iCrowdNewswire Nov 13, 2020 2:31 PM ET
While many stalwart industries reel from the impact of the global pandemic, the luxury residential real estate market continues to show remarkable resiliency.
Fueled by a myriad of factors — among them, a flight from high-density urban areas to more suburban, single-family home and estate-focused settings — the world’s millionaires (some 47 million strong) have redefined luxury living.
These, plus many other findings related to the high-end market, are noted in The Modern Luxury Home: Reimagined — a just-released bi-annual study by Luxury Portfolio International® (LPI), in collaboration with YouGov Affluent Perspective. The universally revered brand, which comprises more than 200 leading high-end real estate brokerages, is the luxury marketing division of Leading Real Estate Companies of the World®.
The whitepaper breaks down a number of trends that are currently impacting the affluent consumer’s spending patterns. The purchase of luxury goods, travel and experiential activities, for instance, have been all but curtailed by COVID-19. However, by that same token, high-end real estate has proven to be extremely resilient and more than capable of withstanding the current circumstances.
“Our research indicates that, while the world’s high-net-worth individuals have benefited from growing valuations in financial assets, the coronavirus continues to generate tremendous uncertainty,” said Mickey Alam Khan, President of Luxury Portfolio International®. “To that end, luxury real estate is proving to be an ideal investment, and consumer preparedness to purchase is very high, with many regions experiencing record sales.”
Additional highlights from the report include:
- The current ratio of buyers-to-sellers, on average, is three buyers for every two sellers, exemplified by the fact that, in some markets, the supply of single-family homes may be as low as two or three months of available inventory (12-18 months of inventory is considered ideal in the luxury residential real estate market).
- At this juncture, it is not uncommon to have multiple offers on a listing, which means that buyers should be prepared to have strong offers in-hand.
- Plans to purchase a primary home have trended upward during the pandemic, while plans to purchase a second home have been trending slightly downward — chiefly due to travel restrictions — while trends to sell declined, fostering a shortage of available inventory. In short, the report reveals a veritable “dream market” for sellers.
- Of those surveyed, approximately 61% of affluent buyers and 57% of affluent sellers noted that they preferred face-to-face property tours with a real estate agent — meaning that agents must be fully versed on COVID-19 protocols in their respective areas.
- The demand for spaces that cater to one’s “self” are on the rise, as are home remodels, (additions, etc.), with 32% of those surveyed noting that they would like to renovate.
- Perceived values of home features and amenities vary by price range:
- In the U.S. $1M to $1.9M range, outdoor areas are in-demand along with a dedicated home office. As work-from-home has become ubiquitous, so, too, has the need for a quiet place to video chat and be productive.
- In the U.S. $2M to $2.9M range, relaxation and an activity room are highest in demand, with luxury homeowners are using wellness practices to combat the stress of success and now life at home nearly 24/7.
- In the U.S. $3M to $5M+ range, monitored home security (more than likely due to the constant ‘at home’ status of most people), and home entertainment spaces are increasingly sought after.
- Property investment is poised to grow, with 61% of those surveyed indicating their next big buy will be a home-related investment (either a purchase or remodel). Twenty percent indicated that it will be an automobile. The percentage of those who answered leisure vacations, fine dining, and high-end fashion registered in the single digits.
- In spite of the pandemic and subsequent lockdowns, overall consumer confidence in both the U.S. and Europe have returned to near-historic levels. The affluent in Canada and China are still working their way back. In total, two-thirds (66%) of the global affluent say confidence influences their desire to make luxury purchases. This, of course, is a leading indicator of overall consumer recovery.
“One very compelling takeaway from the survey involves the affluent consumer’s confidence,” concluded Alam Khan. “While most high-net-worth individuals are not only enduring, but may well be prospering through the pandemic, 80% of those surveyed noted that they were in good shape to withstand a recession. So, whether the financial headwinds are positive or negative, the affluent consumer will remain pivotal to the global economy.”
The complete report can be accessed at luxuryportfolio.com/whitepaper.
ABOUT LUXURY PORTFOLIO INTERNATIONAL® (LPI)
LPI (luxuryportfolio.com) is the luxury marketing division of Leading Real Estate Companies of the World®, the largest global network of premier locally branded firms dominated by many of the world’s most powerful, independent luxury brands. LPI attracts a global audience of visitors from over 200 countries/territories every month and markets more than 50,000 luxury homes annually. Well Connected.™