The big five
Kate Everett-Allen identifies the key themes set to influence prime property markets in the years ahead
3 minutes to read
Policy
Cited as both the biggest risk and opportunity for UHNWIs by our research teams this year, changing policy can dictate the fortunes of a market. From planning regulations to taxes, from restrictions on holiday rentals and foreign buyers to new visas and the quest for greater transparency, the global landscape is made up of multiple moving parts which influence the flow of wealth, and ultimately, market performance.
As public debt escalates and housing affordability diminishes across advanced economies, policymakers are poised to scrutinise wealth and property even more, injecting another dimension into strategic considerations for UHNWIs.
AI
The buzz around artificial intelligence (AI) in real estate now transcends basic chatbots, and looks set to usher in a transformative era of structural change. Currently, the spotlight is on improving productivity in knowledge-centric roles – for example, streamlining mortgage assessments and valuations, and identifying sites for development.
But for the luxury residential sector, dominated as it is by heightened demand for personalised experiences, AI looks set to offer sophistication, customisation and efficiency, providing insights into client behaviour, preferred locations, favoured architects and developers, and lifestyle preferences.
Currency
Is the dollar past its peak? The world’s reserve currency hit a two-decade high in late 2022 against every other major currency and has since drifted downwards, eroding some of the currency advantage enjoyed by US dollar and dollar-pegged buyers when purchasing overseas in recent years.
The consensus is that the dollar will remain overvalued given the lack of any viable global alternative – but it may weaken. High levels of government debt, along with interest rate differentials as central banks start to pivot, could offer those investors considering a foothold in the US, or in dollar-pegged economies such as Dubai, Hong Kong, Barbados and the Bahamas, a potential chink of light.
Climate
Rising sea levels and extreme weather events such as heatwaves, droughts and wildfires are leading some UHNWIs to consider where they buy. Despite the escalating vulnerability of our environment, the luxury residential sector has been slow to embrace sustainable living and integrate green technologies en masse.
However, impending energy compliance regulations in advanced economies are poised to catalyse change. Landlords, facing bans or rent caps unless they significantly improve poorly rated properties, will see rental stock decline and sales inventories increase, unless institutional investors see an opportunity in acquiring this older stock.
Wellness
Wellness is becoming big business. Supercharged by the Covid-19 pandemic, the industry is now worth an estimated US$5.65 trillion – a trend which has not escaped the attention of luxury developers. By way of example, The Well, a new luxury residence in Miami, not only features a state-of-the-art fitness and wellness centre but has a team of holistic experts on hand for residents.
Moreover, yoga and meditation retreats are now ubiquitous in the top ski resorts, and off-grid locations in the Caribbean, Nordics and Asia are increasingly in demand.
The race to provide ever more enticing amenities to meet the physical and spiritual needs of wealthy residents is well and truly on.
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