Are hotel branded residences the future of luxury property?

Ellen Millard

9 March 2021

London’s latest wave of luxury developments are offering more than high design and a central location. For the high-net-worth buyer, five-star services provided by a world-leading hotel, and backed by a trusted developer like Finchatton or management firm such as Rhodium, is becoming an increasingly popular selling point.

9 March 2021 | Ellen Millard

Imagine a home that runs like clockwork. The rooms are always clean and tidy, the fridge is full, and dinner is on the table. The wine has been poured, chosen to your taste and complements your meal beautifully. Your dog has been walked, and tickets to the theatre show you’ve been dying to see have been booked. After dinner, you might fancy heading to the cinema to watch a film, or perhaps you would like to relax, in which case a spa treatment, a stint in the sauna or dip in the pool awaits none of which require venturing beyond your front door, or indeed lifting a finger to make it happen.

This is the reality of those who live within a hotel branded residence, a new style of luxury development that is growing increasingly popular. According to Savills’ Branded Residences Spotlight report from 2020, the number of developments created in partnership with a brand has increased by 170 per cent in the past decade, and 2021 is poised to be another record year, with 100 new schemes expected to open globally.

The Residences by Mandarin Oriental on Hanover Square

From fashion to motoring to interior design, lifestyle brands are falling over themselves to have a piece of the property pie. In Florida, you’ll find Residences by Armani/Casa, a 198m skyscraper with 260 apartments dressed with furniture from Giorgio Armani’s interior design brand. In Miami, the Porsche Design Tower uses a Dezervator car lift to deliver owners and their vehicles to their front door, while the Aston Martin Residences feature fixtures and fittings modelled on the marque’s signature aesthetic. Soon to join them is Missoni Baia, a series of luxury condos where sunbeds and soft furnishings will be upholstered in the designer’s rainbow prints.

These are brands that emulate their clients’ and residents’ lifestyles; high-net-worth individuals who are used to a certain standard of service, design and experience. But more popular still are those brands for whom a five-star lifestyle is the very bread-and-butter on which their business is built: luxury hotels. Already experts in hospitality, hoteliers account for 84 per cent of completed branded residence schemes and 88 per cent of those in the pipeline.

Twenty Grosvenor Square, photography by Simon Upton

Such is the allure of branded residences that, according to the Savills Branded Residences Spotlight report, they achieve a premium of 31 per cent globally compared to similar non-branded residences. However, says Dean Main, founding partner and CEO of property consultancy and management company Rhodium, such a premium is less relevant in London, where the super-prime market is already achieving exceptional sales without the aid of a brand.

“Talking on a global level, there is the emergence of a demand for high-end luxury residential, and where you’ve got an area or a location that people are not aware of, a brand coming in alleviates that,” Main explains. “In London, sometimes it works against you; the location, developer and interior designer could be so strong, and what they’re actually building sometimes could have a bigger brand and a bigger appeal than other luxury brands themselves. There are a few schemes that we’re involved with where the price per square foot achieved has been so great without a brand, so there’s proof of that in the established key markets.”

Twenty Grosvenor Square

Rhodium has £11bn worth of assets under management across 40 developments in prime central London, including some of the most exciting schemes in the capital, from Regents Crescent to No.1 Palace Street, none of which are partnered with a brand. That being said, Main is being increasingly approached by developers and brands that are seeking Rhodium’s residential management expertise, and it’s these brands, he says, that standout from others.

“The hotel brands that do it well are the ones that have been doing it for some time, and that also understand the local legislation in each country they’re working in, that have partnered up with the right people, and have a proper team and the resources to roll out these developments. Companies that come to mind are the likes of the Four Seasons and the Mandarin Oriental group,” Main says. “But there’s also the emergence of other hotel brands that want to get into the residential space but have never done it before. I am skeptical of these companies that want to get involved but then don’t partner up with a company like us to make sure that what they’re doing is correct.”

“The prestige that is associated with best-in-class hotel brands – such as Raffles – appeals to the world’s high-net-worth individuals, who are looking for something completely unique,” counters Ian Pidgeon, partner of Knight Frank’s Prime Central London Developments team, which is working on Raffles’ first UK hotel and its first branded residences in Europe, The OWO. “For these buyers, this is unlikely to be their primary address, meaning a branded residence really does tick all of the boxes. It offers the charm, service and amenities one would expect from a six star hotel, but is still a private space that feels like home and can be returned to time and again. It is the perfect balance that makes branded residences so special, and which is ultimately driving demand and growth in the sector.”

