1、A Guide to Branded Residences for Developers and InvestorsNovember 2022Hotels&Hospitality Group 2 3 Over recent years,there has been a rapid increase in interest from hotel developers/investors looking to include branded residential components to their mixed-use developments.This is particularly sig

2、nificant in the luxury segment,where the synergies between the hotel and residences can improve the overall experience for both guests and residents and the profits from the residential portion of the project can enhance investor returns.Given the demand for this offering as well as brand companies

3、continuing to seek ways to expand their business,we are also seeing growth in standalone branded residential projects,attracting developers/investors looking to achieve premium pricing and accelerate the pace of sales.Why brand a residential project?The brand equity and reputation help the developer

4、/investor quickly define the experience and differentiate the project in an increasingly crowded market.Branded residences are not a new concept,with projects dating back to the 1920s in New York,when the Sherry-Netherland hotel opened with luxury apartments facing Central Park.In Asia,the first bra

5、nded residence project dates back to 1988 with the development of Amanpuri in Phuket,an iconic resort in Southeast Asia.Fast forward thirty years and now an increasing number of luxury developments across the globe are associated with a branded residential program.In this paper,JLL aims to provide a

6、 comprehensive guide to branded residential projects and share an overview of the sector across the globe.For the purpose of our report,the term branded residence refers to residential premises available for sale that are managed and branded by a well established hotel management company and/or high

7、-end residential properties under designated brands.IntroductionAman Niseko-Entrance ReceptionA Guide to Branded Residences for Developers and InvestorsLayan Residences By Anantara-Pool View 4 5 Historically,luxury hotel brands have been the pioneers and leaders of the branded residential environmen

8、t.Todays market leaders include Marriott International(Ritz Carlton and St.Regis),Four Seasons and Accor(Fairmont and Banyan Tree).Mandarin Oriental and Rosewood represent the fastest growing operators in the space with 17 and 18 properties in the pipeline,respectively.In recent years,consumer brand

9、s have also begun to enter the space.Automobile companies such as Porsche Design and Aston Martin and fashion companies such as Armani and Missoni emerged as luxury branded residence players,seeking to expand their product offerings.Branded residences are concentrated in the luxury and ultra-luxury

10、segment as the target consumer is typically high-net worth individuals(HNWIs).These units can be used as primary or secondary homes,with the use being influenced by the location of the property.Branded residences for primary use often are situated in urban/dense markets,where residences used as seco

11、ndary homes tend to be in more resort-oriented destinations.The shift in more flexible working arrangements following COVID-19 has supported the proliferation of branded residences in leisure focused markets,a trend we expect to continue long after the pandemic is over.Moreover,the branded residence

12、 sector stands to benefit from the growing number and wealth of HNWIs over the last few years.Between 2013 and 2019,the global HNWIs population increased at a compound annual growth rate(CAGR)of 6.1%,while the period between 2019 and 2021 witnessed a 7.1%increase across regions.Forbes 2021 list of t

13、he worlds billionaires reported that the wealth accumulated by those featured totaled$13.1 trillion up from$8 trillion the year prior.Key players and trendsA Guide to Branded Residences for Developers and InvestorsFairmont Marrakech outside viewMandarin OrientalHyattRosewoodKempinskiIHGTrumpHilton W

14、orldwideFour SeasonsAccor(including Banyan Tree)Marriott International0204060805202520001920202021North AmericaAsia-PacificEuropeLatin AmericaMiddle EastAfrica7.1%CAGR6.1%CAGRSource:Hotel company websites&JLLSource:Capgemini Research Institute for Financial Services

15、Analysis 7 6 Existing Branded Residential Developments by CompanyNumber of HNWIs by Region,2013 2021685 Fifth Ave-Rooftop Pool 8 Hotel brands Consumer brands 9 Representative hotel and consumer brands 10 11 BenefitsBenefits for the Developer/InvestorBrand association and enhanced services in branded

16、 residences allow developers/investors to benefit from solid price premiums compared to unbranded,high-quality residential projects.When developed in conjunction with a hotel property,branded residences allow developers/investors to rely on purchase deposits by future residents to fund the completio

17、n of the projects development,depending on local rules and regulations.This is particularly attractive in markets where access to debt is limited,and interest rates are high.Additionally,residential projects tend to generate higher returns than stand-alone hotel projects.Branded residences may impro

