Global Hospitality Giants Set Sights on India's Booming Branded Residences Market

by  EVENTFAQS Bureau Industry Watch | February 26, 2024 | News

Skye Hospitality Hospitality industry

As per research findings of Skye Hospitality, a hospitality consulting company, India is home to 2,300+ branded residences, which is a little less than 10% of the aggregate global supply pegged at 26,000 units (approximately).

Globally, the branded residences’ market is growing at a CAGR of 12% backed by the bounce in the prime property market, a surge in UHNIs & HNIS and the desire to own trophy assets. This trend is picking up pace in all the dominant markets of North America, Asia Pacific and the Middle East.

According to Ankit Kansal, Founder and MD, Skye Hospitality, “In tandem with global trends, the branded residence market is picking up fast in India as well with more than 40% volume of supplies concentrated in Delhi NCR. Other prime markets include Mumbai (18.1%), Bangalore (16.2%) and Pune (11.6%). In addition to owning a prized asset, factors such as assurance of prior due diligence done by the brand, access to top-tier facilities, state-of-the-art design, and high rental and appreciation potential, are driving the demand in a positive direction.”

The branded residences segment largely operates on two models: a ‘branded name model’ where a renowned brand lends its name and charges a fee for it, or a ‘serviced and managed amenities model’, wherein the brand (generally a hospitality entity) will partner with a top-notch developer to create branded property. The hospitality entity offers and manages a wide range of services in lieu of the fee charged.

Taran Chabra, Director, Skye Hospitality said, “Not just for the buyers, but branded property development has significant benefits for the developer and the brand as well. The developer enjoys unique positioning and benefits immensely by offloading the inventory at a premium price. The brand connotes to diversify its revenue stream leading to a natural progression of the business, besides earnings from royalties and fees.”

Numerous brands across the hospitality and non-hospitality sectors, like The Leela, Four Seasons, Oberoi, Trident, Grand Hyatt, Yoo, Trump Towers, Versace, Marriott, and many others, have ventured into the branded residences market.

In terms of the aggregate value, the branded residence market in India is sized at 22,800 crores with Delhi NCR contributing to a handsome value of around INR 11,000 crores. The average ticket size of a project is to the tune of 9-10 crores. Hitherto 54.7% of the projects have been delivered, while the remaining are at various stages of development.

Ankit Kansal added, “The branded residence segment is one of the key asset types to watch out for, as the potential of growth is seemingly immense. There is a huge pipeline of properties all over India that can be converted into branded residences, both in metros as well as tourist locations. India has around 850,000 HNIs &UHNIs. In contrast, the present supply is only in a few thousand units. Looking at the current dynamics, we have formed Skye, which will work as a fulcrum between developers, brands and investors. Skye will offer a wide range of services, including market insights, development consultancy and feasibility support.”