How much value does a top brand add to a residence? According to a new report by global consultancy Savills, the average global premium for a top branded residence stands at an average of 30%, with demand growing worldwide.
That’s a dramatic number. But the “Brand Boost” may be even bigger in markets like Panama, where branded properties are just starting to make an impact. Emerging cities “tend to enjoy the highest price premiums, with branded residential schemes commanding average premiums of over 50% compared to non-branded offerings,” Savills says.
The branded residences phenomenon is one of the fastest-growing luxury market segments in the world. Over the past decade, branded residence schemes have increased by over 160%, Savills reports. There are 690 completed branded residential projects in the world, with another 600 expected to be completed by 2030.
The Panama Advantage
Not surprisingly, the top luxury markets in the world are also the top hot spots for branded residences — Dubai, South Florida, New York Phuket, and London. But Panama is perfectly poised to benefit from this trend, Savills reports.
There is “rising demand for branded residences across many emerging cities,” the consultancy notes, in part due to growing numbers of high-net-worth individuals and expanding economies. In growing markets like Panama, local buyers will be looking to the security, quality, and status of a branded residence to use as a primary residence.
Branded offerings in the large “global cities” tend to see lower average premiums than emerging markets, due to the competition from non-branded properties, Savills notes. But branded properties are still relatively new in Panama, which translates as limited supply compared to other global markets.
Although rare in Panama, branded residences have a proven track record in Panama City. The Yoo on Avenida Balboa is consistently one of the top-performing rental and resale buildings in the capital, and the new Wanders & Yoo is already receiving some of the top rents in the city. La Maison by Casa Fendi is a standout in the market, powered by one of the world’s best-known fashion brands.
Markets with strong international infrastructure are well-positioned to benefit from the international recognition offered by branded projects. “International knowledge of brands operating within the branded residential sphere can attract increased interest from global buyers,” Savills reports.
The Brand Boost also extends to rentals, with branded residences able to attract top rents and steady tenants. Many branded projects offer rental programs, which can be an ‘attractive proposition,” according to Savills.
In-resort areas, the brand premium can vary based on offerings and locations, but the average boost is still about 30%, Savills says. The name recognition, security, and implied status help make branded properties among the most popular second home destinations, Savills says.
The enthusiasm for branded residences is only starting, Savills concludes. The factors driving the market and the consumer’s willingness to pay up for the security and value provided by top brands are expected to drive luxury real estate for many years.
Once dominated by hotels, by 2030 non-hotel brands will account for 20% of the total supply, an increase of nearly 40% from current levels, Savills forecasts. Interest is also forecast to remain strong, with consumers clearly showing their preference for homes with a well-known name.
“In the coming years, we expect demand for the branded residence product to remain strong in global cities, which are business and education hubs that offer the lifestyle, cultural attractions, and unique experiences that are significant drivers for prospective buyers and their families,” Savills concludes.