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| • EXCH RATES |
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Baht/$ 33.51/56
Bid/Ask
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GOLD |
14,350
+ 350
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PROPERTY INSIGHTS
NIGEL CORNICK
Branded residences are finally finding their way into Thailand's real estate portfolio, and they are quickly attracting the attention of overseas investors due to the high levels of confidence they inspire and the elite status they provide.
Essentially, world-renowned luxury brands - mostly five-star hotels at this stage in Asia - are working with owners and property developers to manage different components of residential projects to encourage investment.
Buyers are attracted to branded residences by the security, trust and recognition they provide; the benefits that come from their managed rental and global distribution systems, and the superior returns they can deliver.
Though relatively new in Asia and Thailand, branded residences are not new to the world property market, with Thailand's prime resort areas offering attractive destinations for these types of developments.
A good example was the recent launch by a global hotel management company of a residential project in Singapore. While luxury condominiums were typically selling there for S$2,500 per square metre (psm), this particular branded residential complex sold for an average of S$4,000 psm.
No one had ever seen any investment offerings like this before and they sold very fast. People were paying a real premium for the name and the brand attachment. It really set the market alight.
For instance, the St Regis being developed by Minor International on Rajadamri Road - just a few hundred metres from Raimon Land's 185 Rajadamri - will contain a hotel, residences and serviced apartments.
The management company will handle this project in two ways. It either sells the residences outright with the owners living onsite, or the apartment will become part of the hotel inventory and in the hotel letting pool for owners to receive rental income.
Some owners in these letting pools have raised the issue of one condominium or villa getting a much better occupancy rate than others. This has led management companies to pool all the revenue from the leases and split it among the owners according to size.
Developers are a critical component of these residential projects, and hospitality brands need to be cautious in selecting the right one, as they risk damaging their reputations if the property doesn't meet the brand's standards.
Developers need to be convincing and ensure they will deliver a residential product that is in line with the luxury brand's core service values.
Property agents place great emphasis on a developer's track record, and have increased their due diligence to avoid developers who are unprofessional in their approach to the international property market.
Residential buyers also expect to receive the hotel brand's services such as a concierge, valet, doorman, laundry, spa and private access. They want to be able to charge meals to their residence if they eat in the hotel's restaurant.
There are many different things that buyers want, but hotel groups are finding that this concept only works for high-end luxury brands.
Branded residences also attract demand due to the integrity associated with the brands involved. This builds confidence among investors who are considering an off-plan purchase.
For example, investors know that a well established brand has the resources to ensure a branded residence will not only be completed, but will be built to a certain standard, and this creates a loyal following of buyers.
With so much wealth in the world today and the corresponding demand to spend it, there is no shortage of buyers. They don't really care if a residence is three or four million dollars. But they do care if it is a St Regis or a Four Seasons.
Demand for luxury real estate is driven by people who are buying a lifestyle, and want the lifestyle linked to the name. International property agents view the development of branded residences in Thailand as highly positive, as they can generate long-term capital gains.
When they present a product to clients, they are expected to provide a solid reason why the clients should buy the development being marketed internationally.
If the developer and hotel brand have a good reputation and a strong track record, and they offer sensible or unique designs, investor confidence is much higher.
There are other benefits that international property buyers should consider when looking into the purchase of branded residences; the operators can provide security, confidence and peace of mind for the owners, especially when the investment is in excess of US$1 million.
A lot of buyers seeking luxury residential property in Thailand realise the return is not necessarily in the short-term yield for this asset class of property, but in its longer-term capital appreciation.
High-end branded residences can deliver those and other benefits, thus presenting a viable new alternative for those seeking to purchase property along with a lifestyle in Thailand.
Nigel Cornick is Chief Executive Officer of Raimon Land Public Co., Ltd, Thailand's premier luxury property developer with projects in Bangkok, Phuket and Pattaya. For more information visit http://www.raimonland.com
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