Hot or Not: Branded Residences on Way Down Under

Fashion labels, luxury cars marques and hotel brands are expanding into the residential development, creating new partnerships driven by favourable macro trends for high-end apartments. According to a global report by Knight Frank, the number of upcoming projects with known opening dates reflects a 12 per cent annual growth rate leading up to 2026. Now, it is beginnning to take root in Australian. Homes in this category hold particular appeals for high-net worth individuals, with the likes of James Packer, Bob Blann and Mary Tartak already aquireing their own piece of luxury in one of Australia’s first such offering, Crown Residences in Sydney. And big spenders are expected to buy into future projects in Beulah’s STH BNK in Melbourne as well as hotel-adjacent apartments that draw on the benefits of co-location. According to a report into the sub-sector by international firm Bryan Cave Leighton Paisner, association with a brand, “and the quality assurances and prestige it brings, can enable the developer to achieve a sales price substantially more [often 20 to 40 per cent] than if the residences were unbranded”. ▲ Apartments in the Porsche Design Miami Tower sold for up to $19.88 million at the top end in 2021. While the profit margin is substantial, it also creates a distinctive look and appeal, such as Miami’s Porsche Design Tower and its sky garages. The 60-storey tower comprising 132 apartments was completed in 2017 and adds to the Porsche residential portfolio that also includes a property Thailand, with another slated for Stuttgart, the marque’s home-town in Germany. The sky’s the limit for inspiration and opportunities within the branded residents market, particularly for those looking to diversify and expand. Knight Frank global head of research Liam Bailey says there’s a lot of confidence the sector with grow, and in the macro trends that are underpinning it. “I’ve spoken to [hotelier] Four Seasons and a couple of other brands in the last two or three months,” Bailey says. “The clear conclusion from really all of them was they’re all in expansion mode. “You’ve got the continued growth of wealth and the expansion of the investor base. There’s a growing number of people who can afford to invest in second homes. “The other trend is the return to normality in terms of travel. In fact, this year, 2024, is the first year we have gone above 2019 levels in terms of global mobility and travel.” ▲ Knight Frank’s Liam Bailey and the Four Seasons’ branded residences in Marrakesh. Top image: Four Seasons’ Peninsula Papagayo, Costa Rica. In Australia, high-net worth individuals are defined as those who control more than $50 million and companies who have incomes greater than $250 million. The Australian Taxation Office recorded 7836 high-net worth individuals in 2015—that grew to 14,491 in 2020 but the true number is probably even higher. Branded residences offer a number of advantages to deveoplers and the owners. According to a report by Savills, The Branded Residence Advantage, brand association instils buyer confidence, and is especially attractive to globally-mobile, time-poor individuals seeking a high-service offer, hassle-free ownership and the prospect of rental returns when not in occupancy. Hoteliers benefit from diversified schemes and additional income streams, while deepening their relationship with their customers. For developers, a brand brings profile, adds to buyer confidence, gives access to the brand’s customer base and, as mentioned, may deliver price premiums. However, just which brand is involved may become crucial when the markets soften again as heritage, especially in providing residential services, and reputation are likely to carry more weight. “A number of car brands are involved and you’ve got ... fashion and jewelry brands—in London about 15 years ago the Bulgari residences opened, and there’s a couple of those now,” Bailey says. “The car and fashion branded residences tend to be in Miami and Dubai, that’s the main focus. “The challenge ... for those operators or brands is you haven’t got heritage in service. “It doesn’t mean you can’t do it and if you look in Dubai and Miami the schemes that have been launched have sold very well.” ▲ Inside a Crown residence at One Barangaroo overlooking Sydney Harbour. The Bulgari half-floor penthouse with views of the Dubai skyline and marina sold for about $14.5 million in 2021 while the development’s 23 units sold for a total of $235.4 million. Meanwhile in Australia, Crown Residences achieved up to $72 million for its 82 apartments, proving there is a market for these offering, even during the financially murkiest of times—in 2020-2021. Once a brand is on board there are generally two options for the style of development: towers in core-city locations and resort-style offerings, including villas. “There is a lot of interest in mainland Europe at the moment and middle eastern Asia is quite strong,” Bailey says. “Mainland Europe is a bit of a new market, maybe in the sense a little bit like Australia, you haven’t had a kind of deep heritage in branded residence operators but they are beginning to move into the sector very quickly. “If you follow global trends, ultimately you’ve got two key pipelines really: the urban core developments central London, New York and I guess it would suit Sydney and Melbourne. Then you have the resort developments—at the moment there’s a huge amount going on in Italy, Portugal, Spain so looking at the best resort locations in Australia.” Bailey said the main challenge and consideration for Australia would be the depth of the international market. But with high-end wealth on the rise nationally and internationally, the appeal of branded residences in Australia is likely to grow. Who decides to meet that need, and where, will be crucial to the success or otherwise of this sub-sector Down Under. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

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