Luxury home market is a niche for business, if you find the right implementation for the idea. Luxury in itself is a niche, whatever one refers to this concept. It's just that most people don't understand what it really is, and there is a substitution of the concept. This article briefly describes what the real ways are in order to occupy this niche. The narrower the niche for a business, the less competition there is. And if the niche is narrowed down to a framework of exclusivity and uniqueness, there are unlimited opportunities there. You don't have to look to others, you have to find your own way. Read just some guidelines to understand that way better.
More investors than ideas. Out-of-the-box solutions.
There are many more investors in the world than there are worthwhile good projects for them. The world is simply overflowing with dysfunctional ideas, intermediaries offering assistance in finding investors for start-up and investment projects of various levels. This kaleidoscope can be viewed endlessly, but how to separate the spit from the grain? How to separate the sea of unnecessary information? The first principle: unique ideas with no match.
Jackie Ma’s brilliant principle
One of my famous clients, Jackie Ma (Alibaba Group), gave me a lot of valuable advice. The most remarkable of them was one I still remember and follow.
The advice was directly related to running a business – how to find your niche and distinguish yourself from the others, and how to get to somewhere before the others.
However, his point was even more ambitious, “We are there today where you have no chance to ever be”.
Here’s his first piece of advice: “When they bring me one of their investment projects to consider, before I make a decision, I always ask my assistants for advice on what they think of it. If their comments are positive, and everybody finds it perfect unanimously, I always throw it away as trash, without regret.
If such projects are clear to everyone, it means that there is no uniqueness and we would have
to face competition. There is no point wasting time.
But, if the project is such that nobody understands it, but I still feel that there is inherently something
I keep it for further investigation. That's where the uniqueness may be hidden.
I like these kinds of projects, which only the initiated understand at this stage.”
Ideas make money
The second piece of awesome advice: “If you want to implement a business project, but you have absolutely no money for it, do business without money.” What does that mean?
It means that one should do business with brilliant ideas that you can bring to fruition when you are given the money. Everything starts with an idea. Ingenious ideas are the privilege of the selected, talented people, those who are able to create and think.
Bernard Shaw said, “Only 2 percent of people think, another 3 per cent think that they think, and the remaining 95 per cent are afraid of thinking, even in the pain of death.”
Reading these lines, you realize the category you want to belong to. I stay in that 5 per cent, at least convinced that I think.
After a long journey around the world, working in different countries within the luxury industry related to real estate and interior design, I finally found myself in Marbella, a stunning resort, a town in southern Spain. Here I found my niche for the business.
One of the techniques Jackie taught me was to first find the niches in the luxury segment. These niches always stand apart and such a place is usually not occupied or has little competition.
But entering the world of luxury is a very difficult task. You need to have a lot of experience, knowledge, and intuition.
It is necessary to know the elite, those for whom this state of possession of exclusivity is the dominant factor. Luxury should be personal. But that is not enough. It is necessary to find the exact unoccupied niche, and this task is the privilege of the talented. Fate gives us many choices. But anyway, we need to step forward and make a decision.
Otherwise, it is like only being able to see the sunrise if you make the effort to get up early. The one who sleeps will have nothing but dreams. Returning to the point of the article, the challenge was not to do your job better than the others, but to do it differently.
Art brings value to property
My specialty is creating projects that go beyond the ordinary. When everyone around me says that it is impossible to create projects in real estate with a rate of return higher than 20-25%, I just don't understand it.
My answer is that very few people manage to create such a visual value of an object, such a real estate idea, for which you can ask for completely different money. This is especially evident in the cost of goods in art galleries. What is the real cost of production for an item placed there?
Compared to the sale price, it is negligible.
Then why are we willing to price such items in galleries? Because they are presented as art. Art can cost any amount of money and the price offered is never related to the cost of production. This means that visually artists manage to create value artificially, namely to create value for the object in the eyes of the buyer. And the buyer is willing to pay that price.
Drawing an analogy and returning to the idea of investment projects for real estate, we must first of all change our mentality and not do as others do. We need to rise above the hustle and bustle and conservatism of hackneyed ideas and trends. Trends are created by people. It means that by breaking stereotypical thinking, we can become pioneers in this industry.
If we learn to create value instead of calculating it by adding the standard market profit to the cost of sales, we can forget about the market and all the trends in it, as well as the standard of profitability in the industry.
How? It is necessary to create real estate as art and exhibit it in your virtual gallery exactly as the art object. In order to do that you have to create such pictures in your head and then visualize them on paper. And if the property looks, and most importantly is perceived as a pearl and art, we can forget about the price and ask any price for it on the market.
There will always be a buyer for our art gallery who will see this huge difference, there will always be that aesthete who will be able to appreciate the artistic value of the property and its uniqueness. Is it possible to ask a lot of money for it then? Not only you may ask, but you should. There is no match, the category of art has been reached, the level of sales has been raised to the standards of sales in the most famous galleries of the world, such a house is filled with real works of art. Objects like those are more likely to become an object of investment than thousands of faceless houses around.
