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What Makes Exclusive Properties In Solid Locations A Good Investment?

Sep 13, 2016

Investing in property is all about making intelligent decisions about how, where and when you allocate your money. Location and property type are two of the most important factors to take into account when investing in real estate, and choosing the right combination of the two will greatly enhance your chances of strong returns.

One good way to guarantee yourself a solid platform for investment is to choose luxury, in-demand and exclusive properties in locations with existing healthy property markets.

There are a few reasons why this is the favourable approach:

  • Firstly, a location with an already prosperous real estate market will provide the right environment for good returns on your investment, while the stability of the location will help avoid price fluctuations. Property prices in New York, for example, have been increasing year-on-year since 2012, reaching a record high in 2015. Combine New York’s steady house price increase with its existing desirability and reputation as a world city, and you have a solid platform for real estate investment. Everything from thriving tourism to increased development and transport links can help identify whether a location has a strong enough economy for profitable investment.
  • Secondly, making the decision to invest in exclusive properties will help defend against market volatility on a larger scale. This is because the exclusivity of the properties means that there is a necessarily limited amount of them, and they will therefore not be as affected by dips in the market as their widely available, non-exclusive counterparts. Exclusive luxury properties will always be in demand, meaning that there will always be a place in the market for them, regardless of wider economic issues.
  • Thirdly, exclusive real estate tends to be found in exclusive and desirable areas, and these areas are far more likely to benefit from large-scale development, due to the vast amounts of money that they attract. Increased development of a location helps increase the value of the properties in that location, especially in an already thriving real estate market.
  • And finally, exclusive properties in solid locations tend to draw interest from predominantly high-net-worth individuals, those whose expansive cash flow means that issues such as unreliable tenants, missed payments, and changes of financial situation (etc.) are avoided – these are inevitabilities that plague the regular property market, but not the exclusive one. Interest from high-net-worth individuals also means better chances of high-ceilinged bidding wars, the advantages of which are obvious for the investor.

 

Sources: http://www.economist.com/blogs/graphicdetail/2016/08/daily-chart-20;
http://www.forbes.com/sites/navathwal/2016/01/19/will-new-yorks-white-hot-real-estate-market-fizzle-in-2016/#259428eb5661

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