The market for residential complexes is set to grow by 55% by 2026 globally

15-07-23

Branded Residences, or residential complexes - in most cases - managed by international hotel operators, is a market that is growing steadily at a global level.

The Global Branded Residences Report 2023 prepared by the consultancy firm Knight Frank examines 324 projects with more than 26,000 residential units in 52 countries and monitors the portfolios of 15 leading operators in the segment, identifying 186 active projects worldwide. More projects? The firm expects 32 more this year; 23 in 2024; 26 in 2025 and 22 in 2026, plus another 35 that are in the design process, with no confirmed launch date.

The number of new projects - with a planned date - will represent an annual growth rate of 12% until 2026 or, in other words, 55% cumulative growth until 2026.

Growth of this asset in the US

North America accounts for almost 40% of all projects, followed by Asia-Pacific (20%) and Europe (13%). The projects are located in 52 countries, dominated by the US (106 projects) and Mexico, United Arab Emirates, Thailand, United Kingdom and China, all with double-digit growth figures.

By hotel brands managing the projects, Ritz-Carlton is on the podium with the highest number of projects, followed by Four Seasons. In terms of growth rate, Aman and Six Senses lead the way, with 68% and 67%, respectively, of their total portfolio under development. "In Spain, luxury hotel supply has grown throughout the country, especially in Madrid, Mallorca and Malaga, where more and more international luxury brands are arriving, many of them with Branded Residences projects already planned in other parts of the world," says Humphrey White, Managing Director of Knight Frank in Spain.

"We are facing a landscape of many opportunities in a truly global sector. As the market matures and competition increases, developers who are able to deliver the best projects - with a relentless focus on property quality, facilities, service and design - will do very well," says Liam Bailey, Global Head of Research at Knight Frank.

Wealth creation and travel volume recovery, two relevant indicators

The rise of Branded Residences is driven by factors such as global wealth creation and the recovery in long-haul travel in recent years, the report notes. Although the global population of UHNWIs (UHNWIs) declined by 3.8% in 2022 due to sharply rising interest rates and geopolitical conditions, long-term trends are positive and the consultancy expects this population to grow by 28.5% between 2022 and 2027.

In fact, the US and China will contribute significantly to global wealth creation, growing by 30% and 27% respectively. Other countries, such as Canada, Australia, India, Germany and the UK, will also see a substantial rise in the number of billionaires between now and 2027. Regionally, growth will be led by Australia, Asia and the Middle East.

Another indicator pointing to this recovery is global prime and super prime property sales, which have rebounded. Key markets such as the US, UK, Australia, Spain and France are the preferred destinations for second home purchases.

Also, after falling significantly during the pandemic, hotel stays have been steadily recovering. The flight data highlight some regional differences: Asia is experiencing slower but more accelerated progress at present. However, global travel is projected to increase steadily by 31% above pre-pandemic levels by 2027, with significant growth in Africa, the Middle East and Asia.

Key markets" - alongside the US, UK, Australia and France - include Spain, with cities such as Madrid, Malaga and Mallorca, and the Dominican Republic emerging as the preferred destinations for second home purchases.