22:46 (GMT +7) - Friday 16/11/2018

Property

Vietnam holds potential in urban branded residences

Released at: 09:01, 06/11/2018

Vietnam holds potential in urban branded residences

Photo: Khanh Chi (VET)

HCMC seminar discusses investment opportunities in Vietnam's branded residence segment.

by Hong Nhung

Recent studies by Savills Hotels Asia Pacific (APAC) have found that almost 74 per cent of branded residences globally are located in urban areas, while the vast majority of mixed-use residential and hospitality products in Vietnam are located in coastal areas and are defined as condotels.

“Urban branded residences are typically a residential product that offers hotel-like facilities and services to residents,” Mr. Mauro Gasparotti, Director of Savills Hotels APAC, told a seminar on the urban branded residence model held last week in Ho Chi Minh City. “They are typically associated with a third-party brand, which could be hotel brands such as Ritz Carlton or Mandarin Oriental but also non-hotel brands such as Porsche or Aston Martin.”

It has been reported that there are more than 400 residential brands globally, of which 85 per cent are hotel brands. They all offer a superior set of facilities and services compared to more classical residences.

“We believe there is tremendous opportunity for developers to embrace this concept and apply it in urban cities, as competition in the residential sector will be fiercer and buyers increasingly demand alternative products,” said Mr. Gasparotti. “This trend has already grown rapidly in the US, Europe and other Asian countries such as China, Hong Kong and Thailand. Vietnam is on track to be the next country to see strong growth of this concept.”

“Urban branded residences usually have a different target client compared to condotels. They are proposed as lifestyle products and are usually less attractive for rental yield but focus on a longer-term value proposition and capital gain. Compared to other countries, Vietnam is currently offering considerably higher guaranteed returns which, in certain cases, will be challenging to deliver if only unit rental revenue is relied upon. We strongly advise developers to conceptualize products that deliver quality and long-term value to buyers instead of short-term rental gain.”

Branded residences are attractive through offering the value add of a brand and enhancing the experience for the home owner. The engagement of a brand ensures quality in design, security and high-level services.

“We believe creative and unique design can add significant value to all aspects of a branded residence project,” said Mr. Andrew Pang, Managing Director Asia Pacific of Yoo Asia Ltd. “Yoo’s aim is try to improve the quality of people’s lives through design, whether it is a residence or a hotel room. Design is a platform that can heighten the sense of enjoyment of residence owners as well as hotels guests.”

There are several types of branded residences that can be standalone residential buildings or mixed-use developments. In a mixed-use development, in most cases, the residences are integrated with a hotel component in the same location.

“Hotel brands can add significant value to residential components of mixed-use developments,” said Mr. Karan Kaul, Assistant Vice President of the Langham Hospitality Group. “It is a win-win framework whereby buyers receive the exclusivity of the brand design and amenities from the hotel as well as the possible benefits of a rental pool and professional management.”

The branded residence model is a good development concept in emerging markets with immature residential property sectors, through offering more competitive products. However, it requires a thorough understanding of the concept and structure among involved parties.

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