Trends & Market Demand
By Luxury Portfolio International
In anticipation of a great year for both luxury real estate and our collective personal wellbeing, we would like to share some of our latest research. The past 12 months have shown that real estate is a timeless investment that can endure and even thrive in challenging economic conditions. For our International Buyer Trends and Demand Report — which follows on our State of Luxury Real Estate 2021 report released in January — we have detailed the response from luxury buyers who plan to make an international purchase in the next three years. Taking from the trends we identified in our initial State of Luxury Real Estate report, we find the international buyer is highly mobile, motivated by feelings of self-reliance, and after much time at home, is looking to add excitement and fun in his or her daily life.
The following is an Executive Summary. To receive the full report, please contact one of our agents.
THE MARKET
Luxury home buyers purchasing abroad number 2.25 million households worldwide.
Asia Pacific is the largest market of international luxury buyers, and most buyers are looking for a property outside of the region.
North America buyers represent the second largest market, and more than half are looking to move out of the Americas/Hawaii area (primarily to Europe).
Europe buyers are the most likely to remain in their home region, with less than half moving away. International buying intentions are especially high in Europe even though it is the smallest opportunity market in absolute size. Italy and United Kingdom buyers are the most likely to seek residence in a new country.
Hawaii is the world’s number one destination with one-in-five international buyers looking to purchase there in the next 3 years. The most common reasons for moving abroad are related to quality of life, such as education, culture and COVID-19 response, followed by investment potential such as real estate values, a strong economy and low crime.
THE BUYER
Freedom of Movement: International buyers want the ability to move about the world with ease. An increasingly digital work-life paired with the desire to have a second passport is generating interest in homes far afield.
Embracing Spontaneity: After a year at home nearly all buyers agree it is time to have more fun and diversion available to them. This means changes in their living situation and resuming activities that were put on hold.
Self-Reliance: Desire for more control over their environment and heightened personal security translates into homes that can handle the family (and guests) for a longer period. Smart home and sustainability technology take centre stage.
The international buyer is juggling many competing priorities, including a young family, a growing career in business, and a certain joie de vivre that spending too much time at home is squeezing. The result is buyers looking for some excitement to bring into their life as they continue to spend more time working, living and playing at home. These buyers are very confident in their financial strength and see upward potential in real estate investments. Personally, they are likely to be on the upswing in terms of career and often balancing a young family. Working and living life daily from home are key challenges their space must overcome.
THE PROPERTY
Most international luxury buyers are not making a permanent move with this home purchase — just 21% say this is a primary home purchase — which means investment potential is an important consideration. Nearly half (40%) classify the purchase as a secondary or vacation home, with another 27% intending to purchase as an investment/ rental property.
International luxury home buyers prefer newer builds that offer lots of space to accommodate family and guests, and amenities that promote security, safety, diversions, and a resort-like atmosphere. Extras that make daily living easier, such as concierge or valet services, bring a premium and are in demand for those who seek a city/town or resort setting.
The average luxury home buyer is interested in features and amenities that fit with modern life: great Internet, space for each family member, and specialty rooms (gym, media, office) that can be outfitted with smart home and sustainability technology. Ultimately, there are many who feel the home should enable their self-sufficiency, especially in a place where they may not be established with a social network. Local real estate agents can play a valuable role in connecting new owners with local services.
REAL ESTATE PARTNERS
Most international luxury home buyers are planning to work with a traditional company to buy their next property. The traditional company client tends to seek more familiar features associated with luxury homes e.g., gated communities, waterfront properties, branded hotels/resorts, newly developed neighbourhoods, and the specialty rooms and amenities of the class.
When it comes down to selecting a service-related company, such as a real estate firm, most cite basic needs are important to cover. This includes efficient customer service, high-quality product offerings, a strong reputation and the use of new technologies. As the market diverges based on price, higher-value buyers (USD $5 million and above) place greater emphasis on corporate citizenship (corporate social responsibility, or CSR, activities) and relationships with the brand and its employees.
Harvey Kalles Real Estate is a proud affiliate of Luxury Portfolio International. For more information on LPI and our other affiliates, click here.
