More and more people are considering luxury real estate as a strong investment option as the global economy continues to rebound.
There are many good reasons to invest in luxury real estate, regardless of whether you plan to live in the property or not.
Whether you’re looking for a second home, a solid investment, or a place to retire, luxury real estate has a lot to offer. Keep reading to learn about the 10 proven reasons why you should invest in luxury real estate!
As the saying goes, “You get what you pay for.” When it comes to luxury real estate, this couldn’t be more true. Luxury real estate is not only about the property itself but also the amenities, services, and lifestyle that come with it.
Benefits of investing in luxury real estate include:
1) Property values appreciate at a higher rate than non-luxury properties.
As much as the overall real estate market will continue to appreciate, the value of luxury properties will always command a much higher value in the future. Especially for luxury properties in upscale communities with top-notch schools, transportation, and other facilities. These homes have a remarkable value from the instant you purchase them due to the must-have characteristics they have that are unavailable in ordinary locales. Since they are in the best possible locations, you can count on their value to keep rising over time.
2) Luxury real estate is a stable investment.
When compared to other market segments, the risk associated with investing in the luxury real estate market sector is extremely low. Even in times of recession or economic uncertainties, investors perceive the luxury real estate market to be more stable as the rich tend to get richer with the ability to continue to invest in the sector.
With increased wealth and disposable income among the well-to-do, they have the funds to invest in high-end properties, which is a gold mine and a most stable source of investment with high returns over time.
Compared to stocks, bonds, pensions, and cryptocurrencies, luxury real estate is considered to be the safest investment option by the majority of high profile investors.
3) Luxury real estate provides a higher return on investment.
The real estate market remains one of the greatest industries to invest in if you want to see good returns on your money in the future. According to research, luxury homes in upmarket locations, particularly multifamily real estate, provide greater steady cash flow and have a high potential for future growth.
4) Luxury real estate is a hedge against inflation.
Despite increasing inflation, rising interest rates and a decline in the stock mart in the last 2 years. The luxury property market has endured as investors perceive the sector to be a safe haven in turbulent times.
A late 2021 report by Lagos-based real estate brand Octo5 Holdings Limited which looked into how naira devaluation, inflation and increased exchange rate affected the real estate market concluded that the fundamentals of the Nigerian economy were still favourable for real estate investing.
As real estate investments remain the most effective hedge against devaluation against the effect of the declining naira on personal wealth. Fast further to late 2022, the naira has devalued even further, negatively impacting the wealth of the middle class with the lower class negatively impacted the most.
Regardless of all of these, the super rich continue to get richer and are consolidating their wealth in real estate assets that will continue to appreciate in value over time.
The recent all-time high of over 17.3% in Nigeria’s inflation has many investors in Africa in a precarious position. Well some investors might consider holding on to their money a select few have discovered the fascinating world of luxury property investing.
5) Luxury real estate is a physical asset.
Physical assets like luxury real estate have monetary and financial value. They also have a “material life”, are visible to the eyes and can be touched. They tend to outperform other asset classes in periods of economic instability. Some examples of such physical assets aside from luxury real estate are gold and silver. Seasoned investors usually put their money in luxury property investing and gold when they are unsure about the economy.
6) Luxury real estate is a status symbol.
Without a doubt, having a luxury home in an upscale community gives you a wonderful sense of satisfaction and pride. Luxury living has a significant impact on mental fulfilment and happiness.
Every young adult in Nigeria and around the globe aspires to become wealthy enough to own luxury properties in the near future. Believing it will lead to an increase in their status in society as well as their personal satisfaction and happiness.
In the city of Lagos for example, people that own luxury homes in high profile communities like Ikoyi, Victoria Island and some parts of Lekki are perceived as rich and affluent. .
7) Luxury real estate can be a source of rental income.
Depending on the size and location of your luxury property, it can be a fine source of rental income as a vacation home, a long rent family home or a short let.
Income rental for a luxury property is quite reliable and stable. Even in times of recessions, it is still more likely to get better returns on your luxury rental property than from a non-luxury rental property.
The idea of generating rental income from your luxury real estate property might be appealing to investors seeking the peace of mind that comes with consistent monthly or yearly income. A high-income individual who can properly maintain such a property while staying consistent with bills payment would always make the ideal tenant for such properties.
