What Makes a Successful Branded Residence?
I see numerous posts regarding Branded Residences and what makes them successful. Many of these posts are written by “experts” who have never set foot in a completed project, never mind one that has a few miles on the clock.
So, I thought that with over 25 years of experience in this sector, I would chip in with my two penny's worth.
All successful projects need several key components. Among them are the following:
Location
Careful consideration must be given to how the location could change over the next decade or so.
The prospects for city-centre projects will rarely change dramatically, whereas remote locations can change considerably. What was once considered “front line” can easily become third or fourth line. After all, who wants to live next to an industrial estate or a funfair?
Developer
The quality of construction must be excellent. One hugely significant factor is the developer and their track record. How do their projects age?
I'm not talking about fashionable design trends; I'm talking about the quality of the materials used in construction, the landscaping of the grounds, the lighting and the exterior façades. All are important.
Equally, what is the quality of the ongoing maintenance, and who is responsible for providing it?
Ideally, it will be the original developer. This would give me confidence that the project will be properly maintained, as developers typically take great pride in their flagship projects.
The Brand / Operator
The operator isn't necessarily the brand, so let's deal with the easy one first.
Hospitality-branded residences
The operator's role is to provide exceptional service and maintain consistent standards. They must never allow the quality to dip.
Staff must be efficient, highly trained and experienced in dealing with repeat visits and the nuances of UHNWIs. These owners absolutely value the familiarity of seeing the same staff members who understand their preferences.
Staff must know their owners' wants and needs and deliver the required service with professionalism and discretion.
The fees charged by the operator are a key factor here, as, in the majority of cases, they represent the operator's primary revenue source, excluding à la carte services.
One important point to keep in mind is that the brand cannot afford to allow negative feedback to damage its reputation. It is therefore not only looking after its owners but also protecting its global reputation and credibility.
Non-hospitality operators
This is a very different proposition.
First, who are they? What experience do they have, and how long is their agreement to service the residences? What happens if standards drop? What recourse do owners have?
There are some exceptional white-label hospitality providers, and in locations such as Dubai, they are plentiful. This should therefore not necessarily be an area of concern.
However, if the project is in a remote location or emerging market, it can become a significant issue. Due diligence regarding the operator and the contractual relationship is incredibly important.
Security
Once again, this falls under the operator's responsibility.
Security needs to be effective and, above all, discreet. Twenty-four-hour security is a given.
In the majority of cases, owners will occupy their residences for less than 50% of the year, leaving extremely valuable assets behind when they are away.
This creates two distinct security considerations: protecting the residence itself and protecting the wider property when owners are not in residence. Both are equally important.
Owner Fees
Owners of ultra-high-end properties understand that the cost of ownership comes in two parts: the initial purchase price and the ongoing costs.
They know there are expenses associated with maintaining both their property and their lifestyle. This is not a problem, provided they can see where their money is being spent and service standards have not declined. They also understand that exceptional service cannot come cheaply.
A common mistake is to set fees too low initially in an attempt to avoid negatively impacting sales. This is a nervous mistake.
If the cost of servicing a Rolls-Royce is prohibitive, that individual simply won't buy one.
Charging premium fees is perfectly acceptable, and keeping them at the right level is essential, subject to one simple proviso: make sure the owners are satisfied with what they are receiving in return.
Amenities
I've saved the best until last.
Certain amenities are now simply the norm: swimming pools, spa areas, communal walkways, gardens and grounds, food and beverage offerings, car parking spaces and storage rooms.
All must be maintained to an absolutely pristine standard.
However, these are amenities that will typically be used throughout the year.
Let's look instead at some of the more “novel” ideas we're seeing today, introduced to make a project stand out.
Cigar rooms, cinemas, golf simulators, boardrooms and climbing walls, to name just a few.
The challenge is that these amenities can very quickly become underused spaces that either cost a fortune to maintain or are left to deteriorate, eventually becoming an embarrassment.
Realistically, how often would you use a cigar room? A golf simulator? A cinema?
These facilities can be extremely expensive to maintain while adding very little tangible value to the owners' lifestyles.
Interestingly, green spaces where residents can grow plants and herbs, or simply find a quiet place to sit and reflect on life, can prove far more appealing to owners.
The Bottom Line
These are the key areas that will ultimately dictate the success of a Branded Residence.
When a project is exceptionally well run, resales are rarely a major consideration. Owners have found their own “Nirvana”.
Why would they want to sell it?
However, be warned: get it wrong, and it can be as simple as this.
You have the finest Egyptian cotton sheets, but the bed doesn't have a mattress.
A bad night's sleep is guaranteed, regardless of the quality of the Egyptian cotton.
The lesson?
Every component matters. A Branded Residence is only as good as the sum of its parts.
Written by Kevin Wash
Co-Founder & Partner VOS Consultants
About the Author:
Kevin Wash is the Co-Founder of VOS Consultants and a specialist in Commercial Architecture for Branded Residences and Mixed-Use Developments. Drawing on decades of international experience across hospitality, luxury residential and commercial strategy, he advises developers and hospitality brands on aligning commercial positioning, buyer journey, sales execution and operational readiness to improve long-term project performance.
Part of the Commercial Architecture Series from VOS.
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Such a clearly defined post, written with clarity knowledge and obvious expertise.