Know and Understand the Luxury Home Market

At $42.91per square inch the world’s most expensive real estate isn’t in the U.S.  In fact you won’t find it in Tokyo, Monaco, Paris, St. Tropez or Hong Kong or a number of other world class cities.  That’s an astounding $6,191 per square foot and if you’re buying a home there with Euros, £1,000,000 is only going to get you 234 square feet of living space.  If you are buying with USD you are going to have to cough up roughly $1,540,000 at today’s exchange rate. Scary?  Maybe – then again maybe not.

The outlook for the luxury home market, especially for vacation homes, is very optimistic according to a recent report released by Knight Frank and Citi Private Bank … 07 Annual Wealth Report on Prime Residential Property.  The report notes that High Net Worth Individuals (net assets in excess of $10 million USD) tend to focus in goods that become more desirable the more expensive they are (Giffen goods) and for many residential property fills the bill.  As a result there is a strong desire to secure more properties in the form of additional second home or investments.

When you look at the factors these High Net Worth Individuals consider most important in their selection of property the top two are “unique property related factors” and “lifestyle opportunity.”  They want uniqueness and individuality in their personal residence combined with long term capital growth.  And they extend these same factors as being most important in the selection of their second or vacation home.

These folks are very bullish on the world’s economic growth and the increasing acceptance of residential property as an investment asset class.  Many of these High Net Worth Individuals reside in Europe and when they look at the rising cost of property in their own backyard as compared with the United States they see a bargain in the making.  Today with the Euro trading at $1.54 against the USD the lure of U.S. luxury homes is growing stronger. 

It makes the case for looking at specializing in the Luxury Home Market a little stronger.  Take for instance that $42.91 per square inch cost.  That $1,540,000 will buy you a 234 square foot studio in London as compared to a 620 square foot 1 bedroom apartment in Tokyo or a 307 square foot studio in Manhattan.  The Knight Citi report goes so far as to say that “The boom in second-home ownership over the past decade will be nothing compared with the growth we will see over the next decade.” 

With the current status of our real estate market it doesn’t take a great deal of imagination to visualize the potential these international buyers see in the U.S.  And don’t forget that we have a very large segment of HNWIs here in the U.S. that share common aspirations with others around the world.   In fact, Knight Citi reported that “in absolute terms, the most significant growth (in the world) was seen in the U.S. where the number of High Net Worth Individuals grew by almost 120,000 to a total of 3.1 million.

So even as sales sag in the overall real estate market, within the luxury home market, analysts predict demand to continue to grow over the next decade. Find out about this and more inside the 2007 Luxury Home Market Report brought to you by the Luxury Home Council. Topics in the report covers:

Luxury Homes - A Growing Market Segment

Who Is A Luxury Home Buyer?

Baby Boomers - A Driving Force Behind Luxury Housing

Luxury Home Super Markets

Second Home Markets

Inside A Luxury Home

Luxury Housing and Real Estate Professionals

The luxury home market varies from market to market and even within individual market segments.  What is certain, however, is the opportunity that awaits the dedicated real estate agent that is willing to dig in, explore, learn and understand today’s luxury home buyers and sellers. To learn more or to get a free copy of this 12 page report visit www.BecomeALuxuryAgent.com