“Signature residences” are a new product that is gradually gaining market share in the luxury real estate market in Spain. Madrid has become one of the favorite places for investors and buyers of luxury properties. For this reason, Idealista/News has brought together the following professionals: Luis Valdes, Managing Director of Colliers; Alejandro Bernabe, General Manager and Regional Vice President of Four Seasons Madrid, and Lourdes Barriuso, real estate lawyer at Barriuso Legal, who will talk about the growth of “signature residences” in our country, and particularly in the capital.
The discussions at this roundtable were focused on the dynamics that these homes acquire in places like Madrid, the five-star hotel service they provide, and the security of these investments. But before discussing the scale of this product, Barriuso explained what “signature residences” are. “There are basically two main typologies. On one hand, there are those luxury apartments or residences that carry a brand that, let’s say, shapes the design image. And there is the second, in my opinion, more refined, associated with the hotel market, which implies that these residences are associated with a hotel brand. That is, this hotel company, by defining the design and image that these residences must have, also manages them, because these residences receive services that have a hotel nature,” explains the lawyer.
In short, “signature residences” or “serviced apartments” are apartments with hotel services, and in the case of “signature residences,” these services will be provided under the hotel’s logo or luxury brand.
The apartment buyer (investor) reserves it for use for a maximum of 60 days a year, and the rest of the time is transferred under a residence contract, signed by the hotel owner on behalf of and for the benefit of the investor. Apartment users will be able to use basic amenities or services, as well as other additional services, which must be agreed upon and paid separately and provided at the hotel.
Thus, three parties are involved in these relationships: the developer, who develops the land or reconstructs the building for hotel use, the investor, who acquires a “serviced apartment,” and the hotel operator or manager, who provides hotel services in the hotel and apartments (under the flagship hotel or luxury brand in the case of “signature residences”).
Over the past few months, we have seen new brands beginning to enter this Madrid market, and those who already have such products are also looking for new places to build new “signature residences.” Although the capital is not the only geographic area in Spain where hotel chains are looking. “More and more projects will be implemented in very specific regions, such as Malaga, Marbella, Mallorca, or Madrid, and possibly Barcelona,” says Valdes.
In Madrid, the first brand to choose “signature residences” was Four Seasons, and the reality is that the hotel chain clearly indicated this from the very beginning, as Bernabe confirmed. “Currently, 85% of Four Seasons projects include residences. The main reason is that the cost of hotel construction is very high. So, if you can build it with residences, the development company can generate income, which ‘they can’ reduce costs and make it much more profitable.
In Madrid, this was very clear, they were sold immediately, and evidence that people are very happy is that none of the residences sold at the beginning has been resold again,” explains the General Manager and Regional Vice President of Four Seasons Madrid. The success of Four Seasons in Madrid was so great that the brand is already looking for a location in the Salamanca area to build new “signature residences,” as Bernabe confirmed exclusively to Idealista/News.
Madrid is trendy.
But what type of client is interested in this elite real estate product? “This profile is undergoing impressive changes. Madrid is fashionable, and there are different attractions, such as the climate, culture, language… I mention above all the Latin American or Latin American population. Madrid also has the new Bernabeu, which will increase its number of visitors from 2.5 million to 12, all hotel chains, such as Four Seasons or Mandarin, which are opening in Madrid and which were not there ten years ago. We also position ourselves as a ‘center’ at the European level in terms of private education,” says Valdes.
“Historically, buyers of elite housing in Madrid spoke Spanish, but now Americans or Canadians are appearing, which was not the case before. But there are also many Europeans. Lately, I am starting to hear English, German, French languages… “A few years ago, it was very difficult to hear two Germans speaking in Madrid. Now you go to eat in a restaurant and start noticing a culture that was not there before in terms of nationalities,” says Colliers.
Furthermore, the user or buyer of “signature residences” typically is a client who does not reside in one city for twelve months. “I would say that 85% of our owners travel constantly and very few actually stay there all year round,” says the Four Seasons participant. “It is also an economic issue. There are clients who have four or five places of residence in the world, and it is true that for tax reasons they may have to spend a certain number of days in Spain, and other days in another country…” “adds Valdes.
Reliable legal framework.
Speaking specifically about tax and legal issues, Barriuso provides a legal explanation for this luxury subject located in “real estate.” “Usually, this is a business that is managed or legally regulated very similarly to the hotel business. The latter buyer, because it’s about relationships, is very similar to those that exist in the hotel business,” he adds initially.
“It’s complex because there are many related parties. In this business, there may be an investor-developer who deals with project development, or it may be the property owner who holds it, or after the project development, they may hand it over.
It’s necessary to establish an important legal foundation and take into account the community of owners, which usually arises in such large residential buildings. These communities usually have common elements, they are not only roads in maintenance but also complex,” he adds.
Source: Idealista Portal