Luxury Portfolio International has identified an emerging group of affluent homebuyers who, it believes, will be “powering” the luxury real estate industry in the next three years, it finds in its 2018 report: “The Rise of the New Aristocracy.”
The ‘new aristocracy’
The “new aristocracy” are, on average, age 37; they are married, have young families and have inherited wealth or expect to, said the research conducted by YouGov on Luxury Portfolio’s behalf.
They are the consumer to watch, rather than their 50-plus aged counterparts (“luxury loyalists”) when it comes to homebuying, said Luxury Porfolio Executive Vice President, Stephanie Anton from the Leading Real Estate Companies of the World annual conference held in Las Vegas.
For these future homebuyers ranging from 25 to 49, the economic future looks bright — six out of 10 expect an inheritance of $1 million or more, and their current investable assets average $4.7 million, the research found.
The new aristocracy are more likely to have grown up in affluent and wealthy families and stand to inherit nearly $4 million on average. They know brands, they demand quality and they are familiar with real estate.
Anton, due to become president of Luxury Portfolio, the luxury arm of LeadingRE, in April, said the parents of these grown children were often gifting at least part of their inheritance earlier so they could see their families benefit from it.
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And they wanted to see their money put into real estate “not to have them go and buy a bunch of purses,” said Anton.
Personal wealth in the U.S. grew by $8.5 trillion in 2017, according to the Credit Suisse Global Wealth Report.
“With phenomenal gains in the stock market, combined with new legislation that favors wealthy families, we expect this is just the beginning to what could be a boom time for luxury real estate,” it added.
Luxe house hunting
The research had some surprises for what the new aristocracy buyers want in a house.
They are primarily looking for an urban home and many are seeking a living area of 5,000 square feet or larger, partly because their families are growing, and other generations may live with them.
They want the extra space so they can have “specialty rooms,” which might be an office, a home theater, a music room, or surprisingly, a separate formal dining room — a welcome revalation to some LeadingRE agents marketing traditional larger homes, said Anton. A space for a home gym also ranked highly and a pool.
And while modern styles (27 percent) are growing in popularity, Victorian, (28 percent) Tudor (24 percent), and brick Georgian homes (23 percent) were desirable too, according to the research.
But while they were happy with a traditional exterior to fit in with the neighborhood, they still wanted a more contemporary interior, said Anton.
As with many of those in luxury world, the new aristocracy is concerned with privacy and security in their homes, ideally that integrates systems with their smartphone.
The report described it as smart home technology centered around sustainable living. “Essential” home features, meanwhile, included outdoor spaces, commercial grade kitchen appliances and nearby dining options.
And while the new aristocracy might be attracting the spotlight in this report, the 50-plus luxury loyalists have their own important characteristics, agents can learn from.
The younger cohort may like a variety of home styles, but the luxury loyalists are looking for contemporary and modern homes predominantly. They like big windows, new technology in materials used and clean, open, light-filled spaces, said the report.
One-fifth of this age group also likes the efficiency, security and amenities offered by large condominium or apartment buildings.
Meanwhile the most important community amenities to luxury loyalists deal with fitness because they want to stay healthy and fit for years.
Note: A total of 536 interviews were conducted for this research by YouGov between Dec. 9, 2017 and Dec. 18, 2017.