What is a 'Branded Residence' and Are they worth investing in?

Whenever you are thinking about investing money in property, whether in your home country or abroad, there are a million-and-one things for you to consider before taking the plunge. For example, you must heavily research the area that you want to buy in; decide between buying pre-construction or existing; think about how much deposit to put down and how much to finance; and whether you want to rent it out as a holiday home or to renovate and flip it for profit (to name a few). Another important consideration is if you should invest your money in a branded residence. 

In this article, we’re going to define what a branded residence is and look at whether or not they are worth investing in. What are the risks involved? Is it safer than investing in a standard condo or apartment? Read on and we’ll tell you everything you need to know… 

What is a Branded Residence?
So, what is a Branded Residence? In a nutshell, a branded residence is a condominium that collaborates with a well-established brand in order to make it stand out from the competition. It is a partnership that can bring many benefits to potential investors (e.g., internationally recognised hotels, furniture brands, or notable fashion labels). 

The most popular collaboration as you may have guessed is with hotel brands. International hotel brands will manage the buildings, including all common property, to meet the exceptional standards that their brand promotes. 

This assurance of quality can refer to anything from the room service, concierge, doorman, and valet parking, to room maintenance, in-house facilities, location, and the finishing touches in each apartment. In essence, the condominium will provide a hotel service standard which is a growing trend in Thailand – and the rest of the real estate industry.

The idea is to provide residents with an experience that far surpasses conventional condo living, ultimately adding significant value to the housing project itself. 

What are the different types of Branded Residence? 
There are two main types of branded residence:

• Hotel branded residence: the residences may be located in the hotel itself or separate. They can be legally released as a room for daily rent and short-term stays including long-term residence.
• Non-hotel branded residence: these are collaborations with brands that aren’t hotel chains. A great example of this would be the Residence by Armani Casa. Other projects collaborate with luxury car brands such as the Aston Martin Residence. Rather than being managed by hoteliers, these branded residences will hire professional condominium managers with hospitality management experience. These types of branded residences are popular in many countries, though they’ve yet to establish in Thailand (while hotel branded residences are thriving). 

What is the difference between investing in a Branded Residence and a standard condominium? 
So, what’s the main difference between buying property in a branded residence and buying a standard condo unit? Are there any clear advantages to doing so? Let’s take a closer look…

• Additional facilities and services: a branded residence that has joined hands with a hotel chain can provide residents with many of the services you would come to expect from an internationally recognised brand. It’s similar to being in a hotel, only you are at home. It provides residents with all of the luxuries they could ask for, including a restaurant, spa, room service, concierge, and so much more.
• Hotel chain privileges: residents in hotel branded residences can enjoy a number of privileges while travelling, such as promotions, special discounts, and exclusive access to their favourite hotels in the hottest destinations.
• Better value: when compared to standard condominiums, branded residences are far superior with more amenities and hotel-level management.
• Potential for capital gains: assets in branded residence projects are more likely to appreciate in value in the future, particularly as the brand continues to thrive and the building is well maintained in an up-and-coming neighbourhood. In general, condominiums that are managed by hotel brands tend to have a higher value than those that aren’t.  
• Higher rental yields: branded residences can fetch higher monthly rental prices. This means that if you are to invest in a condo in a branded residence for the purpose of renting out to holiday makers or long-term tenants, you can see a greater ROI than you would in a non-branded residence.

When the economy is sluggish—as it has been in the wake of the COVID-19 pandemic—the real estate market also stagnates. However, there are two areas that always remain largely unaffected: the luxury and ‘super’ luxury industries. These two markets have high purchasing power which is why branded residences have received much attention over the years. Those who have invested have, for the most part, received an attractive return. 

As it stands, branded residences in Thailand are highly priced. On average you are looking at about 300,000 THB per square metre. The hottest locations for branded residences are currently on Sukhumvit, between Phrom Phong and Thonglor – making it prime real estate for those who are looking to invest.

Are there any drawbacks to investing in a branded residence? 
Are branded residences fool proof? Is there anything that can go wrong? 

The important thing to remember is that, as with any form of property investment, nothing is certain; there is always an element of risk. 

Take the Sukhothai Residences as an example…

The Sukhothai Residences were part of the first wave of branded residences shooting up in Thailand back in 2010. This luxury residence provides its unit owners with an upscale lifestyle that many non-branded residences struggled to compete with… 

However, in recent years, the condominium has been beset by legal issues between the project's owners and the project developer, Grace Ivory (a HK based firm). 

They recently had to rename the Sukhothai Residences to Grace Ivory Residences. This was decided upon without the consent or agreement of the unit owners. 

One of the biggest concerns with this is the impact that it can have on the property value. Investors purchased their branded residence because of the big name that they were attached to. Now, their investment has taken on a less prestigious brand. 

Not only that, but many of the amenities once provided by Sukhothai Residences have been lost (thus defeating the purpose of investing in a branded residence to begin with). 

So, what can we learn from this? 
Ultimately, this is a potentiality that you must be aware of before investing in a branded residence. There is always the possibility that the project developers and companion brand will separate. The agreements are only established for a set number of years and while they are often extended – nothing is set in stone. 

And while what has happened with the Sukhothai Residences is rare, you should still be prepared for the worst-case scenario before parting with your money. 

Conclusion: are branded residences worth it? 
The long and short of it is yes; branded residences are worth investing in. Just make sure that you do your due diligence and invest in collaborative projects that are most likely to survive and thrive in the years to come.