Luxury Real Estate as an Investment

“Ninety percent of all millionaires become so through owning real estate”, those were the famous words of Andrew Carnegie (1835-1919), a Scottish-American Industrialist who led the expansion of the American steel industry during the 19th Century.

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Purchasing property as an investment has proven to yield significant profits, but it has also lead to some unprepared investors to bankruptcy, wasting time and money, as well as the inability to pay back a loan. Successful real estate investing is best carried out when an investor has a team of experienced professionals to guide them through the process.

The luxury property market has experienced record growth in the last few years due to a number of factors, including the rebound from the 2007 financial crisis. There are a limited number of luxury homes for sale at any given time and this limited inventory alone can lead to price increases and bids from multiple buyers. Metropolitan markets have seen the biggest increase, such as New York, London and Dubai, due to low unemployment rates combined with well-paying jobs.

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Seeing growth in the property market has encouraged investors to turn to luxury real estate to further increase their investment portfolio. Purchasing real estate is an alluring investment opportunity due to its tangible aspect.

What Defines a Luxury Property?

A high price tag won’t make the cut, so it’s important for potential investors to know what exactly is considered a high-end property prior to their investment. While there is no one design that defines a luxury property, ranging from sprawling manors and picturesque country estates to immaculate metropolitan apartments and contemporary masterpieces, there are certain factors that define a luxury home.

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Buyers in the high-end market look for many of the same features as any other buyer, such as privacy, security, space and proximity activities and amenities. When purchasing luxury real estate, you’re buying the luxury lifestyle to match, so it’s vital look for the sophisticated services and striking qualities that distinguish the luxury lifestyle. Wealthy people will pay a premium for something that’s perceived to be superior.

Other amenities should include those you wouldn’t necessarily find in a regular property, such as a chef’s kitchen, luxury pools sitting in landscaped exotic gardens, home automation systems, extensive security systems and temperature-controlled wine cellars, to name a few.

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Nearby amenities should include exclusive shopping destinations, fine dining and premium art galleries, as well as exceptional private international schools for families with children. Luxury residences are most desirable when situated in affluent and exclusive neighbourhoods and premium addresses, such as Park Avenue in New York City, will add value to a property.

Investing in Luxury Real Estate: What Are My Options?

There are several options for investing in luxury in real estate, including property flipping, buy-to-rent properties and completing a custom-build.

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Property flipping has proven to be one of the most successful investments and is a popular choice amongst investors. Property flipping allows for a smaller time frame as it’s much faster than building a property from the ground up, but its limitations include the right combination of architecture and layout. There is less competition in high-end market due to the limited number of people who have the available funds or understand how to execute such extravagant projects.

Investing internationally can have benefits that one may not be able to find domestically. In Barbados, a British Commonwealth island in the heart of the Caribbean, property sales have increased tremendously over the past decade due to tourism and new developments. Investors of property in exotic locations are able to benefit from seasonal income and use the property for personal enjoyment. Popular tourist and metropolitan areas, such as New York, London and the Spanish riviera of Marbella, are also in demand for both long-term and short-term rentals.

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Completing a custom-build benefits from a higher profit margin compared to other options - however it comes with the downside of a longer time frame and ensuring it includes all the desired styles and amenities. The home must be functional, welcoming and offer the security and privacy that luxury property buyers seek. High-end buyers are looking for something unique and with great attention-to-detail - the more exclusive and harder to find a certain feature may be, the more worthy the investment of the property becomes.

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Many high-end properties may not be featured on the internet or places of public access to protect the privacy of the current owners. A qualified real estate agent who specialises in the luxury sector will benefit from insider information about a listing before it hits the open market and will be able to advise on a property’s value during the buying or selling process.

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Butterfly Residential offers an unbeatable service in all of our select international locations. Our professional team of agents have vast experience in assisting real estate investors buy and sell their investment properties. We have established relationships with the best real estate lawyers and financial advisors in each of our locations in order to deliver a bespoke, professional and discreet service to meet the expectations of our clients.

Butterfly Residential are market leaders in the luxury real estate sector with exclusive properties for sale and luxury properties for rent in some of the finest locations across the world.

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