• Vietnam Property Guide

VietNam among the fastest growing Branded Residence world markets

Regardless of how COVID-19 affected real estate in 2020, the concept of Branded Residences continues to resonate with the buying public. Sub-segment growth has been of 170% over 10-years with 2020 representing another record year after over 100 projects opened around the world. Savills recent Global Research found that VietNam is now among the 10 fastest world growth markets.

Mr. Powell commented most sectors continue to be affected by COVID-19, however, in Real Estate growth continues, and the number of buyers continues to increase too.

According to Savills research, major Branded Residence Destination markets include Dubai, Miami, and New York, with growth markets including Viet Nam, the UK, Morocco, Malaysia, Australia, Saudi Arabia and Egypt. Branded residences are usually a partnership between a well-known management brand, and a property developer. The brand is generally from Hospitality, the values of which guide the project design, finishing, and levels of service. Asia Pacific is forecast as a hotspot which is borne out by the increasing numbers of projects. The associated lower entry costs present less development risk but have the appealing potential to reach new demand silos. VietNam and Thailand are leisure destinations, and both tap into a wide range of international demand. The burgeoning middle- and upper-classes in both countries also present further potential for Branded Residences.

Mr. Matthew Powell, Director of Savills Hanoi, commented: “Branded Residences are at the premium-luxury end of the market. They can be either larger projects or boutique approaches, apartments, or villas. Local consumers have similar buyer behaviours to those in other world markets: they look for projects that are well-constructed, well-serviced, and easily commercialized, bringing added, often attractive yields and benefits for the owner. Regardless of the type of residence, these projects are expected to deliver owner-benefits, and not only through the brand name, which is often a major purchase influencer in Viet Nam. International brands bring their own quality assurance: through design, service, amenities, but also through reputation. These brands being widely known and respected, tends to generate an overwhelmingly positive response when attached to property.”

“When defining a “branded residence”, most consider only resort properties, but over 60% of global branded residences are actually in major urban centres. We feel this trend will become more established over the next few years as the approach delivers superior, guaranteed quality, proven luxury with brand recognition and 5-star service, which also reassures investors and property developers themselves, let alone the attached price-premium. We see opportunities and potential growth in this high-end sub-segment”, Mr. Powell emphasized.

When it comes to pricing branded residences, the difference between price and perceived value requires attention. According to Mr. Powell, many Vietnamese will not be able to afford branded residences, simply for their super premium price-positioning. Branded residences in Ha Noi may appear expensive, but when compared to similar properties around the world, or even those in Ho Chi Minh City, they are actually very competitive.

“There is a price premium, but there is value return in exchange. In some ways it is similar to purchasing a super-luxury handbag or staying in a world class hotel: you do it because you can, expect to, or simply want to. The pricing of a 5-star resort serviced by global operators easily exceeds unbranded 4- or 5-star project pricing and service levels, but super-premium design and service is thoughtfully approached to deliver a much more distinctive, and memorable experience. That is the key difference between price and value”, Mr. Powell explained.

According to Savills recent Global Residential Market Sentiment Survey, even under pandemic effects, a third of global markets have reported increasing buyer interest looking to upsize their main residence with a view to improve the balance of private and shared spaces. Remote working has allowed branded residence projects to be more flexible with space easily reconfigured as an additional bedroom, study, or even a home gym. Shared amenities, a key selling point of branded residences, will remain important, but their usage may change. Branded residences aim for seamless service to the point of using apps to book facilities.

Source: Savill Vietnam

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