Australia primed for branded residences boom: Knight Frank

Upon tracking the portfolios of 15 prominent luxury branded residence operators, the global real estate firm uncovered a total of 186 ongoing projects worldwide.

This year alone, the firm identified there will be 32 new developments, followed by an additional 23 in 2024, 26 in 2025, and 22 in 2026. Furthermore, the research reveals an additional 35 schemes in the pipeline, although their launch dates are yet to be confirmed.

The number of new schemes with known opening dates reflects a consistent annual growth rate of 12 per cent projected until 2026, resulting in an overall increase of 55 per cent over the forecasted period.

Currently, North America accounts for nearly 40 per cent of all projects, followed by Asia-Pacific (20 per cent) – which includes Australia – and Europe (13 per cent).

Across 52 countries, the US dominates the sector with 106 schemes, while Mexico, the UAE, Thailand, the UK, and China all have double-digit numbers of schemes.

In terms of brands, The Ritz-Carlton leads with the highest number of schemes, followed by Four Seasons. However, based on the rate of growth, Aman and Six Senses lead with 68 per cent and 67 per cent respectively of their total portfolio in the development pipelines.

Erin van Tuil, Knight Frank’s head of residential in Australia, said there is currently only one fully integrated branded residence development under construction in the country – with Four Seasons set to manage the hotel within the new STH BNK by Beulah development in Melbourne – and one completed project in Sydney, being Crown Residences at One Barangaroo.

But Ms van Tuil noted many developers and brands are actively exploring the option.

“Amid a shortage of new prime stock in Australia, buyer demand for branded residences in our country is strong, with the success of Crown’s One Barangaroo development evidence of that,” she said.

In the coming years, the Australian market is expected to see a notable increase in the number of branded residences. These properties, which are affiliated with well-established brands, are also projected to generate significant interest and drive sales.

And although she acknowledged there is a “myth” in the market that offshore buyers would make up the biggest pool of purchasers for these homes, supported by the fact that Australia is a favoured destination for second home purchases, Ms van Tuil explained “the depth of the market is much greater than that.”

Ms van Tuil said branded residences, which are generally recognised as a residential property associated with an established brand, such as a hotel operator, provide owner-occupiers with the assurance of best-in-class delivery and long-term service benefits that come with a world-class hotel brand.

She explained for branded residences to be successful in terms of increased saleability and an uplift in prices, more was required than a developer just putting a brand name on their project.

“The project needs to be in the best location, built to the highest specifications and the brand needs to have strong recognition from buyers so they have certainty about what they are purchasing,” she said.

She explained that in these types of developments, what is most appealing to buyers is service rather than amenity, highlighting “it’s not just about having access to the pool and gym, but the most desirable value-add is the service offering led by 24-hour hotel concierge from professional hotel staff.”

“It gives residents of these developments service at their fingertips, and that combined with the convenience and lifestyle of these well-located projects, as well as good architecture and interior design, makes them hugely popular,” she further remarked.

Knight Frank predicts that Sydney and the Gold Coast will emerge as the primary focal points for branded residences.

“There are plenty of domestic buyers, particularly Sydneysiders, who are looking for a branded residence to purchase, but there just aren’t any options in the market outside of One Barangaroo.

“There is also strong demand for branded residences on the Gold Coast – branded residences are all about lifestyle and the Gold Coast is a true lifestyle destination,” she explained.

Knight Frank director for residential project sales in Queensland Alison Hedger said the Gold Coast was a “well-positioned opportunity” for developers to consider best-in-class super-prime luxury branded residences as observed in established hubs around the world.

“Within the Australian property landscape, we are experiencing strong interest from key players in the branded residence space for prime sites in South-East Queensland, including the Gold Coast and Brisbane,” she said.

Ms Hedger cited the value proposition of these sites, wealth migration and forecast annual growth of 3 per cent for prime residential property over the next three years, provides “a strong case for investment in branded residences.”

“For a developer to deliver a luxury branded residence project on the Gold Coast would be a landmark legacy, and we firmly believe it would be extremely successful from a sales perspective,” she added.

Noting the high enquiry for prime properties on the Gold Coast, including penthouse and prime waterfront residential offerings with high-end amenities, from high-net-worth individuals and ultra-high-net-worth individuals, Ms Hedger said the strong demand for branded residence projects is evident.

“The Gold Coast has come of age in the prime residential space, transitioning to an owner-occupier, rightsizing destination with demand for luxury apartments with considered and market-leading lifestyle amenity,” she stated.