A Beginners Guide To Investing In Luxury Real Estate

The luxury real estate market has undergone a tremendous change in the past decade with the evolution of entirely new ideologies in terms of new selling channels, the onset of digitization, easy access to investors, exposure to business opportunities and the sudden boom in the luxury real-estate market.

Tapping into luxury real estate can be immensely profitable especially if one is well-aware of the market trends and know exactly when to strive to make changes. The driving factors of this lie beneath the reason for purchase.

Depending on if you are looking to buy a home to live in, to rent out periodically or for investment purposes- the real-estate market has something for everyone to profit from.

While there are different types of properties catering to individual likings, luxury real estate has been one of the most sought-after market this season. With an increasing number of property development projects hitting the market on a daily basis, it continues to spike the interest of buyers on a huge scale.

Luxury Real Estate

Let us begin by first understanding what luxury real estate is exactly and why it has become such an integral part of the real estate market as a whole. Most people have the misconception that luxury real estate is any property that is highly priced.

While it is true that luxury real estate does come with a heavy price tag, that is not what determines its category. A luxury property is one that is marked by opulent features, high-end amenities, unique designs and promotes an exclusive experience.

Luxury real estate comes in many forms and can range from an apartment to a fully-furnished mansion. The difference lies in the overall appeal, location and luxury features that comes along with the property.

In terms of prices, the rate of luxury homes has been on the rise at a huge scale ever since the interest in properties spiked. For instance, in 2019 the most expensive luxury real estate sale within the residential sector was a penthouse in Manhattan, that was sold at a whooping $240 million.

The sales of luxury real estate properties were soaring at an all time high when the pandemic hit, after which like other markets, real-estate too had been taken for a toss. With real estate prices crashing down in some parts of the world to a sudden interest in luxury holiday homes investments, getting the right deal in real-estate can be tricky.

Type of Real Estate and Cost

Before making any first-hand choices, it is imperative to understand the market and what type of properties you would be interested in. More often than not, high-end property buyers are looking for spaces that have close and easy access to luxury shopping destinations, dining and so on.

It is usually preferred to choose a location that is near to other luxury homes. Some luxury enthusiast also like to properties that are amidst nature that maybe somewhere around the countryside and offers a gorgeous views of mountain tops, waterfalls or dense forests.

Like all homeowners want their houses to be completely secure, luxury homeowners usually take it up a notch by investing in the best quality of home privacy and security measures. Considering most luxury houses have a larger area to cover, it is essential to get the right type of security to ensure complete protection.

This can include 3-D set up gate structures, 360-degree CCTV cameras around the entire property, professional security guards, locker systems, passcode entryways and much more.

While it is certainly not necessary to have a huge area to call it a luxury home, one can add certain elements to their space that can automatically transform your home into a luxurious space.

This can include a high-end artifacts, beautifully designed interiors, grand architecture, luxurious pools, unique hardware and so on.

Luxury Real Estate Investments

There is no fixed rulebook to play by when it comes to investing in luxury apartments or properties. While real estate as investments are generally stable through the year, luxury real estate can have considerably steeper ups and downs than the usual.

It is integral to maintain a balanced perspective and hold on to the investment rather than to over-leverage yourself, resulting in impactful volatility.

First and foremost it is integral to have a financial goal as an investor and to identify if the property being bought is a long-term investment or a risk-buy.

Where most people start to focus on the macro market, if you want to make a well-informed and smart investments in luxury real estate, you must start looking at micro-scale details of the property. This means going into the depths of factors like the price-to-rent ratio and price per square foot of the property and how much the prices have changed in the neighborhood in say the last 5 years.

Renting a Luxury Home

Many luxury home owners live in their property for a few years and gradually look at other places to live in due to expensive maintenance issues or simply by choice. In terms of real-estate, this is great because renting out a luxury home is a great wat to make money.

There are always people that are looking for a taste of luxury and while they may not want to make a huge purchase, renting out a luxury home is always a more accessible alternative. This is a great market to invest in considering the results reaped are endless. The one thing to ensure is that the house is maintained in the best manner possible. There is nothing more attractive to a client looking for a luxury home than to see a well-maintained potential future home.

Renovate An Existing Property

Another profitable alternative is to renovate an existing luxury home, by adding elements that you think will be within your budget and sale worthy. This can include re-furnishing, changing the architecture, interiors and adding your own luxury elements to make it stand out in the market.

While this alternative calls for a high amount of competition in the real-estate industry, considering luxury homes usually come fully-furnished, it is still a really great option especially for beginners who are just starting out in luxury investments. It is a great way to explore their creativity and truly execute their vision.

Look At International Markets

Luxury Vacation Rentals are extremely huge in the current real estate market, with people flying from all across the world to experience the art of luxury homes. Location plays a very important role in determining how successful your investment will be. While it may seem like a risky move, investors reap immense benefits out of foreign investments.  

Majority of investors look at top tourist destinations to strike a deal in real estate considering the traction they will potentially receive. Some of the best countries for real estate investments are Germany, France, Colombia and Morocco.

On the other hand, Turks and Caicos Islands also see a high number of property investors considering it is property tax free. So it is always good to do your research on the rules and regulations around property investments in the area you are looking at.

Customize A Luxury Property

If you want to fully profit from an investment and do not have any time-constraints when it comes to your investment, building a luxury home completely based on your creative ideas and designs can truly be mastered.

Make sure to add the most luxurious amenities that will cater to the likes of your target customers and design the home in such a way that it appeals to clients, making it easier to market it for rent or sale.

The more exclusive and unique elements you add to the property, the more desirable it becomes in the market.

Understanding luxury real-estate can be challenging at times but once you study the main aspects of the industry, there is nothing more exciting than exploring more of it. While it may take months or sometimes years of knowledge to see through appropriate deals, it is surely intriguing to find new information every day on the best in the market.

While there are many ways to go about luxury property investments, the bottom line is to find the one that can yield the highest returns in terms of sales profit or assets.

When & how to invest in luxury property
If you are interested in investing in luxury real estate, consider the following options:

Consider why you want to invest
There are purchasers of luxury real estate who are just interested in acquiring a trophy asset. They want to add additional lustre to their luxury real estate portfolio and pursue a natural long-term financial appreciation. Others, however, are ardent investors who want to acquire a house, sell it quickly, and pocket the gains. There are other investors who want to purchase luxury real estate in order to produce a stable rental income. If you are clear about your luxury real estate investment goals, then your luxury real estate agent will be able to assist you in achieving them.

Plan how you intend to pay
How you utilise money, your present bank balance, to purchase a luxury home may make all the difference between a decent luxury real estate transaction and a spectacular one.

Select the optimal time
Before investing in an expensive luxury home, investigate the luxury real estate market in the area and the financial industry as a whole. It will help you choose when to take the leap.

Read more about luxury real estate here