What is a Branded Residence?
According to Verdin Property, ‘Branded Residences refer to residential properties that are developed and marketed in collaboration with a well-known brand, typically from the luxury sector. These brands can be hotel chains, fashion labels, automobile manufacturers, or renowned designers’. According to Savills, there are ‘more than 690 ‘Branded’ projects completed, and another 600 are expected to be delivered worldwide by 2030. Spain has six projects completed so far and 12 underway (271 units completed and 448 to be built).’
Benefits and Risk
A good quality ‘Branded’ project is constructed and sold. Then the Brand company’s reputation takes a hit due to scandal or whatever, and its name is no longer a marketable asset. In fact, anything associated with it becomes unacceptable.
Surely the resale/investment market value of the property will reduce, but the intrinsic building, interior design and location quality will all be the same? Should a valuer divide the ‘Branded’ property valuation/appraisal in two, with the main value being associated with the building, but a secondary value, like a Goodwill element, being the value of association with the Brand name. While in fashion, the Brand increases the marketing value, but if the Brand should become unfashionable, then it will detract from the property value, making Branded Residences riskier purchases. Over the 25+ years of a mortgage, the fashion swings could be considerable. Will a bank offer a lesser % of valuation/appraisal on Branded Residences?
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