Asia-Pacific: A Promising Market Of Branded Residences

• The Asia-Pacific (APAC) region has witnessed strong growth in the branded residences market, offering a diverse range of supplies and prices, attracting the interest of many investors.
• With current economic growth, the expanding upper class, and a tourism rebound, Viet Nam is emerging as a hotspot in the branded residences segment.
  

The development trend of branded residences market in Asia-Pacific

According to Savills, APAC has recently become a hotspot for branded residences, accounting for 23% of the total global supply. Since the launch of the first branded residences project in 1988, APAC has experienced rapid development in this segment, especially over the past decade. By mid-2023, over 150 branded residence projects were completed in the region, with 150 projects underway.  The surge in growth reflects both a historical trend and the impressive potential of the branded residence sector, with the number of projects soaring by 160% just over the last decade.

Branded residences in the APAC region are thriving in luxury resorts and making their way into major cities, becoming a key residential choice for the affluent. Phuket, Thailand, is at the forefront, with the region's highest number of completed projects and projections to surpass 40 by 2030. 

In addition to Phuket, cities like Da Nang, Bangkok, Kuala Lumpur, and Manila are also emerging as key markets for branded residences. This geographic diversity enhances the appeal of branded properties, attracting not only local buyers but also expatriate investors

In the race for branded residence development across APAC, Four Seasons currently leads the hotel and resort segment with over ten completed projects. However, Banyan Tree is expected to take the lead by 2030, with projects in the pipeline. Cassia is also on the rise, with plans to grow from two to ten projects by 2030. In the non-hotel sector, YOO, inspired by Starck, leads 10 projects, while YOO Studio ranks third with 6 projects.

In metropolitan areas, branded residences are ideal homes for affluent individuals and families and offer strong investment potential. Matthew Powell, Director of Savills Ha Noi, highlights: "The diversity of location, property types, brands, and design continues to be a key strength of branded residences. The blend of variety, brand prestige, guaranteed quality, exclusivity, and security creates a lasting appeal. Thanks to these factors, branded residences have shown impressive growth year after year, becoming an increasingly appealing option for investors and potential buyers."

Branded residences are priced at a premium, driven by their top-tier quality, luxury services, and exclusivity. However, pricing can vary significantly based on the location, the brand's reputation, and the type of the project.

In the APAC region, some branded residences are priced lower than the global average due to the diversity in usage and the range of offerings, from luxury to mid-tier properties.

This lower price point is largely due to the focus on domestic and regional buyers who, while more budget-conscious, still seek the high-end amenities and services branded residences provide. Additionally, these projects cater to various purposes, from primary residences to second homes, making them more appealing and suited to the diverse needs of customers in the region. 

A stable economy fuels the rapid expansion of the branded residences sector in the Asia-Pacific region. According to the World Bank's June 2024 forecast, the region’s economic growth is set to reach 4.5%, an increase of 0.3 % from earlier predictions. This economic growth and the rising number of affluent individuals drive the demand for branded residences. 

The tourism industry's recovery also plays a crucial role in this growth, particularly for hotel-branded projects. With a significant rise in tourist arrivals and an extended average stay, the Asia-Pacific is emerging as a prime destination for global investors in branded properties. 

Viet Nam has many advantages in the development of branded residences

Matthew Powell, Director of Savills Ha Noi, highlights Viet Nam’s advantages, especially in the coastal areas. The country’s economic expansion and growing affluent class create an ideal environment for branded residences. Between 2013 and the end of 2023, the number of millionaires in Viet Nam surged by 98%, reaching 19,400. This increase has spurred interest in second-home ownership, with wealthy individuals investing in high-end property for recreational activities and rental income through sub-leasing programs.

Major cities such as Da Nang, Ha Noi, and Ho Chi Minh City are emerging as key markets for branded residences. For instance, in the Hoi An—Da Nang region, five branded residential projects have been completed, with 12 more underway. This area will soon lead the market in project volume and scale.

Mr Powell explains, “Viet Nam offers not only great natural landscapes but also a pleasant tropical climate year-round. These factors are crucial for developers when choosing locations for branded residences. The blend of natural beauty with sophisticated design and premium management services enhances the appeal and long-term value of these properties.” Notable projects include Mandarin Oriental in the emerging destinations of Bai Nom, Phu Yen, and Park Hyatt Phu Quoc.

Additionally, Viet Nam's year-round tropical climate and low living costs make it an appealing destination for international investors seeking a second home. Mr Powell also noted, “Foreign buyers are drawn to branded residences because they recognise and trust the established brands from their home markets.” 

Despite the positive outlook, the branded residences market in Viet Nam faces challenges such as regulatory hurdles, administrative procedures, and competition from neighbouring markets. However, with the growing affluent class and strong governmental support for infrastructure development, Viet Nam’s branded residences sector is poised for significant growth in the future.