18、ve the returns of cost-prohibitive five-star hotel developments and create premium returns for the overall project.In markets where the supply of quality condominium development is considered saturated,residential developers/investors can also look for a brand association to differentiate their prod

19、uct from the competition and increase sales velocity.Benefits for the PurchaserPurchasers are the ultimate beneficiaries of branded residences.Branding is a form of quality assurance for purchasers and buying into a branded residential property can represent an emotional purchase of a trophy asset.T

20、here is also less perceived risk knowing the brand vetted the developer/investor before granting them a license.This saves the purchaser valuable time by reducing the need for due diligence.Furthermore,branded residences offer an elevated lifestyle,convenience and amenities.Purchasers have access to

21、 the concierge services,wellness facilities and various A la carte services offered by the brand.They also enjoy hassle-free ownership with brands handling maintenance,security and various legal obligations during their absence.In some cases,unit purchasers benefit from rental programs,generating in

22、come to offset the service charges and producing a financial return when leasing out their units.Finally,purchasers see the branding of the residence as a way to preserve the long-term resale value of the unit considering its positioning above the traditional residential market.Benefits for the Bran

23、dMany brand companies have spent decades and made significant investments in defining their brands position and growing loyalty and recognition among their customers.Expanding into the residential market is a natural path to expand and diversify their income streams.In the case of hotel companies,th

24、e pipeline for standalone luxury hotels is challenged by high development costs and extensive operating models necessary to deliver appropriate services.By collocating a luxury hotel with a residential component,developers/investors look to achieve premium sales and profits from the residential port

25、ion of the development which can help them meet their overall investment goals.Given these benefits,some hotel companies are choosing to reserve their luxury brands for collocated projects to encourage hotel development.Aman Niseko-Japan Villa ExteriorA Guide to Branded Residences for Developers and

26、 InvestorsLayan Residences By Anantara-Guest Room Amenity PoolPurchaser benefits&services offeredBenefits and ServicesUpon purchase,branded residence purchasers are provided with a variety of exclusive benefits such as highest tier loyalty program status for a number of years and discount privileges

27、 for the brands other accommodations,restaurants,spa services and more.The purchaser benefits vary depending on the brand and may include additional benefits such as invitations to exclusive brand events.Branded residence purchasers also benefit from a vast variety of services and amenities offered

28、at the property.The range of amenities and services varies greatly depending on the location and type of branded residence development.The services offered by the brand generally include base services-included within the purchase price and annual service charge-and a-la-carte services which are avai

29、lable at additional charges and are either provided by the adjoining hotel or the residential management team.Base ServicesConcierge Services:bookings(airline,restaurant,theatre,transport,activities,etc.),business center services,etc.General Maintenance:common area upkeeping,pool and gym cleaning an

30、d servicing,24-hour security,landscaping,etc.Recreational:locker rooms,sauna,steam room,swimming pool,access to spa,fitness center,tennis and other sports amenities,towels and refreshments,etc.Doorman Services:mail/package assistance and delivery,move-in logistics,etc.Other Services:trash removal,ke

31、y card services,etc.13 12 A Guide to Branded Residences for Developers and Investors 15 A la carte services Personal servicesHousehold&engineeringEvent&food servicesRecreationNanny,Childcare arrangementsPersonal shoppingBusiness equipment,RentalAdministrative,Personal arrangements Assistant services

32、Laundry,Dry cleaningCar washing,DetailingComputer technology assistanceTranslation servicesHousekeeping services(daily,weekly or as needed),including:Vacuum and mop floors,Dust interior Strip beds,Change sheets,Wash dishes Clean bathrooms,Clean patio,Clean mirrors,Oven/cooktop cleaning Refrigerator

33、cleaning Laundry Handy-Man services Minor electrical,Plumbing Picture hanging Fluorescent tube/bulb replacement Simple electronic hook-up Furniture assembly Touch-up paint HVAC filter change Bulk trash removal Move-in trash removal In-residence pest controlMail and package shippingArrival prep,stock

34、ingPersonal chefGrocery and food deliveryParty,function and event planningMeeting and conference rooms through hotelPersonal trainerIn-residence spa treatment/services 14 Fairmont Marrakech main swimming pool 16 17 Purchaser considerationsFF&E PackageWhen purchasing a branded residence product,purch

35、asers often have the opportunity to either buy the unit furnished in accordance with the brand standards and design(this can include two or three options to choose from)or unfurnished,allowing for personal customization and the hiring of private designers.Offering various options to purchasers has p

