Want a Pagani? Buy a US$30m penthouse and skip the 3-year wait

Fifteen years ago, a brand partnership was the ultimate differentiator in the luxury homes market. By aligning with a hotel brand, developers were able to position their residences as rare and highly desirable – and they were: just 169 branded schemes existed globally in 2011.

The success of the model has fuelled rapid expansion: there are now 611 projects worldwide, and we forecast that number will climb to 1,019 by 2030. Their distribution is far from uniform. In established hubs like Miami and Dubai, branded residences have become a defining feature of the skyline. Indeed, experts told our recently published The Residence Report that parts of the market have come full circle; some developers in Miami are opting to differentiate their schemes but going unbranded.

Of course, there are lots of ways brands can still differentiate their developments; football clubs can offer branded rooftop football pitches, hotels offer membership to wellness or private members clubs, car manufacturers can provide hobbyists with eight car parking spaces per apartment. But developers in the more competitive markets are upping the ante, as illustrated by the new Pagani Residences in Miami, where buyers of the US$30 million penthouses get supercars that typically carry a three-year wait and start at more than US$3 million – see more from Bloomberg on that.

The Pagani Residences highlight a growing strategy among luxury brands: harnessing the power of community. About 40% of units have already sold, many to existing Pagani owners, according to Bloomberg. This signals the next phase in branded real estate – either tap into a loyal following or create one from the ground up. The brand is no longer just the draw; it's the ecosystem.

See The Residence Report (p.28) for more.

Buying power

UK house prices climbed 0.6% in October, the biggest monthly gain since January, Halifax reported this morning. The annual rate of growth now sits at 1.9%.

While these aren't blockbuster numbers, the market has shown resilience given the weakness of the economy and uncertainty over the contents of the November budget. The best fixed rate mortgages have hovered at around 3.8% for several months, and have clearly plateaued at a level low enough to support robust levels of activity. 

Whether we see activity pick up will depend on the contents of the budget, but there are risks on either side. Tax rises will knock sentiment and curb buying power, but it may prove disinflationary, enabling the Bank of England to continue cutting rates. A display of fiscal restraint will also be positive for borrowing costs.

Drifting lower

The Bank of England opted to hold the base rate at 4% yesterday in a close 5–4 vote, with four members favouring a 0.25% cut. That opens the door to another reduction in December, which will bring the Bank close to the end of this cycle of loosening.

Governor Andrew Bailey said that current market pricing — implying two further rate cuts to leave the Bank rate at 3.5% in three years’ time — was “a fair description of my position at present”, according to the FT. If conditions pan out as the Bank expects, mortgage rates should drift lower through 2026, though only marginally. 

A reminder that in September we revised our forecast for 2025 UK house price growth down to 1%. We expect a moderate recovery to gain traction through 2026. Our current forecasts point to 3% growth in 2026 and 4% in 2027.

Risk aversion

Homebuyers might be pushing on, but the construction sector is wilting under the weight of political and economic uncertainty.

Construction activity dropped at the fastest rate since 2020 during October, according to new PMIs. Civil work was the weakest performer, but residential construction also fell at the fastest rate for eight months.

"Reduced workloads were again widely attributed to risk aversion and delayed decision-making among clients, which contributed to a slower-than-expected release of new projects," Tim Moore, Economics Director at S&P Global Market Intelligence, said in the release. "Subdued demand in the wake of heightened political and economic uncertainty also led to the steepest drop in input buying since May 2020."

In other news...

Barratt Redrow says bookings slower in key season ahead of UK budget (Reuters), and finally, Vistry posts 11% sales growth on affordable housing demand (Reuters).