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A Beginner's Guide to Luxury Property Investment

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    All About Investing in Luxury Property

    Property investment is one of the safest and most stable ways to invest your money in the current economic climate. Rising house prices and rental fees mean you are likely to see larger returns in terms of both capital appreciation and a cash flow of rental income.

    With so many options on the market currently, you may find yourself looking to find something unique that will stand out in a crowded field. If you are looking to invest your money into something that will really turn heads, the answer you are looking for may be to start investing in luxury property.

    Luxury real estate is far more than just an expensive price tag. People living in luxury properties expect the best in all things, from prime locations to high-quality materials to unique designs. If you are looking for something special to add to your portfolio, adding a luxury investment property may be for you.

    This guide will give you answers to questions such as “what is luxury property?”, “how can I get into luxury property investment?”, “is luxury real estate a good investment?” and “is luxury property investment right for me?”

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      What is Luxury Property?

      To be classed as luxury real estate, a property needs to have qualities that cause it to be viewed as unique or superior. They need to be exclusive so they are desirable to individuals who are willing to pay premium prices for the best.

      Being located in a high-end area, such as Kensington Palace Gardens in London, is one aspect that investors often look for in luxury homes. Cities such as New York and Dubai are home to many luxury homes.

      However, investors shouldn’t solely focus on cities like London for their luxury UK investments, as tenants are seeking luxury accommodation all over the UK, particularly in North West cities and towns. So what is investing in property? and where should you look to buy property?

      The location of a property is important, as residents will expect to be close to high-end activities such as fine dining, expensive shopping and the arts. This will mean many luxury properties are located in city centres, due to the ease of access to these activities.

      Instead of a trophy address, many luxury properties are located in areas where residents can take in the natural beauty of the area around them. Waterfront views, mountainside vistas, countryside landscapes – areas like this can help luxury properties stand out from the crowd.

      Outside of the property itself, residents in luxury real estate expect the best in everything. Amenities such as swimming pools, maid cleaning, chef’s kitchens, wine cellars, car lifts and other extra features such as hotel-style service can all be expected by residents of luxury properties.

      Luxury real estate is often classed as such because of design elements that cannot be changed, or ones that stand out as unique. Wealthy residents will want to live in properties that are exclusive and not like others on the market.

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      How Much Does Luxury Real Estate Cost?

      Given its high-end status, luxury real estate can have a much higher price point than regular properties on the market. Some luxury properties on the UK market will go for up to £1 million or more.

      The most expensive property in London, for example, was valued at £58 million in 2022, a townhouse built as part of the Chelsea Barracks development that is only available on their exclusive portal.

      This range in values are extremes of either end, with the average price of luxury properties in London averaging at around £2.5 million.

      Having such a high price point may be daunting for those beginning their investment portfolios, but it also comes with the benefits of higher capital appreciation and rental income. As well as this, there is likely to be less competition in the housing market due to luxury real estate’s uniqueness.

      However, although many luxury properties will be valued at high price points, there is actually a rise in demand for luxury rental apartments in the UK. This has led top UK developers to create modern new luxury developments in key parts of the country, such as Manchester and Liverpool.

      Take Central Park, for instance, Liverpool’s latest luxury buy-to-let opportunity. This upcoming development will bring a touch of luxury New York living to Liverpool’s Baltic Triangle area, with stunning design features, amazing onsite facilities for tenants to access, and a distinct focus on resident wellbeing.

      But unlike the million-pound luxury properties investors may be expecting, Central Park apartments start from just £164,950, with exclusive payment plans allowing investors to secure a unit with as little as a 15% deposit. Developments like this make investing in luxury property a lot more accessible than some may think.

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      What Should I Look For In Luxury Properties?

      If you want to invest in luxury property, there are several key aspects you should look for when investing to ensure your chosen property stands out on the market. As mentioned above, a high price tag does not equal luxury on its own.

      These elements of luxury properties can be a variety of factors, such as:

      Location

      Where the property is located plays a big role in how valuable a luxury property is. Whether it is a townhouse located in a city centre or a condo with a beachside view, residents in luxury properties are very particular about where they live.

      Being in a location that is unique or hard to find can make luxury properties stand out on the market, as well as being close to cultural locations such as restaurants, theatres, art galleries and museums.

      Design

      Having a property that looks unique is important to residents of luxury properties. Architectural designs that stand out and are unlike other properties on the market are a good way to increase a property’s value.

      Lots of space will also be important to some residents, as well as having enough rooms, bathrooms and kitchen space.

      Amenities

      Having extra luxuries that regular properties will not have is something that residents will expect. Swimming pools or private gyms allow residents to keep fit away from crowds, and some luxury properties follow this with saunas or spas.

      Having areas to do activities like cinema rooms, libraries, gardens and outdoor spaces is also a luxury that many residents will look for when trying to find the best properties.

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      Is Luxury Property a Good Investment?

