02 Jul 2022 Spa Business Handbook
 

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Spa Business Handbook - No place like home

Global research

No place like home


Wellness residential developments are the fastest growing segment of the wellness market. But who is going to deliver all of the healthy programming and design? Chair and CEO of Global Wellness Institute, Susie Ellis, reports on this immense business opportunity…

Aspirational living at Tri Vananda, Phuket, Thailand. photos: Tri Vananda
Aspirational living at Tri Vananda, Phuket, Thailand. photos: Tri Vananda
Wellness residential projects offer a huge business opportunity photo: Tri Vananda
Troon Pacific CA: homes with wellness at the forefront photo: Troon PacifiC
The pandemic has sparked an interest in living more well photo: Troon PacifiC
GWI says the big opportunities lie in wellness real estate photo: Troon PacifiC

Spa and wellness industry stakeholders and suppliers currently face an extraordinary business opportunity in terms of wellness real estate. They need to look beyond hospitality and into homes, because this presents a huge opportunity.

The Global Wellness Institute (GWI) defines wellness real estate as “residential and commercial properties that incorporate intentional wellness elements in their design, materials, building, amenities, services and programming.”

In 2018, we pegged the market at $134bn (€116bn, £99bn), with about 740 developments worldwide. Then the pandemic hit, which completely transformed the function and value of our homes. Our homes became our everything and people questioned where and how they want to live. The answer was more well. More safety, nature and sustainability, more space and serenity to work and more healthy programming and true community.

Sky-rocketing demand
According to our latest research, Wellness Real Estate: Looking Beyond COVID-19, market growth from 2017-2020 has far exceeded our researchers’ predictions and general economic growth trends. The global wellness real estate market surged in the two years before the pandemic (2017-2019), growing 23 per cent annually, compared with 5.4 per cent growth for construction overall.

And while hospitality, travel and spa took major hits in 2020, the crisis actually further fuelled growth for wellness real estate – which grew 22 per cent, even as overall construction shrank by 2.5 per cent.

So from 2017-2020, the wellness real estate market essentially doubled: jumping from $148bn (€128bn, £109bn) to $275bn (€238bn, £203bn.) Seven countries account for 82 per cent of the market: the US, China, Australia, UK, Japan, France and Germany. But all of the top 20 markets have seen incredible recent growth across the board.

Japan and Canada are the two standouts, with 360 per cent and 240 per cent growth respectively. But the US, China, UK, France, Netherlands, Denmark, Switzerland, Singapore, Norway, Italy and Finland all basically doubled their markets. The opportunity is almost everywhere.

The sector has grown so fast that the projects are too numerous to properly count. If we estimated that there were 740 projects (either built, partially-built or in development) at year-end 2017, now that number is very conservatively 2,300.

Seize the opportunity
Wellness living concepts are happening in every type of residential project imaginable: master-planned communities; multifamily projects (apartments, condos); urban districts and mixed-use projects; resort/spa-based projects; affordable housing and all kinds of well senior living, co-living and eco-community concepts.

Real estate developers are rushing in, but more spa and wellness industry providers need to make sure they’re fully seizing the opportunity to help deliver all the wellness being programmed into new real estate projects.

There are big opportunities for wellness and spa hardware providers. All the wellness-focused designers, architects and landscape architects and spa, fitness and wellness equipment and facilities providers have huge new opportunities. Biophilic design being the dominant trend.

At the high-end, whether in individual wellness homes, new urban wellness developments or senior living projects, there is a serious resort-level amenities smackdown going on. When visiting new luxury wellness homes and developments, it’s hard to believe the spas, fitness centres, hydrothermal facilities and extraordinary wellness design on offer, from vast meditation rooms to full-blown hammams.

There are so many examples: Troon Pacific’s multi-million-dollar homes in California have every kind of wellness and environmental angle built in, with elaborate, custom wellness and spa centers within each home.

The wellness infrastructure opportunity also includes all the new technology innovations to create healthier buildings: everything from air and water purification to touchless design and advanced circadian lighting. It includes the builders and suppliers of futuristic smart healthy homes (integrating sensors, AI, telemedicine).

Our research found wellness building certification is surging. The two big players, The Well Building Standard (WELL) and Fitwel, saw certified well projects grow ninefold in the last three years. Hitting healthy built environment benchmarks means new opportunities for the technology providers and designers which make it happen.

Get on board
The wellness real estate wave creates incredible new opportunities for everyone who creates and delivers diverse kinds of wellness programming, from therapists and instructors to wellness and spa consultants. Wellness real estate projects are moving into dramatically new programming.

The rise of super-sophisticated medical-wellness residential projects, such as Tri Vananda coming to Thailand, create new opportunities for practitioners from integrative doctors to physical therapists. New wellness projects such as Gravity in Columbus, Ohio, are focused on mental health programming, bringing in practitioners from therapists to motivational coaches.

A key trend in wellness real estate is more wellness and spa resort and luxury players jumping into residences, whether full-ownership or fractional models. This includes Six Senses, Aman Resorts, Mandarin Oriental, Mondrian, Raffles, Montage, Four Seasons, GOCO Hospitality, Baccarat, St. Regis, and more.

Fitness brands are even jumping into the wellness real estate space, from Equinox’s Hotel + Residences project coming to Downtown LA or the US fitness chain, Life Time Fitness, opening three wellness residential developments.

According to Neil Jacobs, CEO of Six Senses, it’s the new model of integrating a resort, with residences, and often a community membership model, which is getting more amazing, sophisticated wellness projects funded, because of the three-part revenue stream. It’s not only a profitable, extremely natural opportunity for wellness resort brands, but an expanded opportunity for all providers and practitioners.

Tsunami in demand
The amenities in these new wellness resort and living projects are extraordinary, for example homes in the uber-luxury Owo Residences by Raffles, coming to London this year, all have private indoor pools and spas, and there is 30,000sq ft (9,000sq m) of private amenity space.

Just three years ago, wellness real estate was a concept not well understood by consumers, builders, developers or investors, but GWI researchers predicted demand would soon hit like a tsunami. That moment has arrived. For spa and wellness industry providers, the wellness Monopoly board has been all about hotels. But it’s time to focus on the opportunity with homes.

This means re-thinking everything from business outreach and marketing to the conferences you attend. It’s why we at the GWI recently held our first Wellness Real Estate Symposium in NYC, bringing together developers, investors, architects and wellness industry players with the goal of immersing the real estate industry in the wellness opportunity and immersing the wellness industry in the real estate opportunity. We have also just launched a new GWI Initiative on wellness communities and real estate. Wellness real estate is fast moving from elective to essential, and the wellness and spa world needs to make it essential to their business plan.

About the author:

Susie Ellis is co-founder, chair & CEO of Global Wellness Institute and Global Wellness Summit. She sits on numerous academic and industry boards, including the EHL – Swiss Hospitality Management School in Lausanne and the Aspen Brain Institute.


Originally published in Spa Business Handbook 2022 edition

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