Banyan Group is betting big on Branded Residences
The total revenue for the group in FY2023 was S$327.9 millions, up 20.9 per cent from S$271.3m a few years ago. Net profit rose to S$31.7million from S$767,000 during FY2022.
This is the tip-of-the iceberg in terms of real estate sales. Banyan’s focus in expanding its branded homes segment is Thailand. There, the group has a huge four square kilometres plot of land. This is about the size of two thirds of Singapore’s Marine Parade area and the size a township would be in Phuket.
Residential properties associated with major international brands including The Ritz-Carlton and St Regis. Branded residences offer a higher standard of service than residential developments.
The most ambitious and new development for Banyan this year is the Laguna Lakelands integrated development on Banyan’s property in Phuket. The project will cover 111 hectares and incorporate native, biodiverse vegetation into different residential living zones. Once completed, the project will house the island’s biggest private residential community.
Laguna Lakelands released its first phase of condominiums in February. These units ranged from one to three bedrooms and included 14 four-bedroom homes.
Prices for condos start at about 7 million baht (260,000 S$). Four-bedroom villas that include gardens and private pools have an average of 5,600 sq. ft. and start from 60 million Baht.
Ho predicted that between five and ten years’ time, up to 5, 000 residences could be built.
Segment reached a high with S$267.8million in new sales in FY2023 and further growth is expected especially in Thailand. Branded Residences have gained a lot of ground around the world. This market will grow exponentially over the next few decades. Banyan Group B58 +2.82% formerly Banyan Tree Holdings provides a good example.
The total value for property sales in the group’s most recent financial year (FY2023) ended December 2023 was S$267.8 with 432 closed deals. Banyan had its best sales year to date, with S$267.8m from 432 deals. That’s a 23 percent increase on FY2022 when S$217.2m was generated by the sale of just 354 apartments.
As of December 31, 2023, the revenue not yet recognized from property sales was S$377.7million. This was an increase by 67 % from the year before. Approximately S$92.6 millions will be realised in the year ahead, while the remaining S$285.1 millions will be realised in 2025.
Phuket’s allure
According to Knight Frank’s July 2023 market report, Thailand is one of five leading markets for luxury-branded residences.
Savills, in a similar study, found that Phuket, the resort island in the country, was Asia-Pacific’s top destination for brand residences.
Phuket is experiencing a boom similar to that of Majorca in Spain or Ibiza, both of which are popular tourist destinations.
The post-pandemic lifestyle has changed. Many people now look for a secondary home as a way to escape from the busy city or as a place of “safety” from political turmoil.
Banyan has recently seen a rise in demand for its products from Russian and Chinese tourists. Singaporeans are only a small part of the group, which now accounts for two-thirds.
Phuket is ideal for those who are able to work remotely. It is only a short drive from other Asian Cities, and it has several new International Schools and Hospitals. He added that working in an area with “beautiful weather” and dry warmth during winter is also a big attraction.
A Phuket property is also a fraction the cost of buying one at home. He said those from the upper middle class and middle class are still interested, but might not be in a position to purchase a secondary home in places like Singapore where a bungalow could cost S$20 to S$50million. Phuket offers a more affordable alternative for them.
While rising interest rates could affect property sales in the future, they have only had a “slight impact” so far. It seems that this confirms the theory of people not purchasing for investment. Because if they were, they would (not) want to buy in a high interest rate environment, where your yield from (these sales) may be less.
He said that the “moderately modest” returns of 4 percent are enough to cover any expenses.
Banyan, for these reasons, is “doubling down” its efforts to develop property in Phuket. The Laguna Lakelands project alone is estimated at US$2billion.
Savills’ report shows that demand for “branded” residences is expected to remain high and “ever increasing” over the coming years. This is true especially in cities with business and education centers that also offer cultural and lifestyle attractions.
Brands are confident of increasing their presence at these locations, thanks to the economic growth that has been experienced and is forecasted, as well an increasing number high-net-worth people.
Knight Frank noted, however, that branded residences are not without their challenges. There are several challenges, including the need for buyers and developers to work in sync, to validate the value associated with brand associations and to show a commitment to sustainability.
However, overall the consultancy noted that there was much potential for developers and operators. Despite current economic headwinds the demand for brand residences will continue to be strong, underpinned by wealth creation and investment fundamentals.