36、roven to be successful,albeit more onerous.HNWIs are typically more likely to appoint their own designer to customize the unit to their liking and incorporate art.If branded residence purchasers want to include their units in the rental program,the brand-suggested furnishing in accordance with the b

37、rand standards and design is often mandatory.Our experience has shown that HNWIs prefer to buy residences in developments that restrict rental programs to ensure occupiers are only other HNWIs and that traffic from outside and short-term guests is limited for enhanced privacy.685 Fifth Ave-Restauran

38、t-Vignette-FireplaceA Guide to Branded Residences for Developers and InvestorsAman Niseko-Spa Swimming PoolTypes Traditionally,branded residences were hotel-led developments with a portion of the development area allocated to a for-sale residential scheme linked to the hotel facilities and branded u

39、nder the hotel brand.As the general population is increasingly brand-conscious,consumer brands from the fashion or car industry,have also entered the sector.Types of Branded Residences:There are a number of variation on the Branded Residences Model:residences located within a hotel often on the hote

40、ls upper floors residences in mixed-use neighborhoods,where the hotel and branded residences are located in different buildingsstandalone schemes without a hotel nearby 19 18 A Guide to Branded Residences for Developers and InvestorsLayan Residences By Anantara-Guest room-Ocean ViewStructureBrand*En

41、d userDeveloper/InvestorPurchaser/main userProvides:Base services On-demand services Facilities Image Quality ManagementProvides:Development land Construction permits Real estateLicenses brandProvides serviceSells ata premiumPays fees (HOA management)BrandedResidencePays rentPays fees(licensing)*In

42、some parts of the world(i.e.the Americas),the brand and operator of the development may be of different entities due to the selection of a white-label operator.21 20 A Guide to Branded Residences for Developers and InvestorsA Guide to Branded Residences for Developers and InvestorsRental programRent

43、al poolOwner 1Owner 1Owner 2Owner 2Owner 3Owner 3For Each Unit-Less Deductions for:Commissions(agents,metasearch,etc.)Credit card fees Potential rental program management fee from the operator Reservation&Loyalty Program fees Other off the top chargesFor Each Unit-Less Deductions for:Commissions(age

44、nts,metasearch,etc.)Credit card fees Potential rental pool management fee from the operator Reservation&Loyalty Program fees Other off the top chargesIn rental programs,each unit has its own P&L.In order to ensure fairness among owners of the units,the brands usually implement a priority rotation of

45、 units within the same room categories to prevent two very similar units from resulting in vastly different returns.Some brands only offer rental programs as rental pooling may result in the selling of units being classified as a sale of a security under some jurisdictions(i.e.considering this would

46、 be similar to owning a share in a hotel owning and operating business,as opposed to owning a real estate asset),therefore attracting a different set of regulations.In rental pools,revenues are pooled and distributions are made across the entire ownership pool.In most jurisdictions,these structures

47、are highly regulated and require registration as an investment,adding time and cost to the project.The distribution to unit owners is typically done on a monthly or quarterly basis based on a distribution formula considering the unit size,potential views,number of bedrooms,etc.In some cases,the retu

48、rn distribution happens after the accounting of operating(rooms and overheads)expenses.However,purchasers generally like the transparency of an off-the-top return distribution.Gross RevenueGross RevenueGross RevenueUnit 1Unit 1Unit 2Unit 2Unit 3Unit 3All revenues generated by stays in the residences

49、 are pooled into a Residence Gross RevenueAfter deductions,all revenues are considered Net Residence RevenuesRental program vs.rental pool 23 22 Hotel brands offer purchasers that have purchased a brand-approved FF&E package to participate in the rental program or rental pool scheme.The brand reserv

50、es the right to decide how many units may be placed in the rental program/rental pool according to market demand and to avoid cannibalizing the adjoining hotel.Hotel brands manage the units participating in the rental program/rental pool and commercialize them along with the hotel rooms in the syste

51、m.The branded residence rooms revenues flow within the hotel P&L,however the revenues are also accounted for separately for each unit.All F&B and other revenues generated by the branded residence occupiers flow into the hotel P&L.Net RevenueNet RevenueNet RevenueNew Trend in Standalone Branded Resid

52、encesStandalone branded residences have become increasingly popular over the years.Living in a hotel environment affords residents a lavish lifestyle,often in one-of-a-kind locations,with exclusive access to on-site restaurants,spas,golf courses,private cinemas,and more.Licensing their brands to sta

53、ndalone residences allows hotel brand companies to tap into a new world of partners and real estate developers/investors whose business model does not include hospitality.At the same time,real estate developers/investors can enjoy price premiums and higher velocity of sales with a brand partnership.