The Residences at Mandarin Oriental Mayfair

Take Twenty Grosvenor Square, the very first standalone private residence by the Four Seasons, which launched in London in 2019 with prices starting from £17.5m for a four-bedroom apartment. While there is no hotel directly attached to the Finchatton-designed property, the residents in each of the 37 homes have access to an exclusive Four Seasons team, offering housekeeping, valet keeping, grocery shopping and a range of other services. The hotel group also acts as a property manager for the building, taking care of the homes while their owners are away.

Completing this year is The Residences at Mandarin Oriental Mayfair, a Clivedale London development of 80 residences and a 50-key hotel located on Hanover Square, with apartments starting from £2.95m. Along with health and wellbeing amenities and access to the hotel’s roof terrace bar and restaurant, residents will enjoy a private lounge, in-residence dining, housekeeping, valet parking and a 24-hour residential concierge. It’s the second development of this kind being steered by Clivedale London, which is also the brain behind Mayfair Park Residences, the Dorchester Collection’s first private homes. More subtle than the former, this development of 22 apartments and townhouses is hidden behind a Georgian façade. From the exterior, you'd never know it was linked to the neighbouring 45 Park Lane hotel, which provides access to a series of services, amenities and a health and wellbeing facility to the building's residents. Prices start from £4.25m.

Opening in 2022 opposite the Horse Guards in Whitehall, The OWO will be housed in the Grade II-listed Old War Office, the former stomping ground of Winston Churchill, David Lloyd George and Lord Kitchener. Along with 85 homes and 125 hotel suites, there will be nine restaurants, many of which will be the first of their kind in London, and a world-class spa. Residents will have privileged access to “a truly seamless, five-star hotel service that they can access 24 hours a day,” says The OWO’s head of marketing, Jenny Naylor, as well as a host of private amenities, including a cinema, games room and exercise studios. “The former Old War Office building has an extraordinary history and heritage, an enviable location opposite Horse Guards and incredible architecture,” Naylor adds. “To own a piece of this history or to stay as a hotel guest in what used to be Churchill’s old office will be a most memorable and privileged experience.”

The Residences at Mandarin Oriental Mayfair

Next year will also see the completion of the Belgravia-based The Peninsula, which, along with a five-star hotel, will be home to 26 residences designed by award-winning firm Peter Marino Architects. In Mayfair’s Grafton Street, meanwhile, a £500m 83-bedroom hotel under LVMH's Cheval Blanc umbrella will open with six Cheval Blanc Private Residences. Each home will have its own private pool.

So is it just a marketing gimmick? Certainly there are financial benefits. Riyan Itani, head of Savills’ International Development Consultancy department, notes that branded residences provide a better cash flow for developers who can sell properties off-plan during construction. They also offer greater financial security for hoteliers.” As the hospitality sector has suffered through the pandemic,” Itani says, “the reliance on the more stable income (through sales, rental and management fees) from branded residences (for developers and brands alike) has meant that now 70 per cent of all luxury hotel developments include a residential component.”

Mayfair Park Residences

The pandemic has also influenced buyers. “In more recent times, the comfort and assurance of the quality of the facilities, services, rentability and management of the properties that a branded residential development provides are real attractors to buyers in the trophy, investment and investment-user categories," Itani says. "During the pandemic, the fact that those facilities and amenities are accessible within your own home/development makes the prospect even more attractive.”

However, Main points out that the typical facilities offered by a branded residence are no different to those you would already find on the market in London. “At the super-prime level, it’s standard to have a number of amenities, so all you’re getting with the brand is the name,” he says. “Buyers are sophisticated at this level, and as long as a developer is working with a very strong and capable management partner, both front and back of house, they can deliver.”

Mayfair Park Residences

What is agreed, however, is that the pandemic will do little to deter demand at this end of the market, whether a buyer is interested in a branded residence or not. In fact, Main predicts the past year will only serve to help drive demand for the super-prime market, particularly in the capital. “There have been some industries that have really suffered during the pandemic, but a lot of wealth has been created during lockdown and I think a lot of people’s mindsets have changed – how they want to live, the locations they want to live in and the access they have to different things. Once the restrictions end and flights are back open to London, I think we’re going to see a huge influx of pent-up demand over the next 12 months.”

“As a safe haven for global wealth, second homes in London will always be highly sought-after by HNWIs,” Pidgeon agrees. “Pent-up demand is building due to the ongoing travel restrictions; once the vaccination programme is fully rolled-out and international travel can resume, we anticipate prime property here will be in high demand. When this happens, those buyers will gravitate towards the best-in-class – in terms of service, amenity offering, quality of design and craftsmanship, and location.”

Read more: Inside Twenty Grosvenor Square's James Bond-inspired apartment