Secure and convenient luxury living, managed by the most prestigious of hotel brands, has proved appealing to many high-net-worth individuals. While purchase for personal use is more common across the globe, branded residences are emerging as an attractive investment asset in certain locations, including the Middle East.
Branded residences are luxury homes, affiliated with and serviced by a high-end brand (usually a hotel brand) and purchased on the open market. Typically, residents have access to hotel amenities, such as housekeeping, concierge services, room service and spa reservations from their homes. In most cases, even the design and furnishings of the residence are curated by the brand. Branded residences differ from traditional serviced apartments in that the occupier purchases a freehold or long leasehold interest in the apartment, whereas serviced apartments are typically rented on shorter basis.
Branded residences can be a more attractive investment option than simple luxury apartments in that the asset is managed (and its value is enhanced) by a best-in-class hotel brand. However, when a block of branded residences is developed for investment purposes, complexities in the ownership structure of the units can cause commercial challenges for investors.
Overall, branded residences can be savvy investment assets, but investment does not come without commercial and legal challenges. As the trend towards investment in branded residences is anticipated to increase within the UK, it will be paramount for investors to ensure they carry out sound due diligence in advance of any purchase.