Beyond the badge: a new era for branded residences

Coco Chanel once said that, in order to be irreplaceable, one must always be different.

What would she make of today’s branded residence world? The sector is among the hottest in real estate. Buyers are happy to shoulder substantial premiums for five-star amenities and apartments that can pay their way by being added to hotel inventories.

For developers grappling with elevated land and build costs, that premium can be the difference between a scheme that stacks up and one that never leaves the drawing board. And for brands, residences offer an unparalleled opportunity to deepen connections with the world’s wealthiest individuals.

That combination is driving rapid growth: the number of branded developments globally is set to rise by 59% in the five years to 2029, according to this year’s Knight Frank Global Branded Residence Survey of more than 1,000 developments in 80 countries. We'll release the report next week – sign up here – but you can read a selection of the findings this morning’s FT.

Becoming the brand

Success has a way of adding complexity, and brands now face a new challenge: how to be irreplaceable when it’s so hard to be different? In cities such as Miami and Dubai, branded residences have become almost ubiquitous, with hotels, watches, clothing designers and even football teams vying for the attention of buyers, and diluting the premium that once came so easily with a household name.

Granted, this is less of a problem for the hotel brands, who have hospitality in their DNA. More than 80% of projects globally are delivered by luxury hotel brands, a reflection of buyers’ appetite for the amenities and services these operators have spent decades refining.

Non-hotel brands are going to have to work harder, but alternative strategies are already beginning to bear fruit. Some developers have opted to do away with the brand entirely, in favour of leaning into the identity of the building – see Eighty Seven Park in Miami, designed by Renzo Piano, or 111 West 57th Street in New York. Meanwhile, a small but growing group of developers have worked to become brands in their own right – a model pioneered by Discovery Land, the US developer founded by Mike Meldman and known for its celebrity clientele. You can read how Meldman did it, in his own words, in the report.

A reason to stay

As sectors mature, they become fertile ground for disruption – and a new wave of entrants is now well placed to challenge the dominance of luxury hotels.

These are developers for whom the “brand” is built around a shared ethos rather than a luxury badge. We call them “purpose-led brands”, and they include models like The Embassies, an intergenerational, design-led living concept with built-in members’ clubs; Arada, which creates nature-integrated communities rooted in sustainability; and SHA, a wellness clinic and medical resort. These developers are selling belonging, sustainability and wellness, creating communities that function more like curated clubs than traditional property developments.

This is a response to a shift in tastes among luxury consumers, who are increasingly seeking out brands able to help them live healthier, or more fun lifestyles, Chris Sanderson of The Future Laboratory tells us. Many developers and hoteliers have sought to respond to this shift in tastes by integrating private members’ clubs into new projects – The Aman in New York City is perhaps the best known among the hospitality specialists. At London’s One Carrington, part of the £1 billion regeneration of the Piccadilly Estate by the Reuben Brothers, the 28 apartments will sit opposite The Carrington, a 70,000 sq ft private members’ club by Robin Birley, the brains behind the exclusive 5 Hertford Street club.

The curated nature of these clubs is crucial because they feel authentic, giving residents reasons to interact with a place over the long term – a pull comparable to the long-term amenity offer that sits at the core of any hotelier’s brand. You can read more on this phenomenon in our recently published Guide to Private Members' Clubs. I'll return with much more on this topic following the launch of the report.

Limiting activity

UK house prices dipped 0.1% in August, Nationwide reported on Monday. That trims the annual rate of growth to 2.1%, from 2.4%.

It's been a resilient summer in the housing market, given the noise about the upcoming budget. Growth in values is sluggish, and is being held in check by rising levels of supply. Purchasing activity remains robust; lenders approved 65,400 mortgages for purchasers during July, up 800 from the previous month and the highest level in six months, according to Bank of England figures released this week.

Affordability, rising supply and the potential for changes to property taxes will continue to limit activity as we move into the busier autumn selling season. Mortgage rates are unlikely to fall in the short term, given the rate of inflation and wage growth, and many of the larger lenders have nudged rates higher in the past ten days or so.

In other news...

Pound falls as UK long-term borrowing costs hit highest level since 1998 (FT)