If you are a luxury market aficionado and like to study the horizon, three years deep into the future, you’ll be happy to learn that exceptional residential properties will very likely remain a hot commodity. That’s the message of confidence all attendees heard and shared last month in Miami, at the Luxury Portfolio International Summit.
Kind of a logical conclusion based on the facts & figures discussed by expert speakers and dissected by a couple thousand real estate professionals in the room. The arguments are pretty convincing. You’ll be the judges.
Since it takes a lot of money to buy luxury homes, all you need in order to find out what will sell is to look at who can buy. Marketing 101. With this in mind, it is reasonable to assume that the continued activity at the top end of the real estate market is predicated on the confidence shown by the most affluent among us and their expressed intentions to purchase at that price level. Luxury Portfolio International excels at this type of studious analysis.
For over a decade, they have been studying affluent consumer behavior together with YouGov, a preeminent global expert on this topic. Understanding that buyers for our local trophy homes are coming from all continents, they conducted thousands of online interviews of wealthy homebuyers in 14 countries, namely: US, Canada, UK, France, Germany, UAE, Saudi Arabia, Kuwait, China, Hong Kong, Japan, Australia, Korea and Singapore.
The findings are sweet enough to make our high-end Realtors feel warm & secure for years to come. Over the next three years, as the study suggests, the buying demand for luxury homes will substantially exceed the intentions to sell, both in the US and globally. Look at this:
Within the US, 25% of the wealthy are looking to purchase, with 18% looking to sell
Outside the US, 45% of the wealthy foreign buyers are looking to purchase, with 23% looking to sell
Exciting stuff? Yes, to be sure. Although, when I look through my main window to the world, California, I am a bit concerned that the gap between the ambitious plans to buy and the modest plans to sell, can only result in a continued shortage of quality inventory. Obviously the very best properties (best location/best style/best condition, etc.) are likely to move fast off the shelves irrespective of price, while other homes, not as appealing, may be ignored for a while, unless & until the price “sells them”.
What are a must-have for a home at the luxury level? Nothing terribly new in terms of amenities. Sustainable living technologies are top of the list for the majority of the global wealthy, as defined by the white paper: “Whole-house energy solutions that start with sound construction... Closely following is the convenience promised by mobile devices. The ability to remotely adjust temperature throughout the home, control lights, window shades and small appliances… energy efficiency and environmental design…”.
Clearly, today’s High Net Worth consumers are all different, yet they tend to think the same way. They embrace innovation. They are driven by passion. They want to live phenomenal experiences, whether traveling, dining or… buying a home. A home is the ultimate sign of success.
The wealthier consumers are, the more they love the journey of discovery. The more likely they use an independent and disruptive brand. Hence the success of the Uber and Airbnb of the world or the explosion of private labels. Quality is not enough. It’s expected. The unexpected is more interesting. It’s unique and meaningful. HNW consumers identify with the products and services that convey these feelings or attributes. The brands they buy are a reflection of their social status.
So, who in the world will drive the luxury market going forward? That’s the multi-million dollar question, don’t you think? Who has or will have the money and plenty of wind behind them to keep running after trophy homes?
As someone noted at the Luxury Portfolio Summit, the US was the main engine of growth in the 90’s. In the 2000’s, China took its turn. Who will come next? One of those two again, whether the US or China? Or will it be India, which did a lot of house-cleaning of late and seems now capable & eager to go for the gold. Or a combination of these three and a host of other aspirants…
We’ll see. In the luxury real estate market, we’ll be happy to help any and all qualified buyers, no matter where they happen to come from. The world keeps on turning. It’s a good thing.