The State of Luxury Real Estate

By Luxury Portfolio International

The residential luxury market is poised to have a banner year as demand fuels growth at the top, with real estate serving as the leading investment category of the day. The following is an Executive Summary from the most recent White Paper on the state of luxury real estate. To receive the full report, please contact one of our agents.

Market Trends

The Luxury Buyer sentiment to real estate is a strong “Buy,” and also has the lowest inclination to “Sell.” One-quarter of Global Luxury Buyers have an investment or rental property in mind for their next purchase. Overall, consumer expectation is that their own property values will continue to rise and that the pool of buyers is likely to grow faster than those willing to sell.

Affluent consumer financial confidence is high, but it is not without reservation. The global growth in wealth has been well documented, but while luxury Buyers have a strong balance sheet today, it is not without uncertainty ahead. It may be time to take some winnings off the table to mitigate unquantifiable risk.

Globally, over the next three years, we estimate 15.5 million affluent households, and 10.3 million at the luxury segment, are in the market to buy. Buyer interest outpaces sellers by 3:2, meaning opportunities abound for developments and existing homes alike. New construction in newly developed neighbourhoods is the number one global preference and it commands the highest price.

 

Consumer Trends

There are three trends that have borne out from extended time at home: Working from home for all members of the household, a heightened need for self-reliance at home, and recognition that spontaneity brings a welcome break. Luxury homes can provide solutions for emerging needs, and those factors are in demand.

The golden passport is a powerful motivator for Luxury Buyers in Mexico, India, China and post-Brexit United Kingdom. When pressed on it, International Luxury Buyers are more likely to cite non-financial reasons to live abroad: education and COVID-19 response are tops on the list.

Luxury Buyers are planning for extended shelter-in-place. Expectations are high that over the coming year more time will be spent at home. Perhaps taking a page from New Zealand’s policy toward “pod” or “quaranteam” living, about half of Luxury Buyers are seeking a residence with accommodations for long-term guests. Whatever their individual reason, the result is, in essence, preparation for non-household members to shelter with them.

Brand Salience

Traditional real estate companies maintain control over the majority of the affluent consumer market. The luxury customer is more interested in high quality offerings and customer service — the basics — than low price. The Ultra-Luxury segment values brands that feature corporate citizenship, reputation and loyalty.

 

Harvey Kalles Real Estate is a proud affiliate of Luxury Portfolio International. For more information on LPI and our other affiliates, click here.