We check out why any waterbody adds luxury to a property price — whether it’s a lake, ocean or river. The allure of water and living beside one makes it welcoming to come home. These water bodies definitely add luxury to any domicile.
The Sydney Habour view adds luxury to One Sydney Harbour development. Image: LendLease
From the serenity of St Tropez to the panorama of Phang Nga Bay, and from the bustling waterways of Singapore to the iconic Sydney Harbour, waterfront addresses are amongst the most desirable around the world. Almost everyone has a fantasy of living near the beach, the ocean, the lake, or a waterway, particularly in the midst of a pleasant holiday on a sparkling sunny day. Living near or by the waters, to some, is simply magical. It engages our imagination and all our senses — the emotional eager anticipation of arriving for the first time at waterfront property, the fresh smell of the water that permeates the air, the salt on the lips, the cooling breeze across the face, the screeching call of the seagulls, the crash of the waves on the breakwater.
The premium for waterfront properties
It is thus not surprising that waterfront homes come at a premium. And there are considerations a buyer or an investor should look into before taking the plunge. What kind of waterfront properties suits your lifestyle needs — a lake house, a beach home with soft sands, or a waterfront apartment? Will you be using the property full time, or only part of the time? Some waterfront properties enjoy strong cyclical demand, while some enjoy demand throughout the year. And waterfront properties tend to be rented out at higher rates as compared to inland properties. Hence, you should be looking to be able to rent out yours easily if you are only spending part of your time there. Don’t get distracted by the water.
You will need to inspect the property carefully to make sure the property is up to standard. You should also look for any additional costs (compared with investing inland) and hidden costs. Flood insurance may be necessary. Higher maintenance costs may be expected to keep the property charming and in good shape given the high humidity and salt. What is the history of the shoreline? The environment is subject to change, especially with climate change affecting sea levels. Did the shoreline dramatically change over time? Your waterfront property is only cool because it is on the water. It will lose its lustre when it is half a kilometre away from the water in ten years’ time. Who will be managing the property for you when you are not using it? Can it be added to a rental pool of properties to earn rental income when you are not using it? What are the costs and revenue share? Is the managing agent reputable and able to minimise vacancies? Suddenly the thought of owning a piece of waterfront paradise seemed like a lot of work.
Skyhomes at One Sydney Harbour. Image: LendLease
Brand Association
A branded residence is a premium residential development that is associated with a quality brand and offers its services to end-users and investors. The key themes that surround a branded residence are the emphasis on design, services, high-end facilities, and architecture. The branded residences concept is believed to have started as early as the 1920s with Sherry-Netherland Hotel in New York which successfully operated its serviced apartment alongside. It is not until the 1980s when The Four Seasons Hotel successfully sold its Four Seasons Place condominiums that the prestige of the brand association become significant. Hotel-branded residences, a subset of the branded residences, evolved and grew rapidly in footprint globally. These hotel-branded residences can either be residential units within a hotel that have been set aside for sale, or an entire residential estate being managed by a hotel brand for services and upkeeping as well as tenancy management.
Waterfront hotel-branded residences took off in Asia in 1988 when Aman launched its first resort in Phuket, The Amanpuri. The private residential villas were originally launched below US$1 million. Today, they are indicatively valued in excess of US$10 million. Since 1998, over 20 hotel-branded residences have been launched across Southeast Asia, about half of which are located in waterfront locations of Phuket and Koh Samui in Thailand, Bali in Indonesia, Da Nang and Phu Quoc Island in Vietnam, and Palawan Island in the Philippines.
Mandarin Oriental Residences Honolulu, Hawaii. Image: Mandarin Oriental
It is all about the brand
Waterfront hotel-branded residences allow residents to benefit from the use of hotel services, facilities, amenities, and security. They have increasingly become more popular with investors who would like to own a piece of paradise but do not use the property all the time. These investors are attracted by the design and high-quality services associated with the trusted hotel brand, and use the property, for example, four weeks a year. For the rest of the year, the hotel operator leases out the property on their behalf. They buy into the hotel brand’s ability to manage their property and earn a share of the revenue. However, not only is there the benefit of earning an income from the property but also the potential capital gain on re-selling. A special location plus a good brand managing the property certainly makes the property more delectable and sought after, fetch a premium, and could be easier to re-sell. With branded waterfront hotel residences taking off on some of the most sought-after holiday destinations, we can expect such properties to become more desired as a holiday home and as an investible asset.
Coastal Scenery of Hon Thom Nature Park on An Thoi Archipelago, Vietnam. Image: Hon Thom Nature Park
Coastal Allure
MontAzure on Kamala Beach, Phuket, boasts two branded residences with water frontage, one right on the beach and the other a lakeside development, where Accor has launched their first MGallery Residences in Thailand within this mixed-use development. Soneva, creators of luxurious and environmentally sustainable resorts have developed three such resorts in the Maldives (Soneva Fushi and Soneva Jani) and Thailand (Soneva Kiri). Banyan Tree, long been operating award-winning wellness-themed waterfront resorts, has offered its residences on some of its resorts for sale. International hotel brands have also started introducing their hotel-managed waterfront residences in response to the increasing demand globally. The likes of Four Seasons, The Ritz Carlton, Mandarin Oriental, and even luxury fashion house and jeweller, Bulgari are just but some great examples.
Although you can never guarantee your investment, a branded hotel-managed waterfront property is an investment with a view, and that could probably be something worth betting on.
Read more about Leong Boon Hoe’s insights here.
Leong Boon Hoe
Leong Boon Hoe, Arcadia Consulting Pte Ltd, Chief Executive Officer
Boon Hoe is the founder and CEO of Arcadia Consulting Pte Ltd, a boutique real estate advisory and brokerage firm focusing on the marketing of luxury residences as well as cross-border investment brokerage. With a track record of over 20 years in managing projects and marketing premium real estate in Singapore and key cities in Malaysia, Indonesia, Thailand, Vietnam and Cambodia, Boon Hoe advises clients from the acquisition stage, strategic marketing planning and execution, and divestment.
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