Real-Estate Investment: Extreme Luxury Accommodation
Article: how to generate income on an investment property.
Beyond a comfortable home or holiday let, extreme luxury accommodation provides high quality in every regard. The high price tag means these elegant and well-equipped properties often offer a high return on investment.
Luxury is a relative term – a luxurious apartment in New York or Shanghai will have very different facilities than a luxurious ski chalet, hunting lodge or private beach villa.
Image source: luuuxe.com
Yet as any savvy shopper will know, a high price tag should be justified by high quality or extra services. Extreme luxury properties will often have:
- Unusual and desirable locations
- Ample space
- Designer furniture and top-quality fittings (often a sought-after brand name)
- Additional services and facilities – from a private boating dock to a butler
These features will often be expensive to purchase – buildings in desirable locations are usually expensive – so it’s important to consider this when assessing the risk vs return of investing in extreme luxury accommodation.
Naturally, the type of luxury in question will vary depending on the type of property. Extreme luxury properties may be:
- Holiday homes
- Niche properties – often providing more indulgent options than is typical in the market
- Short-term accommodation – often in cities, for traveling executives
- Long-term accommodation
Advantages of investing in luxurious properties
- High monthly rent
- May offer high returns
- Property values rise rapidly in the right markets
Disadvantages of investing in extreme luxury
- May suffer more in a falling market
- May take longer to find a tenant
- Typically higher advertising and maintenance costs
- May be harder to sell due to narrowness of market
- Risk of misjudging investment – creating a property for which there is no demand
What to look for when investing in extreme luxury accommodation
While the main concerns for this type of investment are similar to any other holiday home or long-term living accommodation, there are additional questions to ask including:
- Is this area attractive to high net-worth individuals? The tenants in nearby accommodation should be similar to those you’re trying to attract.
- Is local infrastructure geared to the market you’re aiming at? Are there helicopter landing pads, country clubs or exclusive bars nearby?
- Is the house or apartment large, well built and well equipped? If not, are you willing to invest further to bring it up to scratch?
- Does the house have all the facilities the target market will expect? This depends on the type of property, but facilities should be more than at typical properties, e.g. direct beach access rather than a short walk.
- How much land does the property come with? Look out for large plots, which make the house a relaxed retreat, and special features such as private beach access.
- Is the building unique or rare? Examples include private islands, castles and stately homes or homes once owned by a celebrity
- Do you understand the market? If not, you may wish to hire a specialist buyer’s agent or estate agent.