All Rise

The Knight Frank Global Branded Residences Report 2023, confirms a market enjoying sustained growth despite significant recent economic turmoil. Market fundamentals support 55% growth in global branded residences, up to 2026

Tracking the portfolios of 15 leading luxury branded residence operators Knight Frank's report identifies 186 live schemes globally, which will be joined by 32 new schemes this year, 23 in 2024, 26 in 2025 and 22 in 2026. The research also identifies a further 35 schemes in the pipeline with no confirmed launch date. The number of new schemes with known opening dates represents a 12% annual growth rate up to 2026 - or 55% overall over the period to 2026.

North America accounts for nearly 40% of all projects, followed by Asia-Pacific (20%) and Europe (13%). The schemes are located across 52 countries, dominated by the US (106 schemes), and with Mexico, the UAE, Thailand, the UK and China all with double-digit numbers of schemes. Within the US, Florida is leading the charge compared with all other states. 80% of Florida’s schemes are found in Miami.

In terms of growth markets, 60% of the Middle East market is currently under development. Europe and Latin America follow at 49% and 46% respectively. In absolute terms, the biggest development pipelines are seen in the US (36 known schemes), The UAE (7), Mexico (7), the UK (5), and Saudi Arabia (4).

In terms of brands Ritz-Carlton leads with the highest numbers of schemes, followed by Four Seasons. In terms of rate of growth, Aman and Six Senses lead with 68% and 67% respectively of their total portfolio currently in their development pipelines.

Knight Frank's research confirms this growth in supply will be matched by demand - evidenced by key wealth, travel and property dynamics.

Liam Bailey, global head of research at Knight Frank said: "As the sector matures it will face growing challenges. These include a potential conflict between purchaser and developer timescales, the need to define and substantiate the added value that a brand can provide, as well as the need to provide clear evidence of its commitment to sustainability. However, the clearest feedback from our research is the depth and breads of opportunities for developers and operators. The global economic environment is more challenging this year, but our view for the period up to 2026 is that demand will be supported by wealth creation, travel and investment fundamentals."

Wealth creation will support the sector:

The global population of ultra-high-net-worth individuals (UHNWIs) declined by 3.8% in 2022 due to sharply higher interest rates and more challenging geopolitical conditions. However, more positive long-term trends mean that the population of UHNWIs is projected to rise by 28.5% over the five years from 2022 to 2027.

The US and China will contribute significantly to wealth creation, with growth of 30% and 27% respectively. Other countries such as Canada, Australia, India, Germany, and the UK will also see substantial growth in the number of UHNWIs by 2027. At a regional level, growth will be led by Australasia, Asia, and the Middle East.

Travel volumes are set to recover:

Hotel stays, a proxy for travel and mobility, dropped significantly during the Covid-19 pandemic but have been recovering steadily. Flight data highlights some regional differences, with Asia experiencing the slowest progress. However, global travel is forecast to rise 31% above pre-pandemic levels by 2027, with significant growth in Africa, the Middle East and Asia. Asia dominates in terms of expected future growth, but Europe and North America also offer opportunities with increased mobility.

Property remains in demand:

Future demand for second homes, including branded residences, is expected to be driven by rising affluence, increased mobility, and the desire of wealthy investors to expand their residential property portfolios.

The pandemic boosted residential property demand from UHNWIs, with around 17% purchasing a new primary or second home in 2022. Despite higher interest rates, there remains healthy underlying demand with 15% of UHNWIs considering a purchase in 2023.

Global sales of prime and super-prime properties have rebounded and key hub markets such as the US, UK, Australia, Spain, and France are favoured destinations for second home purchases.