The sound of the rattling wheels of the raging branded residence bandwagon is deafening. While the concept can trace its history back to New York in the 1920s with the opening of the Sherry Netherland Hotel offering “permanent private apartments with hotel-style services," it wasn’t until the mid-1980s that hotel companies — led by the likes of Four Seasons in Boston — really started to see the advantage of developing luxury homes tied to their brand identity.
While luxury brands such as Four Seasons and Ritz Carlton led the charge due to the opportunity to enhance the offering to luxury guests, the wider luxury brand community were slow to catch up. Having caught up now, they appear determined to overtake and surpass the pioneers. What started as a way to help fuel a development has become a product in its own right.
Luxury hotel-branded residences initially showed some restraint, generally being an extension of a hotel offering with the same service standards as the hotel. However, developers began to realize that residences were an increasingly attractive, and latterly essential, part of underwriting deals, thanks to sales premiums topping out at plus-30% in some markets. The result is that we are now seeing brands coming in from outside the sector — car brands, fashion brands, hairstylists — who don’t have that background in service.
This highlights a commoditization of the perceived lifestyle associated with that brand. The fashion brands, in particular, are scaling with intensity, and that brings risk.
It is ownership tied to status and not tied to the culture of the environment that you’re in. If you buy a branded residence under a luxury hotel flag, it is very clear that the residences are an extension of that luxurious service-led experience, not just the label.
Hotel brands are increasingly conscious of creating a community and links to the neighborhood around you. They are building a home, not an apartment block dropped into a location without any ties.
If you buy a branded residence with, say, a fashion brand, you are saying that you associate so strongly with the brand that you want to live in an apartment that shares that brand. They are invariably a status symbol, rather like a Birkin bag. This is a design-led decision, coupled with affinity with that brand identity and what it represents to the purchaser (and others).
The fundamental issue is that fashion, by its very nature, is forever evolving. The great designers create entirely new collections twice a year, so your 2026 version of the residence will fall out of fashion very quickly. You’re buying something in a snapshot. Is there going to be longevity in those individual properties, when the bedrock is style and not service?
For developers, it is an easy decision — can they create a project that reflects the ethos and quality of a given brand and sell those homes at a handsome premium? For the brands, there is the attraction of PR and growing awareness from the impact of a prestigious project, not to mention the healthy fees generated.
For owners, however, is there a risk of buyer’s remorse if the fundamentals of the investment are linked solely to a brand if it is not also linked to the locale? Will the secondary market for such developments hold up as strongly as tastes and trends evolve, and the latest “season” of apartments hit the property catwalk?
Out of this, there is one part of the sector that starts to look particularly intriguing. If one accepts that service and locale are key, luxury hotel residences will continue to thrive and appeal to a particular clientele, but this also throws open the opportunity to design and lifestyle brands.
Their unique take on service and design is usually also linked to being one with the local community. Younger affluent buyers may find it more appealing to align themselves with such brands that offer a work/stay experience that is less remote and more inclusive. This is evidenced by the growth in new entries to the sector from the likes of Mama Shelter, 25 Hours, Mondrian, Andaz, Edition, etc.
It is certain they will continue to expand — not through scale and shouting about the brand, but on a more subtle and intimate level, with potential to remain relevant and perhaps offer a more sustainable investment.
Robert Walters is chief investment officer of Global Asset Solutions and is based in London.
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