The Indian HNIs are getting drawn towards branded residences. Lured by their aspiration to own a premium asset and access to superlative services, Indian HNIs are showing newfound interest in branded residences. As per the latest research by SKYE, a hospitality development and consultancy company, India has around 2300 branded residences, a modest share in a global supply that amounts to 26,000 units. However, the segment will soon change gears, as demand is picking up quickly.

Most branded residences are limited to metropolitan cities in India, unlike global markets which have a healthy mix of urban and remote projects. Nevertheless, given the demand is expanding we can soon see some coveted projects in Goa, Himachal, and Uttarakhand.

A Global Phenomenon

There is no standard definition for branded residence. However, in simple terms, it is when a brand (hospitality or other) partners with a developer in return of a royalty and/or management fees. A branded resident should not be confused with a service apartment. However, they can be rented out at the owner’s discretion, making a constant flow of income.

It is not a novel idea as the concept of branded residence dates back to the 1920s. It picked up in 1980s with four seasons playing an active role. Later other brands like Mandarin Oriental, Ritz Carlton, Mariott joined the bandwagon. Today non-hospitality lifestyle brands such as Versace, Armani, Yoo, Trump Towers are also active in the niche segment.

Currently, North America is the biggest market with around 30-35% of the supplies concentrated in the cities of LA, New York, and Miami. Meanwhile it is also spreading at a staggering pace in Asian and middle eastern markets.

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Delhi-NCR leads the Juggernaut in India

In India, over 40% of the supply volume is concentrated in Delhi NCR, as per SKYE research. This is followed by Mumbai (18.1%), Bangalore (16.2%), Pune (11.6%), and Kolkata (5.9%).

Value wise, the market is pegged at around 22,800 crores, with NCR contributing a sizable share of 11,000 crores (48%). This is followed by Mumbai (25.7%).

Numerous hospitalities, as well as lifestyle brands such as Swarovski, Yoo, Trump Towers, Four Seasons, Leela, Taj, Oberoi Resorts, etc., have successfully ventured into the space. Other major players such as IHG, Mariott, Wyndham are planning to enter the lucrative segment.

Tangible Financial Gains for all Stakeholders

Branded residences can entail plausible financial gains for all the stakeholders involved. For a brand whether hospitality or lifestyle, it makes business sense as it is a natural progression, besides making a windfall of money from royalty fees, management fees, designer fees, etc. It also helps brands to diversify their revenue stream. The developer can offload the inventory at a premium price and leverage unique positioning.

Buyers have to pay an extra price for branded homes, which are generally 25-30% higher than their peers. However, one can enjoy better appreciation and rental yield potential with such properties. Moreover, a brand before joining hands with a developer generally conducts its due diligence on the project. This also gives assurance to the homebuyer.

A branded property is not just a trophy asset but also gives access to a wide range of top-tier amenities such as concierge, valet parking, housekeeping, fine dining restaurants, cafes, clubs, libraries, etc to the homeowner. One can also get access to other services on demand such as child care, pet care, in-house dining services, wineries, etc.

Today India is home to around 850,000 UHNIs and HNIs. With the rise in disposable income and a lifestyle change, there is a visible appetite for high-end serviced living. Indians are now willing to pay a premium for top-notch services and branded properties. The time for branded residence has surely come in India.

(By Ankit Kansal, Managing Director, 360 Realtors. Views are personal)