Real estate brands emerged relatively unscathed from the economic fallout of COVID-19, with the total brand value of the Brand Finance Real Estate 25 2021 ranking increasing by 8% year-on-year to US$164.3 billion in 2021. Chinese brands continue to dominate the real estate sector, also claiming an additional two spots in this year’s ranking. This takes the total number of Chinese real estate brands to 23 out of 25, or 97% of the ranking’s total brand value at US$159.4 billion. The remaining two spots belong to US-based Brookfield Property Partners (down 5% to US$2.8 billion) and CBRE (down 12% to US$2.8 billion) in 19th and 20th, respectively.
While China was the first country to bear the brunt of the virus, the nation was the only major economy in the world to avoid a contraction in 2020, with its full-year GDP expanding just over 2%. Additionally, China’s output leapt nearly 20% year-on-year in the first quarter of 2021, the fastest known rate since records began in the 1990s. A combination of high demand, ever-growing population and consistent government intervention has enabled the Chinese property market to thrive – even under the most strenuous of conditions – with real estate investment across the country since returning to pre-COVID levels, and infrastructure and manufacturing investment also rebounding thanks to healthy export growth.
Evergrande leads sector
For the fourth consecutive year, Evergrande has claimed the title of world’s most valuable real estate brand, despite recording a marginal 2% decrease in brand value to US$20.2 billion. Financial challenges amidst tightening borrowing limits as the country’s regulators move to minimise risk across the sector could in part explain the brand’s slight drop in value this year. Additionally, the brand’s US$23 billion investment into the electronic vehicle market – with the aim of becoming the world’s largest NEV company – rendered mixed results, with the electric car maker yet to sell a single car under its own brand. Still, with over 870 projects across more than 280 cities in China, Evergrande continues to dominate the real estate space, with considerable market share and thus solid revenues.
Richard Haigh, Managing Director, Brand Finance, commented:
“While Western countries struggled to cope with the effects of COVID-19, China was able to largely contain the epidemic. Real estate brands in the country have benefited from continued economic growth, which is set to persevere through 2021, while threats of a correction have not materialised. The nation's growth through the pandemic provides both a strong domestic market and potentially weaker international competition in the years to come, which could pave the way for expansion into new markets.”
Greentown makes ranking debut as fastest-growing brand
Greentown enters the Brand Finance Real Estate 25 2021 ranking for the first time after an impressive brand value growth of 52% to US$2.0 billion. At the end of November last year, the company had already achieved over 90% of its full-year sales target, following a notable increase in saleable resources and improved project turnover. Additionally, it is anticipated that Greentown’s total contracted sales will amount to a record growth of 20% year-on-year in 2021, with active land acquisition activities supporting further scale expansion, bolstering the company’s positive financial forecast.
Woes versus Wanda
A pioneer in creating fully independent commercial zones combining shopping, dining, leisure, and entertainment, Dalian Wanda Commercial Properties (down 30% to US$3.3 billion) continued to enlarge its national footprint, entering several cities across China and performing well in 2016 and 2017 – ranking 2nd and 1st overall, respectively. However, as operations continued, inconsistencies appeared between demand and supply levels, leading to adjusted financial forecasts and the year-on-year drop in brand value experienced by the company over the past few years – placing 3rd in 2018, 9th in 2019 and 11th in 2020. COVID brought with it additional challenges for the already struggling business, as shopping malls, dining, leisure, and entertainment facilities were forced to close shop, thus pushing the company even further down the ranking, placing 15th overall in 2021.
Joy City Jubilation
In addition to measuring overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. According to these criteria, Joy City (down 9% to US$2.4 billion) is the world’s strongest real estate brand for the second consecutive year with a Brand Strength Index (BSI) score of 81.3 out of 100 and a corresponding AAA- brand strength rating, up from AAA last year.
Richard Haigh, Managing Director, Brand Finance, commented:
“Renowned for its shopping malls in particular, Joy City is viewed as an innovative, forward-thinking, high-quality brand that focuses on enhancing the urban lifestyle. Based on research conducted in the Brand Finance Global Brand Equity Monitor, these attributes contribute to high brand equity scores on metrics such as consumer familiarity and reputation, which are directly related to positive Brand Strength performance.”
About Brand Finance
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Definition of Brand
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand value refers to the present value of earnings specifically related to brand reputation. Organisations own and control these earnings by owning trademark rights.
All brand valuation methodologies are essentially trying to identify this, although the approach and assumptions differ. As a result, published brand values can be different.
These differences are similar to the way equity analysts provide business valuations that are different to one another. The only way you find out the “real” value is by looking at what people really pay.
As a result, Brand Finance always incorporates a review of what users of brands actually pay for the use of brands in the form of brand royalty agreements, which are found in more or less every sector in the world.
This is known as the “Royalty Relief” methodology and is by far the most widely used approach for brand valuations since it is grounded in reality.
It is the basis for our public rankings but we always augment it with a real understanding of people’s perceptions and their effects on demand – from our database of market research on over 3000 brands in over 30 markets.
Brand Valuation Methodology
For our rankings, Brand Finance uses the simplest method possible to help readers understand, gain trust in, and actively use brand valuations.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668.
Our Brand Strength Index assessment, a balanced scorecard of brand-related measures, is also compliant with international standards (ISO 20671) and operates as a predictive tool of future brand value changes and a control panel to help business improving marketing.
We do this in the following four steps:
1. Brand Impact
We review what brands already pay in royalty agreements. This is augmented by an analysis of how brands impact profitability in the sector versus generic brands.
This results in a range of possible royalties that could be charged in the sector for brands (for example a range of 0% to 2% of revenue).
2. Brand Strength
We adjust the rate higher or lower for brands by analysing Brand Strength. We analyse brand strength by looking at three core pillars: “Investment” which are activities supporting the future strength of the brand; “Equity” which are real perceptions sourced from our original market research and other data partners; “Performance” which are brand-related measures of business results, such as market share.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+, in a format similar to a credit rating.
3. Brand Impact x Brand Strength
The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4. Brand Value Calculation
We determine brand-specific revenues as a proportion of parent company revenues attributable to the brand in question and forecast those revenues by analysing historic revenues, equity analyst forecasts, and economic growth rates.
We then apply the royalty rate to the forecast revenues to derive brand revenues and apply the relevant valuation assumptions to arrive at a discounted, post-tax present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.