Luxury Portfolio International, a network of independent luxury brokerages part of the luxury division of Leading Real Estate Companies of The World, just completed its annual white paper on the global luxury market for high net worth individuals. The results from, “Luxury Real Estate: What Matters Most To Today’s Global Elite” will surprise you.
“With talk of the luxury market softening, what I take from this is there are certain pockets where that luxury segment is not softening,” notes Stephanie Anton, president of Chicago-based Luxury Portfolio International. “The numbers bring to light that Asian, Middle Eastern and European real estate buyers have a high intent to purchase and still see real estate as a good investment,” Anton adds.
Here’s a look at the numbers Anton is talking about. A major takeaway is how the plan to buy real estate assets versus selling differs greatly from Asia, the Middle East and Europe to North America.
Who is buying and selling real estate in the next three years? Globally 38% are interested in buying compared to only 23% who want to sell. In North America, only 30% project buying with 25% selling. Europe has 35% buying with only 17% selling. Asia, where countries like China have been investing heavily in luxury U.S. real estate, jumps to 68% with an interest in buying and only 18% selling. Clearly, investors there like long-term investing. The Middle East has 71% wanting to buy in the next three years and 63% looking to sell. Getting in and out of real estate quickly is what investors from places like Dubai, Saudi Arabia and Kuwait seem to prefer.
“This report tells me that our message always needs to be international. We also need to be focusing more on Asia, making sure our internet placement is the right outreach. Spending money boosting marketing to the Asian market makes good business sense,” said Tripti Kasal, senior vice president of residential sales at Baird & Warner, a member of Luxury Portfolio International. Kasal, who heads up Baird & Warner’s Luxury Living Program, has spent over 25 years selling luxury real estate in Chicago. “I continually see younger buyers, even those with families, who want an urban lifestyle. The white paper confirms this for me,” Kasal adds.
It’s interesting how the ownership of real estate–an indicator of wealth–is different both geographically and culturally. The report looks at, “What home means around the world.” Globally, 35% believe real estate is the most obvious signifier of wealth. Europeans are most likely (44%) to see a home as a determiner of wealth, according to the report.
The research also looked at “Home Trends Among Core Luxury Buyers.” Buyers in the $1 million to $4 million range made up 80% of those “luxury home purchasers,” according to the study. One theme that ran true from North America to Europe to the Middle East and Asia is architectural style and an urban location are important to all. An urban location was most important to 71% of Middle Eastern buyers and 76% of those from Asia. North American buyers were pretty much split with 45% wanting urban and 46% heading to the suburbs. Architectural style differs among the group. Middle Eastern buyers like modern architecture as do luxury Asian buyers. Not surprisingly, Europeans like traditional home styles.
As markets rise and fall, one thing remains–the global interest in real estate ownership. Ron Shuffield, president of EWM Realty International, a Berkshire Hathaway Affiliate and Luxury Portfolio International member has sold luxury real estate in South Florida for over 30 years. “I see a number of trends going on from this,” Shuffield observes. “Parents are giving their wealth to their children earlier than they used to. Younger buyers have the means to buy luxury properties today.” The family home remains key, especially when it comes to creating lifetime memories.
“We see more and more buyers who want to purchase, generational homes where families can spend holidays and annual vacations. Then they are passed down through the family,” Shuffield adds.
Look to New England where family vacation homes in places like Martha’s Vineyard, Nantucket and Maine have been passed down for generations. It’s a nice tradition if you can afford to buy that property and hold it.