A branded residence is, as the name suggests, a residential building with a known branded attached to it. Historically, these have tended to be hotel brands. But it really just needs to be any brand that people know, care about, and will pay a premium for. So it could also be a fashion brand, a car brand, or whatever else.
This is a growing segment of the residential market. According to UK-based Savills, there were only 15 or so of these "schemes" in the 1990s (the UK uses scheme in lieu of project, which always sounds conniving to me), but by the end of this decade they expect the pipeline of branded residences to exceed over 1,200.
I would also argue that projects designed by celebrated architects and/or designers are a form of branded residence. And this is not being captured in Savills' number above.
Whatever your definition, today, the branded residence capital of the world seems to be Dubai, which feels right. And the biggest brands, by what appears to be a long shot, are Four Seasons and Ritz-Carlton (hotel side), and YOO and Trump (non-hotel side). Here are the full rankings from Savills:
This is an interesting part of the real estate business for a few reasons. One, it makes sense. A New Balance shoe that gets co-branded with Aimé Leon Dore unlocks additional value for both sides. ALD has a brand that certain people care about. So, of course the same would be true of real estate paired with the right brand.
Two, it's a growing market, and I think this is aided by the fact that development is an intensely local business -- so it can be hard to grow a globally-significant brand on your own. Sometimes you just need to borrow someone else's.
And three, it's usually a less risky approach to getting your name on buildings. Branded residences typically operate on a licensing model, which means developers pay for the right to use the brand. The brand may also capture some of the upside in the form of a percentage of sales. That's less risky than putting up your own money.
The prevailing view on short-term rentals right now seems to be this:
That is, it's viewed as a zero-sum game between residents and tourists. There are only so many homes within a city, and so if any of them are to turn into short-term rentals, then it is a direct reduction in the supply of available long-term homes. This can also happen very quickly given the asset-light nature of Airbnb and the fact that these spaces aren't usually purpose-built.
It is for this reason that many cities have enacted strict short-term rental laws that basically only allow you to rent out your principal residence when you're not around or if you happen to have extra space. In the case of New York, you have to be physically present when the dwelling is being rented, and so the use case is exclusively "I have extra space for you."
Either way, the basic idea is to stop people from removing homes from the long-term market. I do, however, find it curious that reductions in housing supply seem to be generally viewed as bad, but that increases in housing supply are often met with skepticism. Doesn't housing supply work in both directions? Why aren't more people clamouring for new homes to be built?
Where my head is at on this issue is that I don't see it as a zero-sum game. I believe that there should be rules and regulations around short-term rentals, but that they shouldn't stamp out all use cases other than "here's an air mattress in my living room." At the same time, I think we should be viewing this as an opportunity. Clearly we need more homes, more hotels, and more short-term rentals.
It's only zero-sum if we make it that way.
Neat B and I were in the Niagara wine region over the weekend and I was reminded of a few things:
Winemakers in Niagara will tell you that southern Ontario isn't the easiest of places to grow and make wine. But whatever, I think that Niagara is highly underrated. Niagara has some exceptional wineries that you really should explore if you aren't familiar. Ontario is also the largest ice wine producer in the world, by a long shot. We produce something like 90% of the world's supply. Ice wine can be a bit of an acquired taste -- they're sweet. But if you get a chance, try one from Stratus. They are supposedly the driest in the world.
I don't know how the wine demographics have shifted in other regions, but we were told over the weekend that 10 years ago it was mostly gray hairs who were out at wineries buying wine. Today, there are tons of young people in their 20s, 30s, and 40s. And we certainly saw that over the weekend. This shift has winemakers now adjusting their wines. I couldn't tell you what a younger wine palate wants, but apparently it's something.
Lastly, there is a complete lack of cool and modern boutique hotels in the area. I would imagine that part of this is because the Niagara wine region is still emerging. But I think the other reason has to do with my previous point: younger people now want to go to wineries and the hospitality sector hasn't yet caught up. This strikes me as a massive opportunity.