One question remains: what must be done to elevate the idea of real estate to the level of art?
How to create the artistic value of an investment prospect.
Art is sold in galleries for a reason. The gallery creates value for its exhibits. An entire contemporary art industry is continually working on this issue. I probably won't reveal the secret of how, in many cases artificially, the stories and mysteries surrounding gallery exhibits are created.
People have loved fairy tales since childhood, everyone wants beautiful stories to believe in them, they want to intuitively escape into a world of these illusions. This is how the human psyche works.
Contemporary art makes excellent use of these weaknesses. Numerous private contemporary art museums are being created.
Soon there will be more of them than there are actual artists. These museums are part of a big industry to turn art objects into a highly profitable commodity. All artists dream of going to world-famous museums like the Guggenheim Museum of Modern Art or the Tate gallery, or the Metropolitan museum. Never mind that, as a rule, the fate of many works ends up in the museum repositories, but the very mention of an exhibition or donation of works to museums turns the artist into a celestial figure with lifetime recognition of his talent.
The more stories and regalia surround such objects, already elevated to the rank of art, the higher their price in art galleries.
Modern art can no longer wait several centuries for recognition. The industry works in concert for the result of today. Sure, most of these pieces will fade into oblivion, but today they are commodities and commodities with big price tags.
So art sells well and is expensive. I have a question, why doesn't architecture or interior design become a similar commodity? Although, the answer to that question lies on the surface - it's stereotypes! The real estate industry is very conservative and stereotypes are the protagonist of fashion and trends. It's the accepted way, it's fashionable, it's what everyone does. The answer is something else as well: no one has ever thought about it. Why think about it, when it is possible to sell it this way, because to do otherwise, it would require a tremendous overstrain of energy and plenty of time for realization. The clients will buy it anyway without such work. However, let us dream. Let's imagine that the entire property we created is a quintessence of contemporary art, frozen in the architecture, the interior and the landscape. I'm not even talking about the interior as such. By interior I mean interior architecture, not individual pieces of furniture from great designers.
The value of a house is in the totality of all the elements together. To make an art object out of real estate, you need to have irreducible value, even when we take all the furniture and decoration items out of it completely. And even then, the house must remain a magnet for attracting investment. And that trend shouldn't diminish over the years. How to do it? Let's reason through the steps.
Real estate project concept.
Uniqueness must have a face, and just like a theater starts with a hanger, a project must start with a story. Storytelling is a signature starting point. The more ambitious the project, the more incredible the story should be. It's important that the project is noticed from the very first steps. Since I live in Marbella, it makes sense to try such projects on this Mediterranean coast.
How will the market perceive, for example, with such a sensational story we told long before its implementation? At least my test with the Night Frank employees was successful when I told them one of those stories.
The concept of the project was a private villa on its own lake.
Where in Marbella?
There are no lakes here, and the sea splashes nearby. What is he talking about? But a story wouldn't be a story if it didn't have intrigue. And the intrigue lies in that level of privacy, when the illusion of complete protection from the outside world is created. So the story tells us about the villa, standing on its own island in the middle of an artificially created freshwater lake. As an impregnable fortress protects the tranquility of the region, such a villa will reliably hide its owner from prying eyes: its own waterfront, its own gated area, private life, a private bank vault, a unique security system. The architecture and design is unparalleled, the house is decorated with unique pieces of art, turning it completely into an art object. The declared value is 300 million Euros!
This amazing story turned the mentality of Night Frank upside down. That is what Marbella is really missing! 300 million Euro property has never been seen here and the value like that would generate great interest to see that project.
We don't care how many square meters the building is, how many bedrooms in such a house and what size of the plot is. At a price of 300 million, it is clear in itself that everything is in place and everything meets every expectation.
What is 300 million, what role could this price play in our project? Definitely, it would play a role of attracting the attention of customers, journalists and developers from all over the world. Everyone will want to see what it should be, what they are asking for such money? It must be an art object in its entirety, nothing less and nothing more.
What should stand behind the facade of such a project?
How do we achieve that? In addition to a well-designed concept, we must simply draw such a house and see if the asking price corresponds to reality.
However, everything conceived and drawn has to be manufactured. Art cannot be made by mere laborers, it requires masters of their craft and, if you like, also they must be the artists themselves. When conceiving such projects, we have to have such productions behind us. That is why the Investment Club is also the organizer of such productions, not just ideas.
Its art gallery is the source of such supplies of luxury goods and art, which can make a project so unique that it is beyond industry standards. It's his own productions and those of trusted partners to have the ability to produce museum-grade items at an affordable price. That is what makes any project highly profitable. So, the cost of the project is very attractive and it is to be a part of the unique concept.
And most importantly, it is the vast experience in generating such projects, the success is in a strong team that knows how to perform the tasks. We do not need mediocre projects. We need one-of-a-kind projects.