From National Association of Realtors, International Real Estate Report, Wednesday, January 16, 2008
The global luxury residential market has been largely unaffected by the real estate slowdown. Knight Frank's 2007 Annual Wealth Report looks at the behavior and attitudes of high net worth individuals (HNWIs) as they relate to the residential property market.
HNWIs view their residential portfolio as an opportunity for lifestyle enjoyment, individuality and exclusivity. They are aggressive investors and differ from other investors in their attitude toward risk and reward.
HNWIs have a higher than average weighting in residential property and their portfolio is internationally diverse. They are happy to invest in emerging economies and are open-minded to alternative investment locations.
The report names three key drivers of HNWIs in the purchase of a prime residence or a second home:
- Time Poverty (convenience and accessibility),
- Luxury and
- Prestige
These drivers keep HNWIs pushing at the edge of the market, as they seek to keep ahead of the market either by bidding up prices to retain exclusivity or by exploring new markets.
History shows that where this market niche goes in terms of location and property types, the rest of the market will follow.
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