Branded residences are springing up across Asia … except for Hong Kong
Hotel residences are all the rage these days, and there’s no end in sight for development of the super-luxury projects. They can be found in almost every major urban centre across the globe and they’re particularly hot properties in Asia. The region is home to the W (Koh Samui), Four Seasons (Beijing), Mandarin Oriental (Macau), St Regis (Singapore and Bangkok), Banyan Tree (Lijiang) and Ritz-Carlton (Singapore and Bangkok) residences to name a few.
The appeal is easy to understand. In January 2011, Philip A Bacon, managing director of hospitality services and consulting body HVS in Madrid wrote of the branded residence’s most frequent result in its primary form, the investment in hotel stock, “In theory there are three groups of happy people: Developers with cash in the bank more quickly and more profitably; branded operators with a new source of management revenue and, perhaps more appealing, royalties from the use of their good name; and owners with a gilt edged investment in branded residential real estate with the promise of long term investment protection and … the possibility of rental revenue.” Bacon went on to point out that even with exclusive residences the brand is still the major draw. “Never forget the ability of the HNWI to recognise an opportunity to make money.”
So where are Hong Kong’s branded residences? The only hotel property on the landscape right now is the Four Seasons serviced apartments in Central. That may strike some as odd given Hong Kong and China’s fondness for recognisable product. The first St Regis development in Bangkok, as an example, has been a hit with both domestic and global buyers — in particular buyers from Hong Kong. One theory is that Hong Kong’s mature and savvy property market simply doesn’t need the brands to help it along and for Thais it’s a relatively new and exciting prospect. Kipsan Oslo Beck, chief marketing officer for Pace Development, currently finishing off Bangkok’s Ritz-Carlton Residences, explains, “Changes in the market are driving specific interest in specific areas, such as the high end of the market directly adjacent to public transport that hasn’t existed [before]. There isn’t existing stock in Bangkok. But there are so many condominiums to choose from in Hong Kong. It’s a more developed market … I believe that’s why we’re seeing hotel branded residences in Thailand now. In Hong Kong you have residences that are close to hotel branded, developments that are similar in type. Like at ICC, where residences are within the footprint and the hotel is right next door.”
James Knowles, Vice President of Sales and Marketing for Minor International – Residential Property, which developed St Regis Bangkok partly agrees, but thinks Hong Kong’s market — its buyers — are less a factor than the demand in some quarters to know what you’re getting first. “China and India have huge potential with more of these luxury brands entering the market recently and in the coming years. We need a supportive legal climate and the associated hotels have to be right. Just to share, to date, Hong Kong buyers make up the biggest portion of foreign buyers for the project, attracted by the unique residences during their frequent visits to Bangkok. We see the trend towards purchasing branded residences as second homes in Bangkok with no hassles and high living standards,” he says.
Another theory floating around is that branded residences are becoming the preference for primary addresses, and the exclusive nature of the branded residence; there aren’t truly that many despite what an unscientific visual survey would suggest. “Firstly, it is very limited in numbers. For example, at St Regis Bangkok residences, we have only 53 very exclusive and luxurious residences. Secondly our properties are attached to some of the best hotels in the world. What this means is that the owner enjoys the very best of both worlds. A world class Residence that they own with all the benefit of hotel services available to them to enhance their stay,” states Knowles. “We also believe that St Regis Residences offers buyers a lifestyle linked to a name; St Regis is an haute property brand that has both ‘style’ and ‘soul’ to its name, which enables it to command a premium. Branded residences are limited and exquisite properties — a true symbol of prestige.”
Pilar Morais, CEO of local upmarket serviced apartment provider CHI Residences theorises the lack of branded residences in Hong Kong — for lease or sale — comes down to basics, including space and business plan. “I don’t think Hong Kong is keeping them away. I think you’ll see a shift towards it. You have the Cullinan, which is almost like a branded residence, not quite there, but it’s similar. The hotels are shifting there. But the hotels are coming here to open hotels and not make a residence. They are taking measures for longer stay guests. Their mentality is changing because they have to compete with residences like ourselves.”
So clearly that aspect of the property market has room to move. Knowles thinks that there definitely is for the major players, as their experiential reputation grows on an international level, so will the residential presence of properties like St Regis, W, and Four Seasons. “With more luxury/high-end hotels entering various Asian markets in the last few years, we are seeing an increase in brand loyalty, with guests seeking out hotel brands when they travel or when they are considering buying their first or second homes,” he summarises. It doesn’t explain the dearth of them in Hong Kong so much as the reason they exist in the places they do. “Branded residences are popular and different from buying standalone properties because the buyers and guests are buying a lifestyle and want the lifestyle linked to a name, knowing that the brands ensure the service meet their expectations.”