Property cooling measures discouraging developers from building high-end luxury projects in Singapore
Recent data from C9 Hotelworks, an Asia-based hospitality consultancy, has revealed that the market value of branded residential projects in Asia has reached an all-time high of US$26.6 billion ($35.5 billion), with over 68,000 luxury units now available. Vietnam takes the lead in Asia, with 17,680 branded residential units across 59 properties and an average price of US$350 per square foot. Thailand follows closely behind, with 16,271 units across 65 properties and a majority of units priced at US$510 per square foot. The Philippines is next on the list with 13,276 units across 46 properties, with luxury properties priced at around US$400 per square foot.
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However, it is Singapore that commands the highest prices in the region, with branded residences priced at US$2,140 per square foot. Following closely behind are branded residences in Japan, with an average price of US$1,935 per square foot.
According to Bill Barnett, managing director of C9 Hotelworks, there are also new markets that have seen a rapid growth in branded residences in recent years, such as South Korea with 3,026 units across 16 properties, and Malaysia with 6,014 units across 24 projects.
In the post-Covid-19 era, urban-locale branded residences make up 56% of the existing supply in Asia, with luxury urban projects dominating the sector in terms of market value. This is evident in South Korea, where urban branded residences are priced at US$2,670 per square foot, which is more than half the cost of resort projects that typically sell for US$1,040 per square foot. Similarly, in Thailand, urban branded residences fetch about US$770 per square foot, compared to US$430 per square foot in resort locations.
Asia’s branded residential market comprises 12,330 units across 80 developments that are affiliated with luxury hotel brands, accounting for 31% of the market supply. Barnett notes that reputable brands can help affiliated properties command a 30%-35% premium rate above the market rate in the country, and also increase the developer’s market share in the country.
The appeal of top hospitality brands and other luxury lifestyle brands has also led to hotel groups and premium brands asking for higher licensing fees. It is becoming increasingly common for luxury hotel brands and lifestyle brands to negotiate for a 6% to 10% cut in the sale of each branded residential unit.
In August last year, Thai developer Ananda Development and German automaker Porsche, through its lifestyle brand Porsche Design, unveiled the ultra-luxury Porsche Design Tower Bangkok in Thonglor. With 22 units, the tower is the first Porsche residential tower in Asia, following the Porsche Design Tower Miami a decade ago. The development offers duplexes and quadplexes, with prices ranging from US$15 million to US$40 million.
Gianfranco Bianchi, general manager of Asia Pacific at The One Atelier, an international design consultancy that specialises in branded residences for lifestyle brands, notes that in recent years, more luxury lifestyle brands have explored partnerships to license their branding into real estate developments across the Asia Pacific region. Some of their portfolio projects include the 28-unit Fendi Casa Residences by Armani in Miami, the 259-unit 888 Brickell by Dolce & Gabbana in Miami, and the 90-unit Büyükyalı Residences in Istanbul, Turkey.
While hospitality-affiliated branded residences provide top-notch hospitality services, fashion or design-branded residences offer a rare trophy home that conveys the namesake design and luxury aesthetic that have made such brand names synonymous with luxury lifestyles today, says Bianchi.
Ananth Ramchandran, head of advisory and strategic transactions in hotels and hospitality (Asia) at CBRE, notes that property cooling measures have led many high-net-worth Singapore-based buyers of branded residences to consider trophy assets in nearby regional markets. He adds: “We’ve experienced a significant reduction in terms of discussions and inquiries from Singapore developers to explore high-end, ultra-luxury branded residential projects in Singapore. Developers are severely discouraged from stepping into this high-end segment because property cooling measures have dampened foreign buyer demand.”
Singapore-based high-net-worth buyers are also increasingly looking at luxury-branded residences in destinations such as Phuket and Bangkok in Thailand, Bali in Indonesia, and emerging markets in Vietnam. These locations are typically just a two-hour flight from Singapore, making them a more appealing option for buyers.
Jason Thelen, senior director of sales and marketing at Sudara Residences, a Thai-based developer, says: “Singapore has quickly become our top regional market for buyers looking for second homes, making up over 45% of regional purchases.” The availability of regularly scheduled direct flights and relatively short travel time have made these real estate projects more appealing to Singapore-based buyers, he says.
Saowarin Chanprakaisi, vice-president of business development at The Ascott, notes that the hospitality operator is also tapping into the future growth of the branded residential segment in Asia. “We believe the emotional resonance of our brands, like Ascott, The Crest Collection and Oakwood Premier, have reputational strengths in the market.”
She adds that Ascott is looking to expand its market share in the region by partnering with developers who would like to enter the branded residential market.