Yes.
There are great artists, great cars, great restaurants, and a great many other wonderful things that this world has to offer those who can afford the expense of enjoying a completely luxurious lifestyle. The success is usually attributed to that each almost always stays in the lane where they excel most in their respective genres.
One thing that has been evident of late is the uptick in the clamor to jump on the bandwagon of branded homes and condos under the footprint of a well-regarded hospitality umbrella. Everyone can guess the usual brand suspects, but few know some of the more sophisticated boutique operations that have carefully managed their foray into creating ownership opportunities for the UHNW demographic which only a select few of real estate brokers understand and can aptly navigate.
Here are several items of interest to review with clients during a review of a branded residence opportunity:
- Addendum: Does the purchase of the property include signing an addendum that notes that while you're purchasing a Brand X condo today, that it may become Brand Z or change focus in the future?
- Culture: What forward-looking commitments are included in the CC&Rs etc. For example, what is the required percentage of ownership vote to allow short-term rentals of the condos? What regulation is in place to preserve the "topical" lifestyle of the UHNW purchaser?
- Finance: Any ideas on the future costs of shared services like security, pool, workout, spa, concierge, infrastructure and physical plant with the hospitality company? Is my $2.00 per square foot monthly HOA fee going to suddenly be $5.00? Is the Homeowner's Board going to have the wherewithal to guide the relationship with the hospitality partner after a developer exits?
One outstanding concept on the horizon is the advent of One Beverly Hills that meets the triple-platinum expectation of purchasers in this demographic with Aman as a partner. This destination serves all the needs of the transient owner who is never in one place for more than a month to two.
Licensing of preeminent brand names has its issues - and can potentially result in a very good 3-star property wearing a very temporary haute couture gown of a 5-star name. This is what could be called the Aldo Gucci Syndrome for how the brand devolved into tier-2 department and duty-free stores in the 1980s/90s before being reinvented through the efforts of Dawn Mello, Domenico De Sole and Tom Ford. The magic in a name can extend only so far, as the market and this type of real estate buyer are more savvy with much higher expectations. Fooling uninformed emerging players looking for recognition is easy, but that is not the case with the true UHNW tribe where information travels quickly about the fitness of a property to "fit in" to assumed expectations of absolute unparalleled excellence in every way.
Bottom Line: Beware of the licensed brand. Not all developers are created equally in delivering the intended experience. Quality control measures intended to protect the buyer within a licensing framework can be lip service to watch out for with little enforcement other than to eventually pull the brand name and exit.
