Banyan Group places a large bet on the brand-named residences
Phuket, the city of allure
According to Knight Frank’s market report for July 2023 Thailand is amongst the top 5 markets in the world for luxury brands residences.
Savills has found in a report that Phuket is Asia-Pacific’s most sought-after destination for luxury residences.
Phuket has grown into a popular global destination, much like Majorca and Ibiza.
Following the pandemic of 1918, people have adopted new lifestyles. They are now looking to buy a second house as an escape from the hustle and bustle of city life or a refuge from political turmoil.
Banyan is one example of a company that has seen an increase in interest from Russians, Chinese and other tourists. Singaporeans only make up a small portion of the group’s clients. They now represent two-thirds.
Phuket is also a good location for people who work remotely. It’s a short trip from other Asian metropolises, and there are several new international hospitals and schools. The fact that it is in a beautiful location, with warm and dry weather, during the typical winter, has a strong “pull-factor”, according to him.
More importantly, buying a property on Phuket is much cheaper than back home. Those from the middle-class or upper-middle-class, for example are still interested in owning a home but may be unable to afford one in cities such Singapore, where bungalows can cost S$20,000,000 to S$50,000,000, said he. Phuket would be a much more affordable option.
Segment sales hit a peak in FY2023 at S$267.8M and are expected to continue growing, especially in Thailand. Branded homes have rapidly gained popularity across the globe, and are poised to experience exponential growth over the next several years. Banyan Group, formerly Banyan Tree Holdings (B58 +2.82%), is a prime example.
In the most recent financial period ending December 2023 (432 deals), the value of the property sales made by the group in its branded homes and extended stay segment totaled S$267.8m. Banyan is now enjoying its best-ever sales performance.
As at December 31, 2023 the unrecognised income from property sale was S$377.7 millions, an increase of 67% from the preceding year. Estimates suggest that S$92.6m will be realized in the following year. S$285.1m is expected to be realized in 2025.
The group’s total revenue reached S$327.9million in FY2023, an increase of 20.9percent from S$271.3million one year ago. Profits soared from S$767,000 to S$31.7million.
This is only the tip. Banyan’s efforts to expand its branded-residences segment are largely focused on Thailand. Banyan owns four square kilometers of land in Thailand, equivalent to the size and planning area of Marine Parade in Singapore.
Branded residences are properties that have been affiliated with major global brands. These include international brands like The Ritz-Carlton. Branded homes offer higher service levels than standard residential projects.
The group will unveil its newest, most ambitious development in Phuket this year: the Laguna Lakelands. The 111-hectare project will integrate native biodiverse plants into the different living zones. When completed, the project is expected house the largest residential community of private residences on the island.
Laguna Lakelands’ first phase saw the launch in February of 300 condominiums, from one- to-three-bedroom units, and fourteen four-bedroom villas.
Prices begin at seven million baht, or about $260,000. The average area of four-bedroom houses, with gardens and private swimming pools, is 5,600 square feet. They start at around 60 million baht.
Ho estimated that up to 5 000 new homes could be built in the next five-to-10 years.
The rising interest rate would certainly affect the property market, but this has so far only caused “the slightest of dent”. This supports the theory that most people don’t buy to invest, as they wouldn’t want to purchase in an interest rate-heavy environment.
He explained that a return of 4% is “moderately acceptable” and will cover expenses.
Banyan is therefore “doubling down” on property development in Phuket. Laguna Lakelands, for instance is worth approximately US$2billion.
Savills predicts that in the years to come, the demand will grow and remain strong for branded residences. The Savills report stated that the demand for branded residences will remain strong and “ever-growing” in the coming years, especially in global cities which are hubs of business and higher education offering lifestyle and cultural amenities as well as “unique experiences”.
Brands can confidently increase their presence on these sites, with the forecasted and historical economic growth as well as an increasing number of individuals with high net worth.
Knight Frank did not ignore the fact that the branded homes segment has its challenges. They include the need to align the timelines between purchasers and developers and substantiate brand associations.
Overall, however, the consultancy found that there are many opportunities for both developers as well as operators. Despite economic headwinds in the short-term, demand for branded residences should continue, backed by fundamentals such as travel, investment and wealth creation.