54、It also serves as a product differentiation in markets saturated with condominiums and high-end residential projects.Standalone branded residences generally require the development of ample leisure amenities such as a gym,spa,lounge areas,libraries,and pet facilities.While standalone projects provid

55、e residents with more privacy than mixed-use developments with a hotel and residential component,standalone projects do require some additional thought from an operational and design planning perspective to maximize the revenue generating opportunities of the projects spaces.In order for brand stand

56、ards to be met,developers/investors must hire professionals that can deliver the level of service hotel employees are accustomed to providing.As such,standalone projects are often signed with a brand with an existing presence in the market the development is planned for,allowing for synergies and su

57、pport.Standalone branded residences 25 24 Fairmont Marrakech Palm ResidenceA Guide to Branded Residences for Developers and Investors685 Fifth Ave-Restaurant-ExteriorKey fees involvedThere are several fees affiliated with developing a branded residential project.Below is a summary of the primary fee

58、s developers/investors should take into consideration.Residential Marketing License Fee The license fee is charged by the brands for the benefit of branding the residences and marketing the sales of the residences under their brand.The fees can vary significantly depending on distinct factors and ca

59、n range from 1%to 4%of the sales price for a consumer brand and 2%to 6%for a luxury hotel brand.In general,larger projects can translate into lower license fees.In certain circumstances,brands are willing to lower fees to establish flagship properties in prime locations.Brand Commitment Fee The comm

60、itment fee is generally a flat fee payable to the brand upon signing of definitive agreements.It is sometimes considered an advance license fee payment and therefore credited against initial license fees.Technical Service Fee The technical service fee is for the brand to review the drawings and inte

61、rior design of the units as well as provide guidance throughout the development phase.Brands typically command a flat consulting fee for these services,which generally is paid upon completion of development milestones.Homeowners Association(HOA)Management Fee In locations where the brand manages the

62、 HOA,the HOA will pay the brand a fee to manage the residences.This fee will form part of the annual association budget and will be included in the service charge paid by individual owners.Generally,brands command a flat fee or a percentage(10%-15%)of the annual association budget.*Ranges of fees ba

63、sed off JLL experienceFeeRange*Residential Marketing License Fee1-6%of Unit Sales PriceBrand Commitment Fee (typically credited against due License Fee)USD$200,000-$250,000Technical Services FeeUSD$150,000-$250,000HOA Management FeeUSD$1,000-$2,000 per Unit OR 10-15%of HOA 27 26 A Guide to Branded R

64、esidences for Developers and InvestorsAman Niseko-Retreat and VillasOther commercial considerations 29 28 A Guide to Branded Residences for Developers and InvestorsOwner split For branded residential units participating in rental programs/rental pools,the unit owners typically receive between 40%-60

65、%of Net Revenue(less 3%-5%of Gross Revenue for FF&E reserves)thats generated from hotel night stays at the branded residential units.Brand exclusivity Developers/investors and brands can agree to brand exclusivity for the marketing of residential products within a market.This exclusivity is generall

66、y either limited in time or expires once a satisfying level of sales has been reached.Bulk Buy restrictions Brands will generally restrict the number of units an individual owner can purchase.This is to avoid one owner gathering significant decision power within the HOA and allow the brand to only d

67、eal with either the developer/investor or the HOA(if the developer/investor has fully exited the project).Development phase To ensure that the project reaches completion and that purchasers are satisfied with their branded units,the brand will include a number of provisions during the development ph

68、ase.This includes financing requirements to ensure the project is funded and can reach completion even if sales velocities are below expectations.This can also include a reserve fund and warranties requirements to ensure that construction defects are appropriately corrected and the purchasers are sa

69、tisfied.Ultimately,these requirements are set to minimize any potential reputational and image damage for the brand.This also ensures that the brand carries an outstanding reputation across all developments worldwide,which drives purchaser confidence and price premiums.Term of Residential Marketing

70、License Agreement(RMLA)The term of RMLAs are set-up to be the earlier of:1)the sale closing of all the branded residences and 2)a set number of years(usually between 5-7 years).Unsold residences Upon expiration of the RMLA,the brand and developer/investor can agree to a solution for unsold branded r

