(Continued from Branded Residential "Brand Owner Perspective" Post on June 27th)
In recent posts we have taken an in-depth look at the branded residence business model – from both a developer and brand perspective. Today we will share a compelling set of opportunities we see to leverage current international market conditions.
Partnerships between Fashion or Lifestyle Brands and Professional Hotel Management Companies
Luxury hospitality brands have tended to dominate branded residential, as they have been best positioned to delivery the 5-star hotel services which many affluent consumers wish to see integrated into their residential experience. Yet there remain unmet needs in the residential space that could be well served by a fashion or lifestyle brand. The opportunity we see is for brands that speak clearly and credibly to consumer needs like sustainability, self-actualization and healthy living, to partner with hospitality management companies that specialize in developing “white labeled” hotel management solutions for leading hospitality brands. The right set of partners can translate exciting luxury brands into the residential space, and then ensure service delivery systematically backs up brand promises. When you think of the future of branded residential in these terms, there are many very exciting possibilities that emerge.
Secondary Asian Cities with Global Aspirations
New York, Paris, London and Hong Kong are obvious choices for branded residential developments. However, a dynamic that really excites us is the growth of secondary cities in Asia. We see pent up demand in these markets for the quality residential products, amenities and brands that define global centers. Branded residences can be positioned to fulfill the aspirational element of this demand. In such circumstances a branded residential project can serve as a symbol of a city’s arrival on a world stage and a sign of its ascendency. The project becomes synonymous with a contemporary, cosmopolitan lifestyle that is now available. Of course, these same characteristics subtly apply to individual purchasers as well. Projects like the Raffles Residences Makati in Manila suggest that successful execution of this strategy can be very rewarding for developers.
Align Branding with Current Flow of Asian Residential Investment to Overseas Markets
Perceived property bubbles in Asia, strong currencies, portfolio diversification priorities and emigration strategies are driving individual Asian residential investors into markets like London, Sydney and Vancouver. We see a great opportunity in these markets to license brands that resonate strongly with both domestic and Asian residential purchasers. The highly successful and now complete Living Shangri-La, Vancouver project by Westbank and Peterson Group illustrates the potential. The mixed-use development includes 307 branded residences and its success has paved the way for a similar project in Toronto. We believe this success can be replicated by a number of Asian brands in urban markets favored by Asian residential buyers. Developers can lend further support to this strategy by establishing residential distribution in select Asian cities. A recent study by Landcor Data Corporation suggests the trend is accelerating and that an Asian distribution strategy should be given serious consideration by luxury residential developers. Landcor found that buyers from China accounted for 74% of 2010 luxury residence purchases (+$3M CND) in Vancouver, up from 46% in 2008.
Branding the Sales and Marketing Process
The focus of those who license their brands to residential developers has been to ensure the physical product and service offering lives up to brand promises. By contrast, sales and marketing standards and the degree to which brand owners participate in developer-led sales efforts, varies widely. There is a great opportunity for brand owners to help create a branded sales process that includes global standards, a world class digital and print marketing toolset (including templates to support tactical execution), compelling storytelling tools and a consistent owner orientation process. By building a truly branded sales process, brand owners can further differentiate themselves and establish a “trusted brand” status in the residential category.
Meeting Residential Rental Distribution Requirements
The demand for residential rental distribution is not going away, especially as capital appreciation slows in many markets. Developers who anticipate nightly rental occupancy requirements in design, and brands that can truly support residential rental distribution, will prosper.
We hope you have found our 4-part focus on branded residential to be helpful. LIFT partners with developers in the creation of world-class residential projects and supports leading hospitality and fashion brands as they build and operate branded residence business models. In our next post we will look at a closely related serviced apartment opportunity that is particularly relevant to markets in the Middle East, North Africa and Asia.
