Young buyers who have grown up with every convenience are now the majority, and want more
For the first time, young people are now in the majority among buyers of luxury properties, research has found.
Most have inherited, or anticipate inheriting, significant wealth, but also have solid careers of their own.
On average, these buyers are 37-years-old and married with young families.
This is the “new aristocracy”, according to research conducted by Luxury Portfolio International and international market research company YouGov to establish demands and expectations among high-net-worth individuals who are planning to spend $1 million (about R12.6m) or more on real estate within the next three years.
The study intimated a cohort of consumers aged 25 to 49, encompassing millennials and the younger portion of generation X, will power the luxury market going forward, and will ultimately be larger in number and greater in economic power than the wealthy in the gilded age of the Rockefellers.
Most of these high-net-worth buyers will have experience in living a luxury lifestyle because they are the children of high-net-worth individuals.
“Their experience with fine real estate, fashion, travel and a host of other categories has made them savvy consumers with many demands,” says Berry Everitt, chief executive of the Chas Everitt International group, which is the Luxury Portfolio International affiliate in South Africa.
“Younger buyers who have grown up with wealth have greater exposure to luxury, are more educated and aware of their likes and dislikes. They know brands, they demand quality and they are familiar with real estate.
“They tend to gravitate to blue-chip suburbs and luxury estates with an international reputation, such as Val de Vie in the Cape Winelands, Zimbali on the KwaZulu-Natal north coast, and Dainfern in Joburg. Many will use a significant inheritance to pay the deposit on a luxury property or to buy it for cash.”
What type of homes are the buyers in this new aristocracy looking for?
According to the research, they are primarily seeking urban-type residences (54%) of at least 400m².
“In fact, 53% are looking for something over 700m² and most prefer four or more bedrooms and three or more bathrooms,” says Everitt.
“When it comes to where young luxury buyers want to live, it is interesting to note that proximity to friends and family (48%) ranks second after proximity to stores, restaurants and schools (55%). Affluent young buyers don’t want to be far from loved ones, but also crave convenience and short commutes.”
As for architecture, the new aristocracy has mixed tastes, the survey found, ranging from modern through to Victorian, Tudor and Georgian, and many are seeking homes with some historical significance or provenance. What they have in common is a desire for interiors that offer open living and entertaining spaces, contemporary design and modern conveniences.
“New aristocracy buyers also want a high level of security and privacy. Advanced home security systems are high on their lists of essentials, along with outdoor kitchens and patios, high-spec indoor kitchens with commercial-standard appliances and home gyms and spas.
“In-home technology is also part of daily life for these buyers. As the Internet of Things connects appliances with voice-controlled devices, smart home technology centred on sustainable living is the item of the year.”
Everitt says high-efficiency windows and doors along with an equally efficient heating, ventilation and air-conditioning system that integrate with the smartphone are prime selling features.
“Going one-step further is the ‘whole house control system’ that synchronises products from various manufacturers and allows for a single, secure point of contact. This is a particularly hot topic as the price for a property increases.”
Ensuring heirs are ready to manage large sums
Wealth transfer has been under way for some time, and the reasons why are practical. It is as much about teaching as it is about their children and grandchildren being happy.
The gifting is about making sure heirs are ready to manage large sums of money. Bequeathers want to see the money be a source of joy for their heirs. This means heirs have a chance to live with “some” money while the earner is still alive.
They can teach before the bulk of the estate is passed on. Asset transfer is concentrated on the millennial segment of the new aristocracy.
More millennials expect to inherit, compared to generation X and the baby boomers, and they stand to inherit more money overall. What does this mean for property? Luxury loyalists are thinking long term.
They want to ensure their family is well protected and that they can focus on adding quality in their lives for the years to come. Families have crafted a moat (primarily of cash) that protects their castles and peace of mind.
They are looking for professional service providers to contribute to their quality of life so that clients come to view services and providers as critical elements in the maintenance of their lives, castles and moats.
*Source: Luxury Portfolio International