Real Estate

Never Mind Uncertainties, The Luxury Branded Residences Sector Is Doing Fine – Study

Tom Burroughes Group Editor 1 August 2023

Never Mind Uncertainties, The Luxury Branded Residences Sector Is Doing Fine – Study

An expected rise in the number of ultra-wealthy individuals – despite some recent declines – is likely to keep this sector of "branded residences" in fine fettle, the property consultancy says.

The “luxury branded residences” sector in places such as New York appears to be prospering, riding above the waves of economic uncertainties, according to a report by real estate consultancy Knight Frank. Asian investors are among those driving the trend, it said.

The firm said it has identified 186 live schemes globally, which will be joined by 32 new schemes in 2023, 23 in 2024, 26 in 2025, and 22 in 2026. North America accounts for nearly 40 per cent of all projects, followed by Asia-Pacific (20 per cent) and Europe (13 per cent). 

The report, giving a sense of where HNW and UHNW individuals spend, invest and live, is called The Knight Frank Global Branded Residences Report 2023.

Knight Frank said it has identified a further 35 schemes in the pipeline with no confirmed launch date. The number of new schemes with known opening dates represents a 12 per cent annual growth rate up to 2026 – or 55 per cent overall over the period to 2026.

Within the US, Florida – which has drawn an influx of people seeking lower taxes and higher growth – is leading the charge compared with all other states. Some 80 per cent of Florida’s schemes are found in Miami. In terms of brands, Ritz-Carlton leads with the highest number of schemes, followed by Four Seasons. In terms of rate of growth, Aman and Six Senses lead with 68 per cent and 67 per cent respectively of their total portfolio currently in their development pipelines.

“According to Knight Frank’s recent edition of the Global Super-Prime Intelligence report, global sales of prime and super-prime properties have rebounded in Q1 2023, with 417 sales across the 12 markets, up 11 per cent on the 376 recorded in Q4 2022 and the highest volume since Q2 last year,” Victoria Garrett, head of residential at Knight Frank Asia-Pacific, said. 

“Key hub markets such as the US, UK, Australia, Spain, and France are favored destinations for second home purchases globally and among Asian investors as well. For East Asian buyers from Singapore, Hong Kong and Mainland China, Dubai also serves as a very attractive option for both branded residences and luxury homes,” Garrett continued. 

Christine Li, head of research at Knight Frank Asia-Pacific, added: "Buoyed by a promising outlook, wealth creation propels a remarkable 28.5 per cent surge in the global population of ultra-high net worth individuals from 2022 to 2027. The desire for second homes and branded residences gains momentum, fueled by increasing affluence, greater mobility, and the discerning preferences of savvy investors. Within this landscape, the Asia-Pacific region assumes a prominent position, defining a new era of opulence and exclusivity in the global real estate market."

Growth in the ranks of UHNW individuals is a driver of the branded properties trend. The population of this segment is expected to rise by 28.5 per cent in the five years of 2022 to 2027, although last year, the number fell 3.8 per cent as financial markets fell.

Global travel is forecast to rise 31 per cent above pre-pandemic levels by 2027, with significant growth in Africa, the Middle East and Asia. Asia dominates in terms of expected future growth, but Europe and North America also offer opportunities with increased mobility, the report said. 

The pandemic boosted residential property demand from UHNW individuals, with around 17 per cent purchasing a new primary or second home in 2022. Despite higher interest rates, there remains healthy underlying demand with 15 per cent of UHNW individuals considering a purchase in 2023.

While the report takes an upbeat tone, rising interest rates after a long period of ultra-low rates, and the disruptions caused by the pandemic, mean that the real estate market has not been all plain sailing. In its report in May, Knight Frank said that its Prime Global Cities Index (PGCI), which tracks prices in 46 leading prime markets, fell by 0.4 per cent during the 12 months through March. That's the first annual contraction since the Global Financial Crisis. Annual growth rose to a peak of 10.1 per cent during 2021 before central banks raised rates to curb inflation. Prices are now falling in 16 of Knight Frank's 46 markets, it said. 

Asian favourites
The report said that Asian investors, for example, liked projects such as Towers of The Waldorf Astoria; Mandarin Oriental (main picture): Mandarin Oriental Residences, Fifth Avenue; The Whiteley London, and The OWO, London (below).


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