The branded residences boom is often sold as a simple promise: add a recognisable name, elevate services and watch the premiums roll in. But behind the shimmering promises lies a far more intricate reality.
At the Resort & Residential Hospitality Forum 2025, experts stressed that while the opportunity remains enormous, the mechanics of value creation are tightening. And those who don’t understand the nuances risk stumbling on unrealised potential.
The opportunity
Global supply for branded residences has continued to surge. However, Europe still lacks consistent product in this sphere. This mismatch has created extraordinary opportunity for some.
For Mitra Ghamsari, founder & CEO of Persepolis Investments, this gap was the opening.
“When you come into markets like Europe, there's a lack of standardization and quality uniform international product. And there’s a need for and demand from buyers for products with brands they recognise.”
But it’s not all sunshine and roses due to the region’s architectural and regulatory constraints. Protected buildings, small footprints, scepticism around service charges and buyer education challenges that many newcomers underestimate.
Making it work
And architecture is an important consideration, particularly in Europe especially when deciding between standalone branded residences or co-located projects.
However, Nicholas Mellis, vice president of acquisitions and development at Highgate says that that operating in the “four-and-a-half star plus” bracket rather than ultra-luxury gives room to manoeuvre.
That positioning creates something extremely valuable: flexibility. While most developers rely on pure sell-through to fuel returns, Highgate can redirect unsold units into the hotel inventory
“It’s about balancing the residences - which in most of our projects that's where the majority of the profitability and the ROI comes from - but also the hotel. If a unit isn’t selling quickly enough, we put it into inventory and selling that as a hotel room. At our level, that protects the IRR. It’s about trying to maintain as much flexibility as we can and mitigate downside,” Mellis says.
Sales and marketing
But the real engine behind investor returns isn’t premiums or positioning. It’s velocity. Slow absorption is the quiet killer of IRR and experts treat it with almost scientific precision.
For Omer Isvan, president of Servotel, velocity doesn’t begin with branding but with product-market fit. “The brand is an add-on. The product and the market must make sense on their own.”
His team examines commodity-level pricing and absorption rates, say, €10,000 per sq m and three units per month, and then asks how to push both numbers up. That uplift rarely comes from the brand alone; it comes from the “composition of the promise” i.e. the exact mix of amenities, services, and experiential elements that redefine what the buyer is actually purchasing.
Still, in emerging markets, even the perfect promise moves slowly at first. Ghamsari broke down the drag into three parts: aligning the location, product and brand; educating a sales force with no experience in branded schemes; and navigating legal systems. Closing times stretch, buyers push for customisation, lawyers request changes and every step adds friction. Yet this is also where the upside lies: early entry means low land costs, and if developers sensitise their models correctly, the added complexity becomes a manageable premium for outsized returns.
Marketing adds another layer to the equation. Contrary to expectation, ultra-luxury projects often require less fanfare, not more. Isvan described a world where big ad budgets work against exclusivity; these projects sell through whispers, soft networks and one-on-one relationships, not splashy campaigns.
Even once a buyer is secured, the frictions don’t end. Education remains a constant pressure point, especially among buyers entering the branded space for the first time. Service charges, often misunderstood, must be justified line-by-line. Usage rights can become intense negotiating battlegrounds. And in historic buildings, customisation remains a sensitive flashpoint.
The takeaway
All of these complexities feed into the ultimate question of exit. For stakeholders like Highgate, the goal is to demonstrate concept validation: velocity, pricing, and a hotel that is performing on its own merits.
And this is where Isvan’s final lesson crystallises: the hospitality component must stand independently. If it exists only to enhance the residential story, sophisticated buyers will see it immediately and reject it. Branded residences only work when both halves hold their weight.
What is clear is that the branded residences market, while maturing, is still brimming with opportunity. Demand continues to rise, Europe’s supply gap remains profound and emerging markets offer strong potential for those who can navigate the frictions. The returns are real, but they belong to the developers who can master the entire arc: from concept to exit.
According to Ghamsari: “The moment you enter, the entry point, the brand that you put. All that is very important in getting the right profitability.”