Real estate status symbol: new home from your favorite luxury brand

“I sold a unit to a guy who loves Pagani cars, and for him it didn’t matter what the location was,” Carlo Dipasquale, a luxury real estate agent in South Florida, told me. “He could have built the building indoors anywhere in Miami for all he cared.”

Pagani is the latest high-end car brand to lend its name to a glitzy condominium 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 trendy Italian restaurant 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 was getting in on the action with a condo project near Miami Beach, hoping to sell buyers on a lifestyle straight from its glossy pages.

When I heard about these plans a few months ago, I was tempted to dismiss them as the kind of vanity projects that matter only to people with too much money and an insatiable hunger for status. I also found some of the ads a bit over the top. Magazines have a hard enough time selling subscriptions these days – what makes them so sure they can sell flats? But as we spoke to more people, it became clear that so-called branded residences are a global phenomenon that is here to stay, with developers breaking ground on branded towers in hot spots like Dubai, London and New York. The hottest — and weirdest — trend in condos might actually tell us a lot about the future of real estate, not to mention our branded brains.

The concept of branded real estate projects is not new. The five-star Sherry-Netherland Hotel in New York began welcoming long-term residents nearly a century ago, and since then some 700 branded residences have graced skylines around the world. But the recent boom in these projects makes it clear that we have entered a new era: more than 650 branded projects are set to open in the next five years, a doubling from Riyan Itani, founder of specialist consultancy Global Branded Residences . , told me it was “almost unprecedented in any sector.” Today’s condo developers are laser-focused on the bottom line, and believe that being associated with a well-known label will help them sell units faster and at higher prices. Brands like Elle or Pagani will also charge some nice license fees. But that’s not really what he’s looking for.

“It’s about reaching a customer base beyond your core business,” Itani said. Whether you’re selling handbags or golf clubs, “you can reach out in a different way and get brand loyalty.”

Most of these projects are linked to big, luxury hospitality names like the Four Seasons or the Ritz-Carlton, which set aside parts of their buildings as units for sale. These arrangements seem 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 buy a home that promises the same level of comfort, service and brand recognition. But a smaller portion of branded residences, about 20 percent, are partnerships between forward-thinking real estate developers and companies that seem to have nothing to do with housing. These are the most attractive, and sometimes scratchy, marriages: Lamborghini villas in Dubai and Spain; Nobu Residences in Toronto, named after the Peruvian Japanese restaurant favored by celebrities like Drake; a Miami tower marked by fine crystal maker Baccarat, which features the slogan “Where Life Shines Forever.”

It’s not like these luxury goods companies suddenly turned into real estate experts. Typically, they license their names to experienced development firms that make the money for these projects, drive them to the finish line, and ultimately bear the risk and reward of actual condo sales. While the brands leave the number-crunching and floor-planning to developers, they influence the design flourishes—Giorgio Armani himself apparently puts a personal touch on the interiors of the Residences by Armani Casa in South Florida—and the apartments’ marketing campaigns. Contributions may seem relatively small, but adding a well-known company to the marquee can provide real results for the building owner. Itani estimates that developers working on a branded residence spend an extra 10% to 15% of what they would on a standard apartment project because they have to pay for all the extra amenities and the right to splash the brand’s logo on the building . But in busy cities like New York or Miami, a recognizable logo can help a new building stand out. It also translates to cash: Itani told me that units in branded towers go for a global average of 30% more than comparable non-branded units.

“It’s kind of exhausting for a developer,” Itani told me. “Financially, it’s a very profitable enterprise.”

Disclosures for developers are not always a win for consumers (take, for example, the recent race to 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 another corner of their lives. They are invited to consider how they might feel live inside a Lambo rather than speeding down the coastal highway in one. There is also a novelty aspect to these purchases. Many people own luxury condos, but far fewer end up adopting a prestigious name like Bentley or Porsche when directing visitors to their new pad.

It’s kind of tiring for a developer. From a financial point of view, it is a very profitable enterprise.

Developers load these buildings with amenities to help discerning buyers feel like they’re getting bang for their buck. Convenience awaits around every corner: infinity pools and thermal spas, private water slides, rooftop helipads. The Bentley Residences allows owners to park their cars in their units via a vehicle lift. Villa Miami, the 58-story Miami condo project from Major Food Group, which owns a slew of exclusive restaurants like 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 apartments on Airbnb and manage them when their owners aren’t there, helping buyers get a return on investment even in their absence.

The biggest draw of these bright homes, however, may be the peace of mind. Lots of condos are vying for the eyes and wallets of wealthy buyers, and not all are created equal. But when a prestigious name like Aston Martin or Dolce & Gabbana stakes its reputation on a project, buyers get extra assurance that the units will meet – or exceed – their high standards.

“These are all established, well-known brands that people feel comfortable buying,” Laura Steinbruckner, a luxury agent in the Miami area, told me.

It’s possible for developers to stray too far from this lucrative pitch. Luxury brands will probably always offer the biggest advantage for builders, and even the “non-luxury” projects underway are still tied to respected brands like Hilton and are only marginally cheaper than big-name buildings. But developers interested in branded residences have plenty of other candidates, some of which could push the boundaries of the sector even further. The Elle project may seem out of left field, but Itani told me he’s in talks with another publication interested in making similar forays. After all, magazines like Elle showcase enviable lifestyles related to fashion, celebrity, health and beauty. All of these things could translate into in-building experiences, Itani told me.

These are all very well-known and established brands that people feel comfortable buying

That’s not to say that all branded residences offer the same golden path to profit. Car companies and fashion houses, unlike hotels, are not known for their property management quotas, and there is a risk that buyers will eventually tire of the marketing schtick. In a few years, you may see some apartment owners complaining that they received a Fiat level of service when they were promised a Ferrari. Rob Sykes, associate director at global design firm WATG, which advises companies on branded hotels and residences, told me that developers shouldn’t rely on putting a big name on a building and reaping immediate rewards. But he expects to see the sector expand as non-hospitality brands enter the market – just last year he was in talks with a client who was interested in bringing a luxury jewelery brand (he didn’t name) 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 some big names in restaurants, including Nobu, Major Food Group and Cipriani, the renowned Italian eatery. But Itani envisions a world where many more newcomers turn corner-table regulars into corner establishment 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 the latest technology and infused with their design ethos.

“If there are two things a modern human being cares about the most, it’s what they put in their mouth and what phone they have in their pocket,” Itani told me. “So I would expect to see those two elements represented.”

James Rodriguez is a senior reporter on Business Insider’s Discourse team.