Most of the projects the residential real estate market offers today are not very different from each other. There is the lack of creativity in the world, the market is ruled by stereotypes and trends invented today by an army of architects, designers and real estate agents.
They are based on the average client's taste, the cost of construction and the market price. The trend dictates everything. What they have to do is just get a piece of the pie in the real estate market to stay there.
That is why we see complete anonymity of projects most of which are automatically regarded as luxurious without being even close to it.
This leads to an average profit margin of 15-20% at most. If there is such an order in the industry, the competition is huge. The difference is simply in the size of the property and its location. The sale price depends on that.
We want to raise a question that few if anyone have ever asked. Is it possible to find projects where the rate of return is, say, 50% or 70%?
And what would you say if the question sounds more ambitious? Is it possible to get profitability of 100% or 200% or 400%? Most would say that's utopian, but it's not!
"Just because a lot of people think it's impossible doesn't mean it's impossible. There is always an ignoramus who doesn't know it. He is the one who makes the discovery."
Where and How Does the Miracle Begin?
Let's start this storytelling. Such a huge rate of return in real estate is possible only in one case, if we are talking about newly constructed properties where we are able to manage the entire process from design to construction, to sales. Such a property must look like the money it is asking for. Moreover, it must not only look like for that money, but also create an impression for a buyer that the offered price looks much lower than the real value of the property.
Only then it is that rate of return for the investor formed. This is exactly what we are talking about.
Of course, it is not only about how the property looks like. One of the signature parts is the concept itself, that unique idea standing behind the creativity. And finally, it is necessary to get the low cost of the project implementation while maintaining a sense of luxury, luxury without compromise.
These indicators create the miracle, which is hard to believe for most people. The majority just cannot imagine it, cannot break the market stereotypes. Simply put, it takes a creator's talent to reach heights where others not only can't be tomorrow, but most likely never will be.
In almost 25 years of working in the luxury industry, it has come to realize how necessary it is to create such niches, where there is absolutely no competition. Only in such a niche it is possible to get the very high margin of profit.
What Does It Take To Do This?
How do you create projects like this? First of all, it requires talent and a great deal of experience in design. Many people think that by finding the right architect, the problem of an investor is practically solved. This is absolutely not the case.
If it is not that rare genius, counted on the fingers, most likely he will offer what is a trend in the market. We won't need an architect at the beginning, but an artist with a lot of creativity, whose imagination is the only thing that can create extraordinary things. We only need the projects where we can make a very large profit margin. We need to go beyond stereotypes and soar above the hustle and bustle. The architect comes only after that.
So, we forget what the market does and go our own way. We won't eat stale bread when we can buy fresh bread. We need fresh, out-of-the-box solutions.
Investment Club stands apart in the market of ideas, creating unique projects that meet the set task to provide a high rate of return to the investor. Such ideas are thought out, worked out and tested. The signature thing is the idea or concept of the project. It must be unique in order to attract attention.
Whatever it may be: a separate private villa, boutique hotel, clinic, retirement home or amusement park, everything must be unique. In order to understand how it all works, let's focus on a seemingly trivial project for an investor. It is the construction of a private villa, say 1,700 square meters.
Understanding how this works with the example of investing in a private villa would help us to open new horizons of our thinking. The same approach can be applied to any investment project.
To get a high return, we have to stay in the luxury niche. Different laws rule in the suite, and the sale price is never dependent on the average market price.
Much of what we are about to reveal is our know-how, an undeniable novelty on the market.
We need an architectural concept that is radically different from anything else on the market. And we're going to break those typical of stereotypes in architecture. The market dictates us today that minimalism in architecture is in fashion and trendy: concrete boxes, glazed on all sides, interiors with a minimum of furniture and decor, and only views from windows are the most important attribute and attraction for the sales price.
Yes, stereotypes are like that! But think about what will happen to this so-called luxury property in 15-20 years? Will it still be in the sales trend? Even the question bewilders. Very doubtful.
It means that the property value will decrease as the price of a used car, even if it is a Mercedes or Bentley. Their sale price will always be lower than the original purchase price. So, it is the same with real estate. What we need is a constant price increase over the years. When can we achieve this? We get that only in case we have a unique property in front of us. Unique properties are always priced and always in demand.
Next, we need to achieve such a visual effect from our architecture, when our villa visually looks not like 1,700 square meters, but, say, 2,500 square meters. It is the art of a talent that achieves such a result.
Then, on approach, the buyer will get his most important first impression we need. We can hear the first cry of WOW. The selling price explanation starts at a subconscious level. We need to get the visual volume for the property looking larger than it is in reality. Of course, we know exactly how to achieve this.
The equally important components come next. These are the interiors. They must be luxurious and make an impression, creating a WOW effect without compromise. There are number of techniques how to do it. The reader of this article doesn't have enough patience to read to the end, if we are going into all these details.
Let's dwell only on a couple of them. The interior design should create all the same visual effect of volume, but only now inside the villa. Again, we need the first impression. The first thing we see in a house is its entrance hall. It has to be more than luxurious. The front lobby should make a lasting impression and set the mood for further viewing of the property.
Next, we need to use our know-how to achieve the WOW effect of having something in every room that attracts attention. This allows us to hold the customer's attention and maintain a sense of WOW effect, as well as a sense of inner euphoria.
Property as Art
Interior design is a very important component that participates in the formation of the selling price. We don't want faceless interiors. We need something that adds more value to the property.
What can it be? Artworks! I'm not talking about paintings or antique furniture. We consider only those works of art that will remain part of the architectural elements. Furniture and other decorative items can be taken out, but it will not change the sale price. It is thanks to such works of art that the price remains high.
For example, when you enter the house, you may see a huge marble mosaic on the floor, skillfully integrated into the interior design. The more intricate the work, the more value it leaves in the buyer's mind. We have at least half a million Euros artwork in front of us. Already half a million?
But we're just getting in. Mosaics are timeless decor. They have come down to us from antiquity and are perfectly preserved.
Wood paneling is another example of art itself because of the design. It all means and shows how design could transform the sales price and keep it on the level we need.
Next, we need stunning landscaping with lots of small architectural forms. All of them will also pass to the new owner when the villa is sold.
How long can we build faceless pools that look like two peas in a pod? We need swimming lakes surrounded by a natural landscape.
To summarize this part of the narrative, we need to achieve the kind of uniqueness for which we can ask quite different money.
Low Cost of Implementation
The next thing to consider is how to achieve low cost to implement a project. After all, everything we have just described may cost us a lot of money. Is it wise to fall into that luxury? Absolutely! This alone adds significance and value to the property.
We should not be afraid of high implementation costs. Experienced designers know how to achieve the effects and use different materials. It's like in the theater. There are major roles for actors and minor roles for actors. It's the same in real estate projects. There are major roles and we use the budget to the max, and then there are others where we use a variety of décor and get a grand spectacle in the interior.
And the low cost is achieved by using unique factories in Southeast Asia, where there are still masters to implement any idea of the designer, and where labor costs are not comparable with Europe.
Moreover, European factories, often simply cannot fulfill the tasks, not to mention the cost of production.
All of the above in the aggregate and leads to the formation of such sales prices, which are not available on the market today, and thus to high profitability.
To make the project even more profitable, you need to intelligently redistribute the amount of investment and choose the right location. But this is a subject for another conversation.
Projects with an investment volume of 200 million Euros, for example, are so much unique that they require a separate and more detailed consideration. In any case, there are no analogues of such projects in the world. For larger projects read:
Enclaves. A New Trend