Banyan Group invests heavily in branded residences

The segment reached a new high in FY2023, with S$267.8 millions in sales. More growth is expected in the future, particularly in Thailand. Branded residences are gaining popularity around the globe and this market is set to grow exponentially in the coming years. Banyan Group: B58+2.82%, previously Banyan Tree Holdings is an example.

The group’s last financial year, which ended in December 2023 (FY2023) saw a total of S$267.8 millions worth of sales for its extended stay and branded residences segment. 432 transactions were closed. This is a 23 per cent increase over the S$217.2 Million from 354 units sold in FY2022. Banyan has achieved its best ever sales performance.

As of Dec 31, 2023 the unrecognised revenue from property sales was S$377.7million, an increase of 67 percent from the prior year. The estimated S$92.6million will be recognized in the next year. The remaining S$285.1million will be recognised between 2025 and after.

The group’s revenue for FY2023 increased by 20.9 percent from S$271.3 millions a year earlier. The net profit jumped to S$31.7million, up from S$767,000 a year ago.

It is only the tip of iceberg when it comes to property sales. Banyan is focusing its efforts on growing the branded residences segment in Thailand. The group owns an enormous four square kilometre land plot, which is the size of a Phuket township and two-thirds the Marine Parade planning area in Singapore.

Branded Residences are residential properties affiliated with international brands like The Ritz-Carlton or St Regis. Branded properties offer a higher level of service than standard residential developments.

This year, the group’s most ambitious and newest development will be Laguna Lakelands in Phuket. The project, which spans 111 hectares will integrate biodiverse native vegetation in various residential zones. Upon completion, it is expected to be the largest private residential community on the island.

In February, Laguna Lakelands launched its first phase, which included 300 condominiums with one- to three-bedrooms and 14 villas with four bedrooms.

Prices start at around seven million Baht ($260,000). Prices start at 60 million baht for four-bedroom villas with private pools and gardens. The average size of the villas is 5,600 square feet.

Ho said that in the next five to ten years, up to 5,000 new residences will be built.

Phuket’s allure

According to a report published by Knight Frank on July 20, 2023, Thailand was ranked among the top five luxury brand residences markets.

A similar report from Savills revealed that the country’s resort-island of Phuket is the top destination in Asia-Pacific for branded residences.

This boom is largely due to Phuket’s “coming of age”, as it has become a hotspot for tourists around the world, comparable to Majorca and Ibiza both in Spain and Caribbean.

After the pandemic, lifestyles have changed. More people are looking for second homes to get away from city life and political turmoil in their own country.

Banyan, for example, recently experienced a spike in demand from Russians and Chinese tourists. He said that they now make up two-thirds the clientele of Banyan, with Singaporeans making up a tiny portion.

Phuket is an excellent location for remote workers. The city is close to other Asian cities and boasts several international schools and hospitals. He said that there was a “pull” factor to working in a “beautiful”, warm, dry location during the winter season.

A property in Phuket is a fraction of what it costs back home. He said that those in the upper or middle classes, for instance, may still be interested in purchasing a second home, but they might not be able afford to do so in cities such as Singapore, where a house can cost up to S$50,000,000. Phuket is a better option for those who are in the middle class or upper-middle class.

The rise in interest rates was expected to affect sales of property, but so far, it has had only a “slight dent” on sales. This confirms the theory that people do not buy for investment. If they were, then you would not want to (buy) in an environment with higher interest rates where your return may be lower.

He added that it’s enough if the return – “moderately good” at 4% – covers any costs.

giverny residences

Banyan has therefore decided to “double down” on its property development in Phuket. For example, the entire Laguna Lakelands development is estimated to be worth US$2 billion.

According to the Savills Report, the demand for branded residential properties will continue to be strong and “ever growing” in the next few years. It said that this is particularly true in cities around the world, which are hubs for business and education and offer lifestyle and cultural attractions as well as unique experiences.

Brands can increase their presence in these locations with confidence, given the strong economic growth in recent history and predicted, as well as the increasing number of high-net worth individuals.

Knight Frank’s report did note that the segment of branded residences is not without challenges. The report noted that the branded residences segment is not without its challenges.

The consultancy believes that there is a lot of potential in the market for both operators and developers. The demand for branded residential properties is expected to continue despite the current economic downturn, underpinned as it is by wealth creation, travel and investment fundamentals.

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