The importance of understanding branded residence agreements in Thailand

branded residence agreements
Issues at The Sukhothai Residences are an example of what can possibly go wrong with branded residences

The Sukhothai Residences was part of the first wave of branded residence projects to spring up in Bangkok. Completed in 2010, the luxurious condominium provided residents with an upscale lifestyle that included access to amenities at The Sukhothai Bangkok Hotel.

It was a groundbreaking agreement that would help pave the way for future branded residence agreements across the Thai capital in the 2010s. However, The Sukhothai Residences also serves as a stark reminder of the issues owning a unit in these types of projects can bring.

The condominium has been beset by legal wrangling between owners and developer Grace Ivory, a firm controlled by Hong Kong-based homebuilder HK Resorts International, over various grievances. One of the most notable struggles is a fight about the branded residence agreement.

In May, the developer decided to rename The Sukhothai Residences, now calling it Grace Ivory Residences. According to unit owners, this was done without their input and could cause confusion among the public, even possibly harming property values.

As part of the renaming, those living in the building lost access to amenities at The Sukhothai Residences as well as discounts which are the backbone of branded residence agreements in projects connected to hotels. HK Resorts International claims this was done after unit owners declined to renew a facilities management contract with its affiliate company. Residents disagree with the decision.

Related: Understanding the difference between hotel-branded residences and serviced apartments

The importance of understanding branded residence agreements

At the end of the day, most branded residence agreements do not last forever. These are management contracts between a hospitality operator and developer or a building juristic board covering a set number of years. These can, of course, be extended. That is not guaranteed though.

What is happening with The Sukhothai Residences is a perfect example of why you need to understand what is covered in any branded residence agreement if you’re considering a unit in one of these projects. That means asking about how long the facilities management contract runs for, what happens when it expires and if there are any dispute mechanisms in place.

Ultimately, very few of these relationships in Thailand turn into legal disputes. In fact, The Sukhothai Residences is a worst possible scenario. But it’s always wise to be prepared for that, especially when it comes to real estate investment.

Watch: Explore the most exclusive branded residences in Southeast Asia