When it comes to real estate, luxury brands including Mercedes-Benz, Dolce & Gabbana and Baccarat are showing they have value beyond expensive cars and high-end accessories. The names, when attached to condominiums, draw steady enough demand to help fund development as some lenders balk at making hotel construction loans.
Hotel financing has become increasingly challenging, with typical lenders like banks tightening their belts as global market uncertainty grows. So branded residences — either as stand-alone luxury condominiums or as part of a larger hotel project — can help developers and their hospitality partners to get funds, said Phil Keb, senior executive for luxury brand growth at IHG Hotels & Resorts.
“It may be five huge homes or it may be 200 condos stacked on top of a 50-story building. But branded residences today is a way to facilitate new luxury hotels" being built, Keb said during the American Lodging Industry Summit's Caribbean and Latin American 2025 conference at the Loews Hotel in the past week in Coral Gables, Florida.
For example, the deposits from nearly sold-out proposed condos at the Waldorf Astoria Hotel & Residences Miami helped get the project, the tallest U.S. residential building south of New York, underway last year.
New luxury hotels can cost as much as “$3 million a key to build,” Keb said. “You can’t underwrite them based on hotel performance," alone. He added that you also need "a bunch of profit off of the branded residences,” a property type that is “needed today to facilitate the hotel financing."
Branded residences aren't new, with hotels for decades using them to offer buyers a white-glove lifestyle. But more recently, high-end consumer brands including carmakers Bentley and Mercedes-Benz, Italian fashion house Dolce & Gabbana and the French crystal company Baccarat are planning their first branded condos in markets like South Florida and Dubai.
In South Florida, the trend has become increasingly popular over the past few years, fueled by brands and developers chasing the dollars of all the region’s new wealthy individuals and families who relocated from states like New York in the aftermath of the pandemic. New Yorkers who moved to Palm Beach and Miami-Dade counties between 2018 and 2022 brought an estimated $9.2 billion in income to the region, according to a recent report from the Citizens Budget Commission, a New York-based think tank.
Establishing credibility
Luxury brands help establish credibility and a sense of safety for potential buyers familiar with the standards and quality of a particular brand, according to Edgardo Defortuna, founder and CEO of Fortune International Group. Defortuna is a well-known name in South Florida real estate development, and his company is synonymous with some of the region’s most luxurious condo projects.
"Miami is attracting the world," he said in an interview in recent months, and Fortune's branded residences have "as many U.S. customers as we have foreign customers."
Not only car companies, but restaurant firms including Major Food Group and other luxury brands such as design studio Pininfarina are expanding into real estate as part of a broader push into lifestyle offerings — something that some hoteliers think the "jury's still out on," said Keb. He added that branded residences are a useful tool to fund new hotel development globally, with units common on under-construction luxury hotels outside Saudi Arabia and China.
Brands typically charge a percentage of a project’s development value in exchange for naming rights, adding another revenue stream for the brand, according to a report from global real estate marketing firm Graham Associates.
Branded residences appeal to developers and their hotel partners by helping to reduce borrowing costs, while lenders can rely on condo sales to mitigate the risks of hotel development.
“Branded residences play a critical … role in ensuring the viability” of luxury hotel development, said Jeff Tisdall, chief business officer of Accor One Living, hotel company Accor’s luxury branded residence division, at the conference. Branded residences are capable of fetching as much as $20 million per unit, in what is “the ultimate loyalty program," Tisdall said.
Hotel development professionals say strong demand for branded residential properties that emerged from the pandemic isn't slowing.
“Coming out of COVID, there was an immense demand for branded residences," said Mario Eduardo Carbone, managing director of development in Mexico and Central America for Hilton. "What I’m surprised to see is that demand hasn’t necessarily tapered off" but has shifted from “large villas” in favor of luxury apartment-style residences with two or three bedrooms. “But the volume of sales, the amount of money that has been spent hasn’t necessarily slowed down,” Carbone said.
Still, that doesn’t mean hotel companies are becoming glorified condominium developers.
"At the end of the day, we're paid to get new luxury hotels in our system,” said Keb with IHG.