As CEO and Founder of AHS Properties, one of my main missions in life is to match clients with their dream homes. My team’s focus is not only on crafting exceptional buildings and interiors, but also on creating unparalleled luxury experiences that exceed the expectations of homebuyers and investors alike.
Although a luxury property is always an investment, buying a home to live in is a vastly different proposition from adding a new real estate asset to your portfolio. It’s inevitable, therefore, that the way in which a client intends to utilise a property has a significant bearing on the search process.
With so much at stake in both cases, it’s essential that buyers have a clear idea of their goals and priorities before signing on the dotted line. So, which factors should you consider before investing in luxury real estate, whether as a home or an investment?
Here are my thoughts…
Heart and home
When you’re searching for a property that will be your primary residence, you may choose to be led more by your heart than your head.
A residence is a place to make memories, to spend quality time alone or with loved ones, to perhaps raise a family, and to welcome guests. Your comfort – and, to a lesser extent, the comfort of those you invite into your home – is paramount. So, ask yourself: what do you need to feel at home?
The style of the property, its location and available amenities should all reflect your own needs and desires as well as those of your family. That might mean choosing to be closer to the beach than to the city centre or prioritising proximity to prestigious schools over the potential gains of purchasing real estate in an up-and-coming neighbourhood.
Decisions about buying a luxury property that you intend to live in are often emotionally driven, and rightly so. As such, you may find that you are willing to stretch your budget that little bit further if it means securing your ‘forever home’ – even if the chances of recouping that money over the longer term are slim.
Invest like the best
The purpose of an investment property is to generate income through rental returns, value appreciation, or, most likely, both. In this case, it’s much wiser to base your real estate search on financial analysis and market research to ensure a sound footing for your investment.
When rental yields and returns on investment are your primary goals, your personal tastes should be less of a consideration. The asset’s USPs should be obvious to all, whether that’s its location in an exclusive neighbourhood, cutting-edge design, panoramic views or exclusive access to amenities like golf courses or water parks. Put simply, it doesn’t really matter whether you would want to live in a property if you’re buying it as an investment. The thing to remember is that the property in question should have mass appeal.
Of course, to secure the best possible return on your investment, you need to be aware of the regulations and requirements of the market in which you’re buying. In Dubai, for example, larger down payments are required on supplementary investment properties and real estate with a purchase price in excess of AED 5 million.
There are also tax implications to consider, as well as management, maintenance and insurance fees. You will need to decide whether short-term or long-term rentals better suit your needs and objectives, taking into account the potential variation in income, costs and vacancies. You will almost certainly want to seek professional advice to ensure you’ve covered all possible angles.
Feather your nest
As I pointed out earlier, any luxury property purchase is an investment. Even if you plan to live in and enjoy your home for many years, you can still maximise its potential resale value with careful consideration at the point of purchase and beyond.
Your choice of location is key in this regard. Planned infrastructure developments, zoning changes or the locale’s potential to become an exclusive neighbourhood can all boost property values and capital appreciation over the longer term. While you may yearn for mountain views and wilderness, prime real estate in a safe haven like Dubai will have broad appeal among future buyers and potential tenants.
In terms of architecture and interiors, timeless design is more likely to retain or increase in value than a trend-led approach. Likewise, there are plenty of features and amenities that will attract future residents: privacy and security, generously proportioned outdoor spaces and the seamless integration of future-proof tech all contribute to a near-universal appeal.
However, while it may represent the most rational approach on paper, I would never advise anyone to choose a home for personal use based solely on potential returns. In my opinion, it’s always sensible to allow yourself some emotional compromises because if you have no personal affinity with a property, you’re unlikely to want to live there for long.
Whether you’re looking for a home or an investment, take time to articulate your preferences and requirements (at least to yourself) before you embark on your search. Identify your personal priorities and what you consider non-negotiable factors. If wealth-building is your end goal, be clear about your timeline and exit strategy.
Last but not least, be kind to yourself. If you’re searching for your dream home, it’s OK for financial considerations to play a secondary role in the decision-making process.
After all, you deserve to love where you live.
