Why invest in luxury real estate

Why invest in luxury real estate?

We all know that luxury real estate is described as such because it is scarce. Luxury properties command a higher price, but let’s not forget that an investment in a property that many others covet will always generally result in a better (higher) return on investment.

Certain destinations – Dubai included – have positioned themselves as luxury ‘hotspots’, desirable locations with several premium features that people want.

Invest in a luxury hotspot, and your investment will – at the very least – retain its value. It’s all about the old adage – location, location, location.

It might seem like a good idea to invest in a unique property in a relatively unknown location, but buying in a renowned, well-established district, resort or city has manifold benefits, from transport links to a strong economy, great schools and good healthcare. All these factors -and many more – help retain a property’s investment value.

Luxury property in a desirable location will, of course, will attract wealthier tenants and buyers, who are more willing to pay a premium for the luxury facilities and amenities your investment offers.

To me, a luxury property should also come with convenient facilities that help foster an upmarket lifestyle. High-end neighbourhoods – like Palm Jumeirah, for example – tend to come with upscale facilities that, in turn, help bolster property values, and you’ll see them increase over time.

Places like Dubai, Monaco or the Algarve in Portugal, for example, offer high-end lifestyles to match the investment property. Sporting and social facilities in the district can always help sell, as can features such as beaches, mountains or views.

Exclusivity is key – whether a property sits atop a location which offers stunning views, or unmatched landscapes.

Certain global locations have carved a niche as luxury ‘hotspots’ – places where a combination of climate, amenities and lifestyle combine to create a highly desired location. Do your due diligence and look for luxury properties in tried and tested locations with strong re-sale markets that have already stood the test of time.

The building itself – from the materials to the design – also helps retain value, of course. Premium build means just that – you can expect a luxury property to be more thoughtfully designed, with high-quality and high-value materials, fixtures and fittings.

Such quality translates to less maintenance, which means you won’t be troubled by building issues, such as leaks, faults or breakdowns. Of course, this also translates to value retention, with less depreciation due to age and wear and tear.

Luxury property normally involves high-end design. Many such properties are linked with well-regarded designers or design firms, and therefore often offer interesting features, design aspects or highly desirable features like open-plan design or floor-to-ceiling windows, on top of that all-important extra space synonymous with luxury.

If you’re investing with a view to renting, a luxury property will always attract renters. Touches such as pools, hot tubs, games rooms and outdoor kitchens deliver a sense of good living and differentiate your property from the crowd.

Of course, globally, now might be the right time to find a well-priced luxury property, as global property markets are experiencing a degree of uncertainty.

There are obvious benefits to buying a property during a time of global economic downturn, but ensure you undertake deep research and advice on how long to keep your property in your portfolio. There is a wealth of advice online, and in person, from companies and people who hold great expertise in the field. Luxury property investment takes a great deal of capital, and should not be entered into lightly.

However, the range of benefits investors gain from purchasing a luxury property, put simply, translates into a higher guarantee of a good return on investment. ‘Bricks and mortar’ have always been seen as a solid investment, but if you really want to reap the dividends, consider putting your wealth into a luxury property.

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