The ultra-luxury real estate market continues to demonstrate remarkable resilience in the face of broader economic uncertainties. While the overall housing market faces challenges, deep-pocketed international and domestic buyers are still actively pursuing high-end properties in exclusive communities across the United States. An example of where this is happening is Hualalai Resort, a residential resort community along 865 acres of the exclusive Kona-Kohala Coast of Hawai’i Island, that possesses an unmatched value proposition.
ECONOMIC UNCERTAINTY AND THE STABILITY OF ULTRA-LUXURY REAL ESTATE
The primary reason that economic fluctuations have minimal impact on the demand for luxury real estate is that the individuals who invest in these properties are often insulated from broader economic trends. These buyers possess significant financial resources, enabling them to acquire properties by paying in all cash to avoid financing and mortgage payments. Not to mention, affluent individuals prepare for economic downfalls, safeguarding them from unexpected twists and turns in the market.
Furthermore, it would take a substantial market shift or a significant geopolitical event to deter these buyers. In some cases, such events can even increase demand for ultra-luxury properties, as was evident during the pandemic.
In 2020-2021, many affluent buyers sought to relocate to safer, more secure environments, driving demand for properties in exclusive, secluded areas. This trend highlights how external crises can, paradoxically, enhance the appeal of resort real estate, particularly when safety and security become top priorities.
LUXURY REAL ESTATE AS A UNIQUE INVESTMENT CLASS
Affluent buyers perceive luxury real estate differently compared to other asset classes. Unlike stocks, bonds, or even art, luxury properties offer a tangible asset that can be used, enjoyed, and shared with loved ones. This emotional and experiential value sets luxury real estate apart, as it allows owners to celebrate their successes and create lasting memories with family and friends.
Additionally, the biggest wave of wealth ($84 trillion to be exact) in history is about to pass from older Americans to Gen X and millennials over the next 20 years. This is going to have major impacts on many facets of life and real estate is likely to remain a favored investment because of the reliable vehicle it provides to maintain wealth across generations. As this money is handed down, these individuals are increasingly turning to luxury real estate to invest their newfound wealth in a tangible and secure asset, making real estate the ultimate tool to maintain and inherit wealth.
THE EVOLVING PROFILE OF ULTRA-LUXURY BUYERS
In recent years, the profile of ultra-luxury buyers has shifted, with younger individuals increasingly entering the market. This trend is driven by several factors, including the impact of the pandemic and the growing acceptance of remote work. The pandemic served as a wake-up call for many, demonstrating that one could work from virtually anywhere in the world. This newfound flexibility has allowed younger buyers to purchase luxury properties in locations that offer a desirable lifestyle while still enabling them to manage their professional responsibilities, as opposed to pre-pandemic when individuals were spending time in their second homes once they retired.
In addition, the remarkable growth and innovation within the tech and related industries have not only transformed markets but have also given rise to a new generation of affluent young buyers who are now comfortably investing in luxury real estate.
Their purchasing power, combined with a desire for tech-enhanced living spaces, is reshaping the high-end property market, driving demand for cutting-edge amenities and prime locations. Lastly, the ongoing wealth transfer mentioned above has resulted in younger individuals acquiring the financial means to invest in ultra-luxury real estate earlier in life. These buyers often have families and prioritize factors such as the availability of quality education and a high standard of living.
This shift in buyer demographics suggests that the market for ultra-luxury real estate will continue to evolve, driven by a new generation of wealthy individuals who value both the financial and lifestyle benefits of luxury resort properties.
KEY TAKEAWAYS AND ADVICE
In conclusion, ultra-luxury real estate remains resilient in the face of economic uncertainties due to the financial strength of its buyers, the unique value it offers as an investment, and the evolving profile of luxury buyers. If these factors remain in play, the demand for ultra-luxury properties is likely to continue, making this segment a strong performer in any market condition.
However, the communities that will fare the best are those that are rich in amenities and offer diverse residential options like Hualalai Resort. As many buyers focus on long-term investments and preserving capital, they seek properties with a proven ownership group, track record, and a strong sense of place and purpose. It’s crucial for sales teams to effectively communicate the unique story and appeal of these communities to different buyer profiles, ensuring the message resonates with each group.
Principal Broker and Director of Sales at Hualālai Realty for the past two decades, Rob Kildow not only knows his product well, but lives it daily both professionally and personally, having purchased a villa here with his wife Barbara in 2001.
A force in its field for nearly three decades with sales well over $3B since its inception in 1996, Hualālai Resort has long been one of the most sought-after zip codes in the country—with a standing wait list of prospective buyers that allows for inventory to be sold in a matter of days. In the first six months of 2024, Hualālai Resort has already exceeded 2023 sales transactions, and they have closed $170,271,000 this year from the sale of 12 lots and 18 residences.
