The luxury real estate market is increasingly a target for a number of global buyers and investors, despite Covid-19’s impact on the real estate market in general.
The pandemic has impacted homes at all price levels, including the luxury sector, with trends borne from quarantining including adjusting to all members of the household working from home; a heightened need for self-reliance at home; and recognition that spontaneity brings a welcomed break.
Nonetheless, real estate remains the leading investment category of the day, with luxury buyer sentiment a strong ‘buy,’ and a low inclination to ‘sell.’
According to the just-released study, State of (international) Luxury Real Estate by Luxury Portfolio International, of the 15,5 million consumers who indicated interest in purchasing residential real estate, 66 percent of that segment (10,3 million consumers) noted a desire to purchase a residence valued at US$1 million or more over the next three years.
While real estate prices vary dramatically from country to country, a viable luxury threshold is homes in excess of US$1 million.
The study focused on consumers in the top 1 percent to 5 percent income bracket of 17 countries, representing more than 30 million households.
It is clear that affluent residential real estate buyers see opportunities within their respective markets,” said Mickey Alam Khan, president of Luxury Portfolio International.
“We are noting a surge in buyers throughout many markets worldwide, where it continues to be a seller’s market in the luxury space vis-à-vis the previous year. We expect that trend to continue through 2021 — as well as the next couple of years — as buyers rush into the market.
“The ultra-luxury buyer perspective is that the current climate is getting stronger. In many markets, we see home values going up, and there is more interest in prime property.”
Said Chandler Mount, CEO of Affluent Consumer Research Co and research partner for Luxury Portfolio International:
“Real estate is an increasingly sensible investment at a time when financial and alternative investments appear potentially disconnected from traditional success indicators, like revenue and profit.
“Many luxury buyers all over the world share this sentiment, and the implication is a lot of money flowing into real estate in the coming year.
“Investment sentiment toward real estate is positive and outstrips other forms of financial investment,” concluded Alam Khan.
“This bodes well for developers and resellers, along with sister industries, such as home design, art and furniture.”
According to the report, luxury buyers are bullish on the residential real estate market. 45 percent of those surveyed believe that it is getting stronger (more buyers) — compared to 31 percent who believe that it is softer (these results are impacted by in-market, in-country specifics).
In other key highlights, 60 percent of affluent consumers expect an increase in their current home’s value, primarily in the 1 percentnto 10 percent range; while 50 percent of luxury buyers believe that now is a good time to buy real estate, being the number one result in the survey — beating out stocks, private equity and gold, among others.
And more than one-half of ultra-luxury buyers (52 percent) perceive their current home value to have risen by more than 10 percent, perhaps incentivising them to trade up or add to their portfolio.