The wealthy have strong ideas about their ideal home and who they want to work with
This article was previously published on Inman Select.
- There has been a 53 percent increase worldwide in the number of ultra-wealthy individuals in the last five years.
- Of America's ultra-wealthy, 25 percent of them are planning to buy real estate and 20 percent to sell.
- Up to 45 percent have been sidelining cash until the U.S. Presidential election is over.
- Independent real estate brands scored higher than national big box brands with luxury buyers.
Roll out the red carpet (but only neutrals in the living room, please). America’s ultra-wealthy are becoming more numerous, and a quarter of them plan to snatch up more real estate in the next three years, according to a new report from Luxury Portfolio International.
Released today, the research conducted in partnership with YouGov shows the ranks of the super rich (with $50 million or more in net worth) have soared to new heights, with an estimated 123,838 individuals at this level, an increase of 53 percent in just five years.
What’s more, half of the world’s ultra-wealthy live in North America, while close to 20 percent are planning to sell.
Indeed, despite concerns about market fluctuation, real estate is a passion for high-net-worth individuals and is often seen as the ultimate sign of success.
“It is a lifestyle choice, a discretionary purchase that can be an investment in and reward for all their hard work,” the report noted.
As part of Leading Real Estate Companies of the World, Luxury Portfolio’s analysis focused on the global top 1 percent, those with a minimum of $3 million in assets.
“It’s twofold — there are more of them, and they have more money,” said Chandler Mount, YouGov research director. “There has been a lot of hesitation with the U.S. election with upward of 40 or 45 percent of the wealthy ‘sidelining’ cash ’til the election is over, but the money is there.”
For these affluent real estate purchasers, the report found location remains an important factor; more than 60 percent noted that privacy was essential.
There has been an increase in gated communities, said Paul Boomsma, president of Luxury Portfolio International.
“Google Maps can’t get into the gated community, they can’t do Street View,” he said. “Nobody can be outside your home with a camera, which makes people feel more secure.”
Proximity to shopping and services, work, hospitals and schools was important for these buyers, and they are looking for high-quality finishes in their kitchen appliances and a luxury bathroom for the master suite.
The home should have plenty of spaces for comfort and relaxation, and the kitchen also remains a popular hub among the wealthy. Fifty-five percent are looking for kitchens with high-end (and in some cases, restaurant-standard) appliances already installed, while 45 percent say an entertainment-friendly kitchen is important.
Independent versus national brands
When choosing the real estate professional, seasoned players are less interested the well-known national brands, preferring to work with independent market experts, according to the Luxury Portfolio/YouGov research.
“The world’s wealthy community continues to grow, as does the demand for luxury real estate,” said Boomsma. “Our research shows that for these buyers, independent real estate companies provide the service and individual care they require.
“We are still seeing some great sales in the Luxury Portfolio; it’s not like things have just stopped, but if something doesn’t sell, people are quick to point to the election. There is a lot of activity in many markets.”
The study compared the use of independent providers in three major categories (hotels, financial services and real estate companies) and found that 58 percent of the wealthy use independents in these three categories while 42 percent use major brands.
A higher 63 percent of the ultra-wealthy (over $30 million in assets) would be drawn toward using an independent real estate provider.
The report found that independent real estate companies scored higher than brands (34 percent) including Coldwell Banker Previews, Sotheby’s, Keller Williams and Berkshire Hathaway Home Services.
“I think the client likes to know that there’s somebody very responsible, a higher power in that local firm, a figurehead whose name is on the door, involved in the community, who will stake their reputation on the success of that transaction,” said Boomsma.
The wealthy don’t have a whole lot of faith in corporate America when it comes to dealing with a transaction of this magnitude, he added.
Smart home tech rises to the top
Wealthy homebuyers are looking for smart homes; ideally, they want whole-house energy solutions that start with sound construction decisions.
Using mobile devices, they want to have the ability to remotely adjust temperature throughout the home or control lights, window shades and small appliances to maximize energy efficiency.
These tools are especially useful for people who travel a lot (to their other homes around the world) and come back after some time away.
Home technology is becoming smarter and might be something sellers of luxury homes would benefit from installing — even ahead of renovating an outdated kitchen, which is more subjective in taste, said Boomsma.
“Contemporary homes are very popular right now, newer properties with a lot of architectural design elements and glass,” he added.
Many of the upper echelon are also retrofitting and doing major renovations.
Home offices are no longer necessary (as people can work anywhere), while workout rooms with pleasant views are coming to the forefront.
Dedicated “homework” spaces are also popular with families who don’t want their children sequestered away in bedrooms on their computers, said the Luxury Portfolio president.
Finally, the key technology preferences expressed by the U.S. wealthy included:
- Security technology (57 percent)
- Energy efficiency and environmental design (44 percent)
- Sustainable technologies such as solar panels and on-demand water heaters (40 percent)
- Control of heating and air conditioning through a mobile device (37 percent)