Branded residences take off in Spain: more supply and prices of up to €30,000/m2

Spain is preparing to lead the launch of a new concept of super-luxury housing in Europe. Christened 'branded residences', this model began in the USA four decades ago and is gradually gaining prominence in the Spanish market, thanks to high-end brands, such as hotels, fashion brands and car giants.

Five projects are currently being developed in Spain, totalling 300 homes of these characteristics, although projections point to a growth of more than 300% in the coming years. According to the consultancy firm Colliers, the supply will reach 1,200 units in four years and be spread over 17 developments in the country's main tourist areas. Moreover, prices will be increasingly higher: in some cases, they will fluctuate between €20,000 and €30,000/m2, well above the €15,500 per m2 at which the 'branded residences' of the Four Seasons hotel in the centre of Madrid were marketed in 2017.

This project by the hotel chain is in addition to the one completed by its counterpart Mandarin Oriental in Barcelona and the three projects promoted by Abama in Santa Cruz de Tenerife. Between them, there are 278 units on offer. However, according to the projects under construction and those planned, Spain will have 1,200 super luxury homes with exclusive designs, prime locations and services in just four years.

Behind the new projects are hotel brands (Four Seasons, Marriott, Mandarin Oriental or Hilton) as well as some of the world's most famous fashion brands (Dolce & Gabbana, Karl Lagerfeld, Ellie Saab or Missoni) or some of the world's most famous car brands (Lamborghini).

"Spain is experiencing a remarkable boom in branded residences, with five projects completed and more than ten in the pipeline for the coming years. This 360% growth in the sector makes Spain a leader in branded residences in Europe," says Colliers. An example of this interest is that the Dolce & Gabbana project is the first in the world.

"There are few examples now, but the trend is there, and we are at the right time for its development despite the wars and interest rates. In the end, we are still Europe's Florida, there is legal certainty in this type of project, and the macro environment is moderately optimistic, to which we can add the climate and culture factor. The timing couldn't be better", insists the consultant. 

This luxury residential property boom is also highlighted by the forecast that the number of millionaires will continue to grow internationally in the coming years. "It is expected that wealth with more than 30 million in liquid positions in their current account will grow by 5% until 2027 and that the number of people with more than one million will increase by more than 50%," Colliers explains. And this environment will favour investment in residential projects.

On the other hand, the consultancy says that the hotel sector is showing a lot of interest in this segment and that other brands in the fashion world, such as Armani, could carry out developments.

Keys to these developments

These branded luxury housing developments are aimed at Spanish and international clients with very high purchasing power in the main Spanish tourist destinations, such as Madrid, Barcelona, Malaga and Tenerife, although other locations, such as the Balearic Islands, are not ruled out in the future. But the most prominent enclave is the Costa del Sol, which accounts for 60% of the new developments currently planned.

Beyond the location, other keys to branded residences are the exclusive design, based on the joint work of the brand, the operator and local interior designers to adapt the product to the area's demand, as well as the extra services offered to buyers, from cleaning to the management of a potential rental of the property or invitations to events, and which allow them to generate a bond with the client.

Sierra Blanca Estates

Also noteworthy is the variety of uses this type of housing can have, depending on its location. If it is on residential land, as in the case of the Four Seasons in Madrid, they can be first or second homes, although if the land has a tourist use, regulations come into play. In the case of Andalusia, for example, the use is limited to 60 days a year, while the rest of the year can be used for tourist rental. These high-end residences can be rented out, earning returns and passing management to an operator.

According to Colliers' calculations, this increases the price of this type of residence compared to a standard luxury home by between 10% and 30%, depending on the services included.

Regarding the price of the new branded residences that will be coming onto the market soon, Colliers believes that they could reach €30,000/m2 in some cases. "The Four Seasons in Madrid were marketed from €15,500/m2 in 2017, with the most affordable property (one bedroom) being €3 million and the most expensive (a penthouse) being €18 million. And those launched by Mandarin in Barcelona are rumoured to be around €18,000/m2 but there will undoubtedly be projects averaging more than €20,000/m2, something we have never seen in Madrid, while in some areas of the Costa del Sol, they could be around €30,000/m2. The strength and reputation of the associated brands justify this price premium, allowing for a higher appreciation of the property and conferring a unique and distinctive character to the property," concludes the consultant.

Projects in Spain

These are the branded residence projects in Spain, including those completed, those under construction and those currently in the project phase. Grupo Lar could also be added after winning the public auction for this property with a bid of €204.7 million.