The next frontier of luxury is apartment building

In fashion, clothes are just the beginning. If for years brands have expanded into lifestyle and culture, producing films, furniture, publishing books, organizing art exhibitions, opening cafes and restaurants, hotels, and museums, the next mega-enterprise towards which fashion is moving is luxury real estate. Recently, for example, Dolce&Gabbana collaborated with Sierra Blanca Estates in Marbella to create an extra-luxury residential complex, which has already raised over 250 million euros from early buyers. The initial interest was reserved for a selected clientele, mainly composed of VIP clients of the two companies and already loyal buyers, who quickly absorbed about 35% of the available apartments. Now, having secured the commitment of a hardcore clientele, the project will also target a broader audience – "broader" is a bit of an overstatement given that apartment prices start at 4 million euros. The high cost is justified: the complex, named Design Hills Dolce&Gabbana Marbella and located in the area known as Golden Mile, has a total area of ​​almost 90,000 square meters housing 92 fully furnished residences with Dolce&Gabbana Casa designs but also public spaces for leisure, areas dedicated to luxury shops and restaurants, a normal and heated swimming pool with an attached club. These are true enclaves of luxury (several exist in the United States under the name gated community but none linked to a fashion brand) that promise to condense demand and supply, becoming catalysts for business in locations that have not only interested Dolce&Gabbana but many other entities.

As explained on MF Fashion, branded residences represent an emerging phenomenon in which historic companies such as Armani, Fendi, Cavalli, and Missoni have already embarked. For example, in 2018, Diesel Wynwood in Miami was born, a complex that includes 159 luxury lofts in the heart of the Design District; also in Miami, Baccarat inaugurated its own skyscraper containing 360 apartments, and according to Forbes, "according to industry research, there are approximately 700 branded residences globally, and nearly as many are in development, all expected by 2030. A decade of rapid growth has seen these projects increase by over 150%" and that's not all as "it is expected that non-hotel branded residences, including those associated with restaurants, cars, fashion, and jewelry, will increase by 40% within seven years, accounting for approximately 20% of the global branded residence inventory". In general, these projects are a win for all parties involved: developers and clients enjoy safer investments and, in the case of developers, higher returns and visibility; brands not only profit from sales but, as Mattia Biasi from Withers explains on MF Fashion, they sign contracts that include the use of the brand, with royalties varying depending on sales and services offered, ranging from 1% to 4% of the project value, with initial fees that can reach $500,000, not to mention the substantial fee for concept design development.

For developers, the premium on branded residences' prices can be significant. For example, Armani residences in Dubai will cost 63% more per square meter than the city's average, but it goes up to +86% according to CNN while in Dubai this premium can go up to 86% according to Knight Frank; Savills instead reports significant differences depending on cities, with premiums ranging from 24% to 52% compared to similar residences in the same areas. The geographical areas of greatest expansion for branded residences are the Middle East and Latin America, places where consumers particularly value the luxury and design of major brands. In Dubai, projects like Urban Oasis Missoni and Cavalli Tower are redefining the skyline, while in South America, brands like Elie Saab are making significant strides, as demonstrated by the Saffire Residences project in São Paulo. Specifically in Dubai, the prices of these residences are reaching new peaks. For example, the Bulgari Lighthouse, composed of 31 "penthouses" on 27 floors, recorded a sale of a "Sky Villa" for $112 million in February 2023, becoming the city's most expensive apartment. In the first half of 2023, the residence sold 20 units for a total of 2.15 billion AED ($585.3 million) according to CNN. 

For typical buyers of these properties, the service component is extremely important, especially if they already own several properties worldwide. Branded residences, often adjacent to hotels or resorts of the same brand or anyway providing access to all luxury facilities, while maintaining privacy in the living space. In Dubai, residences like Bulgari Dubai offer a wide range of services beyond the gym and spa, transforming the resort into a destination for the local community and tourists. The Armani Beach Residences in Palm Jumeirah, designed by Tadao Ando and set to be completed by 2016, include an enormous number of them: purchasing one of the penthouses for sale (the basic one with two bedrooms starts at $5.9 million) also includes a trip to Milan, a stay at the Armani Hotel, and a meeting with Giorgio Armani and the design team to discuss personal style preferences. Needless to say, Dubai's luxury real estate market has recorded a 19% year-on-year growth until September 2023, as reported by CNN citing Faisal Durrani of Knight Frank Middle East, and the growth shows no signs of stopping. Despite branded residences constituting a small fraction of the real estate offer, in fact, according to the American broadcaster, the sector is rapidly expanding, with 3,700 units under construction in the city alone.