The branded residence sector is experiencing extraordinary growth, driven by both traditional hotel brands and a variety of non-hospitality brands entering the market, with the asset class evolving from a niche to mainstream product. The continued growth of high-net-worth and ultra-high-net-worth individuals is a key driver of the branded residence market.
But panellists at the Resort & Residential Forum 2024 - which took place at the Athenaeum InterContinental Athens stress that pricing strategy is critical in the residence market, stating it’s better to price cautiously than go in too high and having to backtrack.
Pricing cautiously
Alexandros Moulas, senior commercial director at property management company Lamda Development, recommended developing a pricing strategy based on understanding of the local market and data, for example on branded price premium and marketing uplift opportunities. He advised it was critical to get the launch price right and gradually increase, rather than going in high and having to reduce it.
Marguerite Krikhaar, founder of Skylla – a London-based, international network of sales, marketing and development specialists focusing exclusively on the high-end luxury property market – agreed that it is a mistake to start overpriced.
She explained that the first person buying a residence in a new development should not be paying the same as the last person due to the difference in risk and certainty. “You go in cautiously and you build from there,” she advised.
Understanding the buyer
Moulas described finding the buyer for the product as the million-dollar question and said that understanding the buyer profile from the outset is key to decision making, for instance whether to brand or go unbranded, the type of units to build, and knowing whether buyers will be making purchases as a primary home or an investment. “That will give you the answers as to the product you’re going to design,” he explained.
Krikhaar also said that it is key to understand what customers are asking for to ensure a product is fit for demand. For her, that means conducting questionnaires and picking up the phone. “If you [base] all your information on what happened before, your data is dated,” she said.
Getting sales and marketing right from the start
Get marketing teams involved from an early stage, stressed Slavica Milic, marketing and communications director at Lustica Bay. Located on Montenegro’s Adriatic coast and led by Swiss-based Orascom Development and Lustica Bay in partnership with the government of Montenegro, it was the country’s first greenfield investment, estimated at €1.5 billion.
She said that marketing teams need time to prepare for launch, immerse themselves in the brand and ensure they can convey the message efficiently. “You don’t want to end up in a situation where you end up with a product that will have a slow sales velocity,” she points out.
Structure will influence how a residence is marketed, with the trend shifting towards in-house in the US due to high commission rates. But it’s key that all marketing and sales teams know what they can and can’t say at each point in the process.
Alexandra Yao, global head of branded residential development and strategy, luxury & lifestyle at IHG Hotels & Resorts, added the brand is led by its developer partners as they are the local experts. However, anyone involved in the sales process of an IHG-branded residence will go through brand immersion sessions covering for example, visual identity and tone of voice.
And as for getting buyers over the line, Krikhaar said this often comes down to the floorplan. “People start imagining their lives within those little lines... it’s very evocative,” she said. “That’s when someone is in it – they’ve bought the dream.”