The Global Property Handbook (from Warburg Realty and Barnes International Realty) finds that ultra-wealthy buyers mainly base their real estate purchasing decisions on three factors – practical, emotional, financial. “For them, real estate is a living asset, which sits at the intersection of the head and the heart,” said Clelia Peters, president of Warburg Realty.
Weighing up factors within these three categories, despite the surprise Brexit vote last year the report still ranks London as the world’s most desirable city, followed by New York and Japan. It also finds that 10% of individuals with a net worth of $30 million or more own at least five properties and that more than two-thirds have self-made fortunes.
Even though UHNWIs have a substantial amount of funds to invest in real estate, they still make decisions based on practicality. For example, most affluent businessmen prefer to live in close proximity to where they work, as well as near to younger family members who are attending school or college.
There’s a pervasive assumption that ultra-wealthy consumers almost buy property as an impulse purchase. If it has a certain number of bathrooms or unique features such as home-cinemas or an indoor pool, the desire outweighs the practicality and a purchase is made. As the report above states, this is simply not the case. UHNWIs will still choose real estate that appeals to their personal taste, but they are for more likely to first consider the location and investment potential of a particular property.
A Wealth-X report finds that 79% own at least two homes, and 53% own three or more. A Luxury Society article identifies home-buying motivations for this demographic, and found that many consider real estate purchases as both safe investment diversification and as a “gateway” to new markets, particularly when the property is abroad. This demonstrates a clear practicality that international real estate marketing experts may not be fully taking advantage of.