      There are several reasons why luxury property can make for a good investment and several why it might not. Here is a breakdown of the pros and cons of investing in luxury properties:

      Pros:

      • High rental income due to the exclusivity, high-end furnishings, and prime locations.
      • A safe way to invest large amounts of money due to how stable the property market currently is.
      • Capital appreciation will increase the value of your property over time, meaning you can sell it for a profit later.

      Cons:

      • High entry costs due to high property prices depending on the area and property.
      • Depending on the area, it could be a struggle to find occupants due to the high rental fees.
      • For certain properties, renovation costs will be expensive.

      As you can see, there are cases for luxury property being both a good and bad investment, depending on your point of view and the location and property type you choose to invest in. In Liverpool, for instance, high entry costs for luxury property investments wouldn’t usually apply due to lower average house prices. And if your luxury property is off-plan, even better savings can be made.

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        Is Luxury Property Investment Right For Me?

        When deciding if property investment is for you, you need to ask yourself several important questions about why you are investing and what you hope to get out of it.

        • What is your investment goal? Capital appreciation or rental income?
        • Do you want to live in the property or rent it out?
        • How much do you want to invest? Do you want to pay up-front or spread it out through a mortgage?
        • What kind of investment do you want to make? Have you considered other forms of investment like stocks or bonds?

        Speaking with a financial advisor can help organise your financial goals and how you want to proceed.

        Setting aside some money in an emergency fund is a good idea when investing, as is paying off high-interest debts. Although property investment is one of the most stable ways to invest money, there is no risk-free investment plan.

        Luxury investment properties are well-suited for experienced property investors due to their more exclusive clientele and higher price points. The extra features that come with them may require more maintenance and management than other properties on the housing market.

        On the other hand, luxury property investments can offer investors a higher level of capital appreciation, more rental income, and tenants that are likely easier to deal with due to their background as high net-worth individuals.

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        How Can I Get Into Luxury Property Investment?

        There are several methods you could consider if luxury property investment is for you. Talking to an experienced property professional can give you advice on what to look for. Luxury properties will have real estate agents specialised in this area of the real estate market.

        Depending on your investment goals, there are several options you can consider if luxury property investment is for you:

        Renovate An Older Property

        This has a cheaper initial price point as properties in need of renovation will go for less on the market. These kinds of luxury properties are often in prime real estate locations but will need a lot of work before they are fit to live in.

        Be prepared to spend a lot of money over time to source materials, labour and other expenses that come with the renovation. However, by the end of it, you will have a luxury property with all the benefits of modern amenities combined with the look and style of older housing, a classy touch which residents will approve of.

        Invest Abroad

        If you are looking for luxury properties that you intend to rent out to tenants or a holiday home to retire in, then searching internationally offers a bounty of luxury properties available to invest in.

        From prime locations such as New York and Dubai, where some of the most valuable properties on Earth are located to more exotic locations like the Turks and Caicos Islands in the Atlantic Ocean, there are a variety of luxury properties to suit any need.

        Invest in Luxury Buy-to-Let

        So long as you are investing to earn rental income and not find somewhere to live, then there are many attractive buy-to-let opportunities in the luxury property market. This option is a good way to get a strong return on your investment, with a hands-off strategy if you choose to hire a property manager.

        Investing in luxury buy-to-let properties offers you the benefit of paying over time through a buy-to-let mortgage, as well as a regular cash flow through rental income. Buy-to-let properties are becoming one of the most popular ways to invest money right now due to rental yields rising across the country.

        Construct A New Build

        This is undoubtedly the most expensive way to invest in luxury property but offers you the chance to build the home you have always dreamed of. This will take the longest and cost the most money, but might be your chosen strategy if you’re prepared to put the time and effort in before seeing returns.

        With this strategy, you can either build a home to live in exactly how you want or sell a brand-new property that will surely attract high-net-worth individuals as buyers or tenants. It is a high-risk, high-reward way of investing in luxury property.

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          Investing with RWInvest

          Here at RWInvest, we have over 18 years of experience in the property investment market. Specialising in buy-to-let properties, we have several luxury developments available for investment right now in prime locations such as Liverpool and Manchester.

          Try talking to our sales team today if you would like to know more about the luxury properties we have on offer in 2024.

          A Beginner’s Guide to Luxury Property Investment

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          Author

          Reece Pape

          Reece Pape is a property writer at RWinvest. Utilising up-to-date property statistics and data, Reece aims to keep investors informed on the latest market developments.

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            1. All About Investing in Luxury Property
            2. What is Luxury Property?
            3. How Much Does Luxury Real Estate Cost?
            4. What Should I Look For In Luxury Properties?
            5. Is Luxury Property a Good Investment?
            6. Is Luxury Property Investment Right For Me?
            7. How Can I Get Into Luxury Property Investment?
            8. Investing with RWInvest
            Market & Investment Trends, UK