Why luxury carmakers are now building glitzy skyscrapers
The world of luxury brands is expanding beyond the confines of cars and watches, venturing into the realm of real estate. Bugatti, the renowned French luxury carmaker, is now building its first residential tower in Dubai, United Arab Emirates. This marks a significant shift in the brand's focus, as it ventures into the world of branded residences.
Bugatti's entry into the market is not an isolated case. A growing number of luxury firms, including fellow carmakers Porsche and Aston Martin, are building glitzy, fully-furnished apartments with their brand names prominently displayed. Other businesses that have entered the sector include Swiss watch firm Jacob & Co, and Italian fashion houses Fendi and Missoni.
Bugatti's 43-storey tower in Dubai, known as Bugatti Residences By Binghatti, is being built in partnership with UAE-based developer Binghatti Properties. The most expensive penthouses in the building will include large, private lifts for the owner's cars, so they can park them inside their apartments.
The appeal of branded residences lies in the experience of living and breathing a particular brand. For many car or watch enthusiasts, owning the vehicle or timepiece is not enough; they want to experience the brand in their everyday life through real estate. Muhammed BinGhatti, chairman of Binghatti Properties, says the buyer list for the Bugatti project includes Brazilian football star Neymar Junior and opera singer Andrea Bocelli, with Neymar reportedly paying $54m for one of the penthouses.
The demand for branded residences has been accelerating in the past two years, according to a report by estate agent company Knight Frank. The number of such schemes has grown from 169 in 2011 to 611 today, and is forecast to rise to 1,019 by 2030. The US currently has the highest number of branded apartment buildings, centered on the skylines of Miami and New York, but the Middle East, in second place, is seeing the biggest growth, driven largely by rapid expansion in the United Arab Emirates (UAE) and Saudi Arabia.
Dubai, in particular, is leading the way in the number of branded residences projects in development, according to a report by property firm Savills. This is fueled by the continuing high number of wealthy people relocating to the city and purchasing luxury homes. Prices for branded apartments in low-tax Dubai are often cheaper than elsewhere in the world, making them extremely affordable compared with cities like New York and London.
The rise of branded residences reflects a broader desire for social signalling and exclusivity. Giana Eckhardt, a professor of marketing at King's College London, argues that such homes have become a new form of 'social status currency', akin to a rare handbag or huge diamond ring. Ultra-wealthy consumers want status assets and goods that are not available to everyone, and luxury brands communicate a person's place in a social hierarchy.
However, not everyone is a fan of branded residences. Business psychologist Stuart Duff, of UK firm Pearn Kandola, cautions that many people may find the idea of branded apartments to not be in good taste, especially if the brand name is excessively on show. Having the presence of a brand everywhere within an apartment block could well reduce the perception of rarity and uniqueness, and lead to a feeling of bragging, or being seen as vulgar and tacky.
