The value of real estate as a means to building wealth, signifying attainment and improving quality of life is highly relevant to high-net-worth individuals (HNWIs) around the world.
The latest report from Luxury Portfolio International®, Luxury Real Estate: What Matters Most To Today's Global Elite, available for download now at luxuryportfolio.com/whitepaper, shows that 35% of HNWIs view real estate as the most obvious indicator of wealth.
The research, which includes data from YouGov, shows that this is a powerful indicator globally, with Europeans (44%) and buyers in the Middle East (38%) each expressing a strong association between wealth and real estate. Among all the individuals surveyed, 38% are looking to buy luxury real estate within the next three years.
Also driving this interest in luxury real estate is the strong emotional connection to a home.
Globally, 37% of HNWIs said that an emotional tie was the top reason they purchased their current primary residence. Only in North America did luxury homeowners state that the lot, location and size of the home was a bigger concern. "Despite this emotional connection, 85% of wealthy buyers consider the purchase of real estate a rational choice," said Stephanie Anton, president of Luxury Portfolio International®. "Real estate signifies success for these buyers, both internally and externally to their peers."
At 23%, the interest in selling within the next three years is smaller, pointing to a continuation of a seller's market in the high-end, with fewer sellers than buyers expected and potential for inventory challenges to grow or persist in places already struggling with having enough homes to meet interest and demand.
The difference between buying and selling is most dramatic in Asia where just 18% of luxury consumers are looking to sell vs 68% looking to buy.
In both the Middle East and Asia, potential buyers overwhelmingly seek out urban locations for their next home.
"We are pleased to see that as we watch wealth grow among the top 10% of consumers globally, so too do we see continued interest in, and appetite for, luxury real estate both as a financial as well as an emotional investment," stated Anton.
Additional findings from this report:
- 41% of all HNWIs surveyed are looking to purchase a traditional-style home for their next personal residence.
- The top reason (40%) that luxury home buyers gave for the purchase of a personal residence is to improve their quality of life.
- 78% of those surveyed said their residence is a home, a place with emotional ties, rather than just a house.
- Overall, 59% of luxury buyers prefer urban locations. North American was the only region where suburban locations were slightly more popular (46%).
- Europeans say that real estate is nearly twice as important as an original source of wealth as those in North America or the Middle East.
