Real estate’s next big status symbol
Luxury brands like Porsche and Lamborghini are driving the hottest — and weirdest — new trend in homebuying.
The Italian carmaker Pagani produces fewer than 100 vehicles a year, and each comes with a seven-figure price tag. The brand is known among gearheads for its attention to detail and air of exclusivity, qualities that Pagani hopes will translate to its next project: luxury condominiums.
This spring, the company unveiled plans for Pagani Residences, a 70-unit condo development in Miami’s North Bay Village. The automaker says the building will offer waterfront views and living spaces “meticulously curated” by its interior-design arm. Pagani condos, much like Pagani cars, start at about $3 million. But for people desperate to claim a piece of Pagani, the price tag may be no problem at all.
“I sold a unit to a guy that loves Pagani cars, and it just didn’t matter to him what the location was,” Carlo Dipasquale, a luxury-real-estate agent in South Florida, told me. “They could’ve built the building inland, anywhere in Miami, for all he cared.”
Pagani is the latest high-end car brand to lend its name to a shiny condo project along the Miami coast, joining the likes of Mercedes-Benz, Porsche, Aston Martin, and Bentley. Beyond automakers, there’s a growing list of luxury brands hoping to use real estate to turn their cultural cachet into cold, hard cash. The owner of the trendy Italian eatery Carbone is partnering with developers on a high-rise; Dolce & Gabbana also has one in the works. Even Elle magazine announced this spring that it would get in on the action with a condo project near Miami Beach, hoping to sell buyers on a lifestyle pulled straight from its glossy pages.
When I heard of these plans a few months ago, I was tempted to dismiss them as the kinds of vanity projects that matter only to people with too much money and an insatiable hunger for status. Some of the announcements also struck me as a bit of a stretch. Magazines have a hard enough time peddling subscriptions these days — what makes them so sure they can sell condos? But as I talked with more people, it became clear that so-called branded residences are a global phenomenon that’s here to stay, with developers laying the groundwork for branded towers in hot spots like Dubai, London, and New York. The hottest — and weirdest — trend in condominiums could actually tell us a lot about the future of real estate, not to mention our brand-addled brains.
The concept of branded real-estate projects isn’t new. New York’s five-star Sherry-Netherland Hotel began welcoming long-term residents almost a century ago, and since then roughly 700 branded residences have graced skylines around the world. But the recent boom in these projects makes it clear that we’ve entered a new era: More than 650 branded projects are set to open over the next five years, a doubling that Riyan Itani, the founder of the specialty consulting firm Global Branded Residences, told me is “pretty much unprecedented in any sector.” Condo developers these days are laser-focused on the bottom line, and they believe linking up with a well-known label will help them sell units faster and at higher prices. Brands like Elle or Pagani stand to collect some nice licensing fees, too. But that’s not what they’re really after.
“It’s about outreach to a customer base beyond your core business,” Itani said. Whether you sell handbags or golf clubs, “you’re able to reach out in a different way and get brand loyalty.”
A rendering of the planned Pagani Residences in Miami, starting at $3 million per unit.
Most of these projects are tied to big, swanky hospitality names like Four Seasons or Ritz-Carlton, which set aside parts of their buildings as for-sale units. These arrangements feel like natural unions — if you’re a big-money traveler with a fierce loyalty to the Four Seasons, for example, you might be inclined to purchase a home that promises the same level of comfort, service, and brand recognition. But a smaller slice of branded residences, about 20%, are partnerships between forward-thinking real-estate developers and companies that appear to have nothing to do with housing. These are the most attention-grabbing, and sometimes head-scratching, marriages: Lamborghini villas in Dubai and Spain; Nobu Residences in Toronto, named for the Japanese Peruvian restaurant favored by celebrities like Drake; a Miami tower branded by the fine crystal maker Baccarat that touts the tagline “Where life forever sparkles.”
