Future of Luxury Real Estate
- Al Sander
- Feb 25, 2023
- 6 min read
Investing in real estate always involves risks. An attractive investment is one where a property has high liquidity and its sales value increases over the years. What properties can meet such high criteria? The answer begs for itself. Liquidity is largely determined by the location of the property, and its value to the market depends on its uniqueness.
Content:
Collectible real estate as an emerging trend
Many years ago we introduced the concept of collectible real estate. It is the kind of real estate that has no analogues on the market and is of artistic value. It is real estate that stays in demand over the years without losing its value. There can not be many such projects, they require a huge amount of time to work out the idea, concept, architecture, interiors and landscape. Its cost depends on the chosen plot of land on which it is to be built, on its size, on what kind of real estate surrounds it.
Today, few people think about this approach to investment, in a world ruled by stereotypes and trends, but they turn this world into a primitive understanding of aesthetics.
Everything is subordinated to the desire to make money as quickly and as easily as possible. Accepted in the industry standard profitability of 12-17% dictates the use of patterns: quick construction, its low cost, following trends, almost imposed by the market. The fashion for "architecture" has already led to the creation of impersonality. Soon it will be impossible to distinguish which country we are in. The general impression is the same: the same shapes of modern houses made of glass and concrete. They differ only in size and minor architectural elements. Are there many memorable objects? A few!
Of course, everyone chooses their own way and follows them, but most follow stereotypes. Since it all sells, that's how you should build, that's how you should decorate, that's how you should sell.
As a result of this impersonality, we are deprived of the most important thing for the consumer - individuality. What the market is offering today, by passing it off as luxury real estate, is pure profanity. If the consumer does not see anything else on the market, what can he do? He is left to buy what this market offers. It is essentially a circular bail out of architects, builders, designers and real estate agents. It is the imposition of new values, which, in fact, are nothing more than industrial design and nothing more.
This overall trend of the decline of aesthetics and the transformation of everything into mass-market, including luxury real estate, is simply frightening. The unfortunate consumer does not even realize what a global gamble he is involved in. In fact, by buying this single-type real estate he gets into complete dependence on the market in the future. One day, when he wants to sell it, he finds that selling it will be extremely difficult.
If the construction industry for the middle class has its own rules, different from the luxury industry, then in the luxury segment such short-sightedness could be fatal. Today, the world, immersed in a global financial crisis, where bigger and bigger bubbles mature, in unleashed military conflicts, in creating money out of the air through stock exchange instruments and cryptocurrency, a world in which no physical values are created, is beginning to change.
So far, it becomes visible only to a part of investors, whose interests diverge from the dictates of the market, and who can look a little further than the horizon, understanding how trends are going to change in the near future.
Rising energy prices and the volatility of the global economy, whatever politicians may be telling us today, already a signal that the world is changing more and more in the direction of division and a widening gap between the rich and the poor. The possession of luxury goods is returning to its original terms. Their consumers are becoming, and most likely to become, not just the rich, but the ultra rich, whose preference for individuality in everything becomes more and more pronounced. This trend is already emerging in the world, and it will only expand in the future.
And then what will happen to all this abundance of so-called villas and houses, which today are classed as luxury properties? Their value and sales values will become unacceptable on the new luxury housing market. New trends will replace them. The Ultra rich, which will remain the rule in the luxury industry, will strive for a new aesthetic where their individuality is not hindered by any tendencies or tricks of the market. Everything will change, from architecture to lifestyle. It is unlikely that style will remain their choice.
A new generation of developers
It means we need a new generation of developers who are able to break those stereotypes and go forward, becoming pioneers in the luxury property market. I was lucky enough to meet unique investors in Milan, whose concept of luxury projects fully coincided with my vision. Today, unique projects designed for the ultra luxury segment are becoming trendy. The higher the level proposed, the more interesting such projects tend for investors.
Sooner or later there appears a special group of developers whose interest is limited to ultra luxury property. But such real estate requires a completely different approach to its creation and promotion on the market.
Firstly, it is the architecture itself that stands to be affected. The houses designed in the style of the future could not compete with the architecture of the future, which is more and more a symbiosis with nature and ecology. A different aesthetic is being born. The uniqueness of real estate comes to the forefront. Uniqueness would be the basis for the new market. The value of such property not so much determined by its square meters and views, but becoming a symbiosis of the new approach to architecture, interior design and landscape, where everything is subordinated to one goal: to get a unique property.
The liquidity of such real estate is always very high, it is always in demand on the market, its value does not decrease, but only increases over time, it always remains a very unique model. It is not a question of custom made property, it is a new approach to the creation of turnkey real estate, where the consumer receives a collectible class that meets all the requirements of luxury. He is not just paying for another house, he is investing in his lifestyle. When creating a truly collectible class property, this kind of investment is always reliable. And even if in the future we want to sell such real estates, it won't be difficult at all.
Moreover, the new generation of developers of this class would also give rise to a new generation of investors. Today they simply have nothing to offer investors. Creating uniqueness requires talent from the creators, a lot of work, and time. But success comes only to those who are not afraid to go forward, standing up for their goals. It's a multitasking task.
What does the world have today? Let's make a little tour. The level of creativity is extremely low in the world. Even using the big names in real estate projects, no one has ever been able to achieve what they wanted. Here are a few examples of this.
Villas bearing the names of Lamborghini, Fendi and Carl Lagerfeld. Do these creations reflect the chosen brands. The maximum of which there is enough imagination is just to buy furniture from these brands. All the rest is the same mediocrity.
What does this tell you? Even the use of great names does not save real estate projects from banal stereotypes and lack of creativity.
A new generation of investors
With the arrival on the market of new proposals at the ultra luxury level, such projects must be accompanied by a high level of service. Buying such real estates, the buyer should not just get another house, but an additional package of services, which is an integral part of such a project. It is, first of all, a butler - the main manager of such property. All other staff, such as maids, gardeners, technical workers remain under his supervision. Buying such a property, the consumer should not feel uncomfortable with its maintenance.
Uniqueness also dictates the selling price; luxury is sold based on the look of the property, the availability of inherent works of art in its decor, all of which create additional value in and of themselves. Only then, the rate of return on such projects becomes incommensurate with the standard average in the market today. in the market today. The uniqueness gives the investor an opportunity not just to generate profits, but to super profit, and therefore make the project highly profitable.
Today, investors in this segment of the market are seeking just such projects. There are very few of them, and their offer clearly lags behind demand, which means that they are in obvious market demand.
The meeting between an ultra luxury developer and such an investor could change the world.
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