Are Branded Residences A Safe Investment?
Property is one of the hardest hit sectors by the COVID-19 pandemic as many buyers are taking a wait-and-see approach amidst the economic uncertainty caused by the health crisis.
However, there is one property sub-sector that is deemed as a resilient safe harbour by industry players and experts – branded residences.
In fact, branded residences have seen a surge in popularity in Malaysia in recent years. Branded residences are luxury homes associated to a premium brand (usually a hospitality or lodging service provider), which allow them to enjoy prestige, recognition and high-quality services through association with the latter.
In essence, this gives the owner the comfort and permanence of a home but with the full benefits and luxury of a five-star hotel.
The pandemic has highlighted some of the advantages of such developments that serve as a silver lining in the market.
Here are the top five advantages of investing in branded residences:
Most branded residences are located in prime locations, which remains the preferred destination for many to stay due to the convenience and lifestyle they offer.
Meanwhile, the supply of new and quality residences in these areas is shrinking due to the scarcity of land and high development cost.
All these factors are helping branded residences retain their value and attract buyers and tenants.
- Value proposition
Branded residences often built on prime locations and equipped with intrinsic value built into the proposition, including extensive amenities, attentive service and lifestyle benefits and the backing of internationally recognised hospitality brands.
Moreover, they come with quality workmanship and development delivery, which provides a stronger resale value for their owner.
As these luxury homes cater to the top income earners, they offer investors the opportunity to buy into a niche product that is much more resilient when compared with other types of properties.
- Price premiums
The luxury home market is actually still performing strongly, especially for branded residences.
This is attributable to their association with prestige brands, which act as a guarantee for high levels of service, quality and ongoing management and oversight, which adds a lot of value for buyers and tenants.
It is precisely these value-adds that contribute to the price premium seen in the market, generally in the region of 30% to 40% over comparable developments, but which also add to the strong resale values available.
- Rental income
Investors of branded residences can enjoy greater ease when renting out their unit, thanks to the brand recognition and quality services.
Also, many of these residences have their own rental pools or programmes already set up along with an existing pool of potential clients with an affinity for the brand.
The rental income is higher as compared to typical, non-branded condominiums as branded residences usually caters to higher income earners.
You can also enjoy hassle-free ownership with the professional operator management offered by the property manager of the branded residence.
- Capital appreciation
As compared to non-branded developments, branded residences command a certain level of premium in their pricing.
But the good news is that the owner is able to enjoy a higher capital appreciation due to their exclusive offerings. On top of that, the current limited supply of branded residences also serves to protect prices.