It’s not as if these luxury-goods companies suddenly morphed into real-estate experts. They typically license their names to seasoned development firms that front the money for these projects, shepherd them to the finish line, and ultimately bear the risk and reward of the actual condo sales. While the brands leave the number crunching and floor planning to the developers, they weigh in on design flourishes — Giorgio Armani himself apparently lends a personal touch to the interiors of Residences by Armani Casa in South Florida — and the condos’ marketing campaigns. The contributions may appear comparatively small, but adding a well-known company to the marquee can deliver real results for the building’s owner. Itani estimates that developers working on a branded residence spend an extra 10% to 15% of what they would spend on a standard condo project, since they have to pay for all the additional amenities and the right to splash the brand’s logo across the building. But in crowded cities like New York or Miami, a recognizable logo can help a new building stand out. It also translates to cash: Itani told me units in branded towers go for a global average of 30% more than comparable non-branded units.
“It’s kind of a no-brainer for a developer,” Itani told me. “From a financial standpoint, it’s a very profitable enterprise.”
No-brainers for developers aren’t always a win for consumers (take, for instance, the recent race toward the bottom in homebuilding). But when it comes to branded residences, there are real selling points for buyers. Brand loyalists may be eager to welcome their favorite company into yet another corner of their lives. They’re invited to consider what it might feel like to live inside a Lambo rather than merely speed down the coastal highway in one. There’s a novelty aspect to these purchases, too. Plenty of people own luxury condos, but far fewer get to flex a prestigious name like Bentley or Porsche when directing visitors to their new pad.
Developers load up these buildings with amenities to help discerning buyers feel like they’re getting bang for their buck. Convenience waits around every corner: infinity pools and thermal spas, private boat slips, rooftop helipads. The Bentley Residences allows owners to park their cars in their units via a vehicle elevator. Villa Miami, the 58-story Miami condo project from Major Food Group, which owns a slew of exclusive restaurants such as the impossible-to-get-a-table-at Carbone, promises residents private dining experiences and VIP status at all its outposts. Hotels, meanwhile, offer to list branded condos on Airbnb and manage them when their owners aren’t there, helping buyers make a return on investment even in their absence.
The biggest attraction of these glitzy homes, however, may be peace of mind. Plenty of condos are vying for rich buyers’ eyes and wallets, and they’re not all created equal. But when a prestigious name like Aston Martin or Dolce & Gabbana stakes its reputation on a project, buyers get some added assurance that the units will meet — or exceed — their lofty standards.
“These are all very well-known, established brands that people feel comfortable buying into,” Laura Steinbruckner, a luxury agent in the Miami area, told me.
Developers aren’t likely to stray too far from this lucrative pitch. Luxury brands will probably always offer the biggest upside for builders, and even the “non-luxury” projects in the pipeline are still tied to respected brands like Hilton and are only slightly cheaper than the big-name buildings. But developers interested in branded residences have a plethora of other candidates, some of which could stretch the boundaries of the sector even further. The Elle project may seem out of left field, but Itani told me he’s talking with another publication interested in making similar inroads. After all, magazines like Elle portray enviable lifestyles tied to fashion, celebrity, health, and beauty. All those things could translate to experiences within buildings, Itani told me.
That’s not to say all branded residences offer the same gilded path to profits. Car companies and fashion labels, unlike hotels, aren’t known for their property-management chops, and there’s a risk that buyers eventually tire of the marketing schtick. In a few years, you may well see some condo owners complaining that they got a Fiat level of service when they were promised a Ferrari. Rob Sykes, an associate principal at the global design firm WATG who advises companies on hotels and branded residences, told me developers shouldn’t count on slapping a big name on a building and instantly reaping rewards. But he does expect to see the sector expand as non-hotel brands enter the market — just last year he was in conversations with a client who was interested in bringing a luxury jewelry brand (he wouldn’t name names) into the fray.
Itani was still amazed that two sectors in particular — tech and food — hadn’t made more of a splash in the world of branded residences. There are a few big restaurant names, including Nobu, Major Food Group, and Cipriani, the famed Italian eatery. But Itani envisions a world in which many other newcomers turn corner-table regulars into corner-unit owners. He also sees an opening for ubiquitous tech companies like Apple or Google to sell loyal fans yet another product, one tricked out with all the latest tech and infused with their design ethos.
“If there are two things that a modern human being cares most about, it’s what they’re putting in their mouth and what phone they’ve got in their pocket,” Itani told me. “So I would expect to see those two elements represented.”
