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Could your city become the next luxury real estate hub?

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The world’s wealthiest people own residential luxury real estate around the world. And some countries attract more interest from buyers than others.

In addition, specific regions within these countries get top billing as prime locations. Indeed, we can narrow it down further and identify real estate hubs within a city.

Deciding on luxury

Generally, ultra-high-net-worth (UHNW) buyers (that term is afforded to individuals with more than $30 million in assets in U.S. dollars) own residential real estate in the area of their primary business.

The affluent seek out luxury residential properties in particular regions based on personal, business and leisure goals. It is not always the world’s major centers, however, that attract high-end buyers.

In fact, New York and London have been falling behind in recent times. Dublin and Detroit though have shown an improved luxury real estate economy.

Investing in luxury

There is a lot of money at stake for whichever cities win over the upscale purchaser.

The Wealth-X and Sotheby’s International Realty Global Luxury Residential Real Estate Report 2015 states that billionaires (on average) own four properties worth U.S. $94 million.

This report also says that it is common for people with inherited wealth to own 17.2 percent of their net worth in real estate. No other subgroup in the UHNW population owns that amount of property. The typical UHNW buyer holds U.S. $78 million in real estate net worth — more than double the amount of money it takes to be considered UHNW in the first place!

Categories of wealth

It is not only billionaires who drive the real estate market.

Obviously, we expect the wealthier among us to own more real estate holdings. Each tier of wealth, however, has its own level of interest in buying property.

There are high-end residential consumers in various affluent groups.

For instance, according to the Wealth-X/Sotheby’s report, there are 91,630 UHNW individuals with a net worth between U.S. $30 million and U.S. $49 million who account for U.S. $3,760 billion in wealth. The average value of real estate holdings of each of those individuals is $9 million — this means that 22 percent of their net worth goes to real estate.

A passion for luxury

The passionate pursuit of luxury real estate depends on individuals and their lifestyle. The UHNW population is on the rise in varied categories of wealth. Therefore, diversification is an obvious outcome of this recent change.

Different locations will appeal to different wealthy buyers. Because billionaires usually have two or more secondary homes, typical holiday spots and vacation destinations should benefit from some of the high-end spending.

In addition, several regions can profit over time from billionaires’ pursuit of luxury real estate. The affluent tend to change at least one property every three years.

Global regions (including local, national and international sites) can cash in on the significant activity in the luxury real estate sector. Billionaires drive the international market; they buy homes in varied countries besides their home base.

Over the past decade, this top affluent group is purchasing more properties in distinct global regions. On the other hand, the UHNW purchaser in the lowest wealth tier tend to buy local or at least in their own country.

The value of luxury real estate

The UHNW buyer looks for value in the property — and the location. Their luxury real estate could take the form of sprawling country estates or luxurious penthouses. Both types of real estate — and all other high-end properties — are popular with individual UHNW consumers.

Some buyers look for acres of land — not only for present use but to pass down to future generations. Others prefer opulent residences in the middle of a city.

Innovative UHNW purchasers like to explore new markets, and more traditional clients might search for upscale property in the major centers.

Most luxury buyers, however, seek out plenty of privacy and maximum space in their high-end residences.

The future of luxury real estate

Since the “new” wealthy have such diverse tastes, many regions around the globe have the potential to become luxury real estate residential hubs in this evolving and progressive market.

Kevin M. Leonard is the founder of Luxury Agent and Valore Group. You can follow him on Twitter or LinkedIn.

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