When considering the purchase of a Condo in Singapore, it is of utmost importance to carefully evaluate the associated financial aspects. While the allure of owning a Condo can be enticing, it is essential to fully grasp the potential consequences. This involves taking into account the Total Debt Servicing Ratio (TDSR) framework, which places a cap on the maximum loan amount a borrower can obtain based on their income and current debt obligations. Understanding the TDSR in depth is crucial for making well-informed decisions when it comes to financing a Condo investment. Seeking assistance from financial professionals or mortgage brokers can also prove to be highly beneficial, as it can prevent excessive borrowing and lead to a successful Condo investment.
According to data from C9 Hotelworks, a consultancy specializing in hospitality in Asia, the market value of branded residential projects in Asia has reached a record high of US$26.6 billion ($35.5 billion). This is a significant increase from previous years, with over 68,000 luxury units now available in the market.
Of all the Asian countries, Vietnam leads in the number of branded residential units, with 17,680 units spread across 59 properties. The average price of a branded residential unit in Vietnam is about US$350 per square foot (psf). Thailand comes in second place with 16,271 units across 65 properties, priced at an average of US$510 psf. The Philippines is next on the list with 13,276 units across 46 properties, priced at about US$400 psf.
However, Singapore has the highest prices in the region, with branded residences going for an average of US$2,140 psf. This is followed by Japan where prices average at about US$1,935 psf.
Data also shows that there are new markets where branded residences have become popular in recent years. These include South Korea, with 3,026 units across 16 properties, and Malaysia, with 6,014 units across 24 projects. In the post-Covid-19 era, urban-locale branded residences take up 56% of the existing supply in Asia, with these luxury urban projects dominating the sector in terms of market value.
For example, urban branded residences in South Korea are priced at US$2,670 psf, which is more than half the cost of resort projects in the same country, typically selling for US$1,040 psf. The same trend is seen in Thailand, where urban branded residences fetch about US$770 psf compared to US$430 psf in resort locations.
In Asia, branded residential projects affiliated with luxury hotel brands account for 31% of the market supply and include about 12,330 units across 80 developments. According to Bill Barnett, Managing Director of C9 Hotelworks, a reputable brand can help a property command a premium pricing of 30% to 35% above the market rate in a country, and can also help the developer increase its market share.
The appeal of top hospitality brands and other luxury lifestyle brands has also caused hotel groups and premium brands to ask for higher licensing fees. It has become increasingly common for luxury hotel brands and lifestyle brands to demand a 6% to10% cut in the sale of each branded residential unit.
Last August, Thai developer Ananda Development and German automaker Porsche, through its lifestyle brand Porsche Design, unveiled the ultra-luxury Porsche Design Tower Bangkok in Thonglor. The 22-unit tower, set to be completed in 2023, is the first Porsche residential tower in Asia, following the Porsche Design Tower Miami, which was launched a decade ago. It offers duplexes and quadplexes, with prices ranging from US$15 million to US$40 million.
According to Gianfranco Bianchi, General Manager of Asia Pacific at The One Atelier, an international design consultancy specializing in branded residences for lifestyle brands, in recent years, more luxury lifestyle brands have explored partnerships to license their branding into real estate developments across the Asia Pacific region.
One Atelier has partnered with several high-profile brands to create branded residences, including the 28-unit Fendi Casa Residences by Armani in Miami, the 259-unit 888 Brickell by Dolce & Gabbana in Miami, the 90-unit Büyükyalı Residences in Istanbul, Turkey, and the Karl Lagerfeld Villas, a collection of five ultra-luxury villas in Marbella, Spain.
While hospitality-affiliated branded residences provide top-notch hospitality services, fashion or design-branded residences offer a rare trophy home that conveys the namesake design and luxury aesthetic that have made such brand names synonymous with luxury lifestyles today, says Bianchi.
According to Ananth Ramchandran, Head of Advisory and Strategic Transactions, Hotels and Hospitality (Asia) at CBRE, property cooling measures have led many wealthy Singapore-based buyers of branded residences to look to nearby regional markets for trophy assets.
“We’ve experienced a significant reduction in terms of the discussions and inquiries from Singapore developers looking to explore high-end ultra-luxury branded residential projects in Singapore. Developers are severely discouraged from entering this high-end segment because property cooling measures have dampened foreign buyer demand,” he adds.
Ramchandran notes that Singapore-based buyers are increasingly eyeing luxury-branded residences in destinations such as Phuket and Bangkok in Thailand, Bali in Indonesia, and emerging markets in Vietnam. These locations are typically just a two-hour flight from Singapore, which makes them more appealing to buyers. In fact, last month alone, flight carriers like SIA, Scoot, AirAsia and Jetstar completed about 150 flights per week between Singapore and Phuket.
Jason Thelen, Senior Director of Sales and Marketing at Sudara Residences, a Thai-based developer, adds that Singapore has quickly become their top regional market for buyers looking for second homes, accounting for over 45% of regional purchases.
Saowarin Chanprakaisi, Vice-President of Business Development at The Ascott, says that hospitality operators like The Ascott are also tapping into the future growth of the branded residential segment in Asia. “We believe that our brands, such as Ascott, The Crest Collection, and Oakwood Premier have reputational strengths in the market.”
She adds, “Branded residential operators must develop and maintain trust in the brand that it can deliver the level of service that will eventually translate into the long-term value proposition of the asset.” As such, Ascott is looking to expand its market share in the region by partnering with developers who want to venture into the branded residential market.