to Graham Associates' Branded Residences Report, a professionally managed rental pool remains one of the features that can increase appeal and enhance the value proposition of a branded residential development. These rental programmes can also provide the occupancy levels needed to support extensive luxury amenity offerings.
However, Nallet argues that the relationship works both ways. While rental programmes can help support extensive amenities, not every residential project necessarily needs them, particularly when many of those amenities may be readily available in numbers in urban centres.
“One important consideration is that transient guests often justify a broader range of amenities. If you don't have that flow of guests, it can be difficult to support facilities such as restaurants, bars, spas and extensive wellness offerings. Most owners aren't going downstairs every day for breakfast or regularly dining in the restaurant within their own residence. It comes back to understanding what buyers actually want.”
So what are the strong warning signs that a rental programme is misaligned with brand positioning? Nallet says an obvious one is when the product characteristics themselves fail to match.
“If you're positioning yourself as a top luxury residential product but 60 per cent of the inventory consists of smaller units, that doesn’t really make sense. It signals that it’s more of an investment product.”
Other considerations
Beyond brand positioning, rental programmes introduce a range of operational complexities, with revenue allocation being one of them.
Nallet explains: “In highly seasonal destinations, pooled rental revenues can become complicated. If one owner occupies their residence during Christmas and New Year while another makes theirs available for rental, the financial outcomes can be very different.”
Maintenance costs also increase significantly as the wear and tear on residences and common areas is very different when people are checking in and out regularly. Furniture depreciates faster, carpets wear faster and common areas experience much greater usage.
Branded resi rental programmes in urban locations face another big obstacle in the form of regulation. In European cities including Paris, Barcelona and Amsterdam, restrictions have tightened on short-term rentals amid concerns around housing affordability and overtourism. Yet constrained markets can also create scarcity value and projects that successfully navigate the regulatory environment can benefit from significant demand and limited competition.
Looking forward, Nallet believes the sector is moving towards more clarity and greater segmentation, with much stronger alignment between brand positioning and customer expectations.
“Today there is still a degree of mixing between investment-led products and ones of the opposite end of the spectrum. Over the next five years, I expect brands to become much more consistent about where they sit on that spectrum.”
It’s no question that rental programmes create value. However, it is important to ensure that every decision mad around a project’s rental programme creates the right kind of value for the product being sold.