71、esidences.In the case of residences collocated with a hotel,furnished and unsold units will either be placed in the hotel inventory or leased separately,generating either a management or a leasing fee for the brand.Developer/Investor considerations Pre-design PositioningEarly thought should be given

72、 to the target market and positioning of the residences(i.e.lifestyle,luxury,etc.)and the product mix and unit layout.It is important to engage with brands early in the process to allow for design changes.Market Study Brands may require the developer/investor to provide a market study showing compet

73、ing schemes,residential sales pricing and other benchmarking after signing heads of terms.Such market studies are typically required for emerging markets and brands may not require these for sites in more established locations.Pricing&Impact on HOA FeesInput from the residential sales agent should b

74、e taken at the earliest stage and a likely increase in the HOA fees versus an unbranded scheme should be considered.DesignBack-of-house Provision&Guest Amenity The brands may have different back of house and guest amenity requirements than a non-branded development.The configuration of these areas m

75、ay need to be amended from brand to brand to accommodate considerations such as the provision of staff areas,food preparation areas,allowance for goods delivery,enhanced security,etc.This should be given consideration at an early stage by the developer/investor at the product positioning and design

76、phase.Contract TermsConstruction Defects The brand will require the developer/investor to provide a program for managing and reducing risks of claims for design or construction defects in the residences.This can be approached through the brand requiring that a percentage amount of each sale shall be

77、 held in reserve for a period to cover construction defects liability.This should be considered in conjunction with the requirements of debt providers for the project.Short-Term Letting Restrictions Brands are likely to seek protection against short term lettings at the residences through platforms

78、such as Airbnb.Sales&Marketing MaterialBrands will require approval rights to the developers/investors sales and marketing material as they will be using the brands brand equity.31 30 Layan Residences By Anantara-Guest room-Ocean ViewA Guide to Branded Residences for Developers and InvestorsConclusi

79、onBranded residences are gaining traction as an essential component to consider for mixed-use developments.While the interest in branded residences started off only among hotel brands and as a development adjacent to or as part of a hotel development,we are seeing consumer brands entering the space

80、and developers/investors considering standalone branded residential developments due to the financial benefits delivered to all relevant stakeholders.With the significant increase in interest rates and construction costs due to global economic uncertainty caused by the pandemic and geo-political ten

81、sions,branded residences have driven appealing returns for developers/investors mixed-use developments due to the premium and upfront sales proceeds from branded residential units.As developers/investors gain concern of the feasibility of traditional hotel projects and steer their interest towards b

82、randed residential projects,the hotel brands have been able to drive their fees and pipeline while the interest in traditional hotel developments remain tepid during these times of global economic uncertainty.Given the recent trends we have seen across the industry,we expect branded residences to be

83、come increasingly an integral business model across all parts of the world.While hotel brands have already established a strong presence of branded residences in specific markets such as the Americas and Asia,we expect significant growth in the coming years in markets such as Europe,the Middle East

84、and Africa.At JLL,we have a team of global professionals that specialize in branded residential developments with numerous years of experience working with all of the aforementioned brands.We are available to assist and address any questions or inquiries related to branded residential developments.3

85、3 32 Domaine Fairmont Royal Palm Marrakech ResidenceA Guide to Branded Residences for Developers and Investors 2022 All rights reserved.The information contained in this document has been compiled from sources believed to be reliable.Neither Jones Lang LaSalle nor any of its affiliates accept any li

86、ability or responsibility for the accuracy or completeness of the information contained herein.And no reliance should be placed on the information contained in this document.For any questions or inquiries related to branded residential developments,please reach out to the following regional teamsGet

87、 in TouchMiddle East&AfricaAmr Elnady Head of Hotels&Hospitality(MEA) +971 4436 2407Aboudi Asali Senior Vice President +971 4426 6999Wayne Godwin Senior Vice President +271 1507 2200Asia PacificXander Nijnens Head of Advisory&Asset Management +65 8650 8800Kuraudo Ohashi Executive Vice President +81

88、3 5501 9238Vibhor Kalra Senior Vice President +61 9220 8568EuropeHeidi Schmidtke Managing Director +49 89 2900 88 184Greg Childs Executive Vice President +44 207 399 5127Pauline Li Vice President +44 754 877 0135The AmericasTimothy Marvin Executive Vice President +1 301 529 6056Rodrigo DaumasVice President +52 55 5350 7393Noah Lee Senior Associate +1 212 632 1801