The Rise of High Net-Worth Individuals and What it Means for Luxury Real Estate
In 2024, the number of global High Net-Worth Individuals (HNWI) increased by 4.7% according to the World Wealth Report. A similar study by Knight Frank also tells us that 19% of HWNIs are considering investing in luxury real estate in 2024, and in addition, 22% of Ultra-High-Net-Worth Individuals (UHNWIs) are also considering property purchases.
This is great news for luxury real estate developers, but what is the best way to capitalize on this potential?
In this post, we’ll look at the rise of High worth individuals (HNWIs) and how their purchasing power is impacting the world of luxury real estate. We will assess the opportunities and challenges that this presents for developers and analyze the behaviors and preferences that attract High high-net-worth individuals to invest in luxury real estate projects.
Investment Preferences of HNWIs
Wealthy investors tend to diversify their portfolios and place their money in different projects, but there is one constant – they really like investing in luxury real estate. According to Delta Wealth Advisors, HNWIs will typically invest around 25% to 40% of their net worth into real estate.
There are a multitude of reasons for this including tax incentives, the properties appreciating in value over time, there are opportunities to generate a passive income and build equity, plus luxury property investments give HNWIs complete control over their investments.
What HNWIs Look for in a Luxury Real Estate Investment
Getting to know the HNWI market, any challenges, opportunities, and their preferences and behaviors enables developers to design their luxury developments accordingly and price them based on the audience that they wish to attract.
Many HNWIs are concerned about the impact of their purchasing choices on the environment and seek out sustainable projects, while others will place more of a focus on the location and proximity to transport networks, financial and business hubs.
Discretion and privacy are also highlighted on a luxury property wish list, alongside upscale finishes, top-tier amenities and thoughtful extras such as personalized concierge services. In addition, HNWIs expect a reasonable ROI that aligns with the market conditions of their chosen destination.
How Can Real Estate Developers Engage With HNWIs?
Luxury real estate developers may need to adapt their marketing and communication strategies when working with High Net-Worth Individuals. These are clients that expect a premium service and approach, and it’s very different to traditional real estate marketing.
HNWIs, VHNWIs and UHNWIs often seek out companies that are discreet, reputable and showcase in-depth expertise about the industry. A personalized service grounded in mutual trust and respect is the key to a positive and long-standing professional partnership with a HNWI.
8 Key Strategies for Engaging HNWI
There are a multitude of tried and tested strategies for engaging HNWIs with luxury real estate projects. Let’s explore a few.
1. Build an Exclusive Brand
The rise of branded residences is undeniable, offering developers an opportunity to command price premiums and accelerate sales.
The branded residence sector is rapidly expanding within the hospitality industry. According to Savills Global Residential Development Consultancy, the number of branded residence projects is projected to reach 1,200 globally by 2027, up from nearly 700 today.
By partnering with iconic brands like Aston Martin or Missoni, real estate projects can tap into the aspirational lifestyles these names represent. Branded residences often benefit from the prestige and trust associated with these luxury labels, which not only attracts HNWIs but also sets the development apart. For developers aiming to infuse exclusivity into their projects, branded residences can significantly enhance value while fast-tracking sales momentum.
Example: Porsche Design Tower Bangkok
2. Appeal to their Values
Understanding your target audience is key, not just to shape the characteristics of your project, but to communicate them in ways that resonate deeply. HNWIs often prioritize longevity and seek investment in properties that offer enduring quality. Sustainability frequently matters to this group, but keep in mind that they are discerning buyers who won’t be swayed by superficial claims or trendy “green” labels. Your project must have a genuine commitment to the values it promotes, supported by a solid foundation of authenticity and substance.
The way you communicate these elements is crucial. Focus on aligning your message with their personal values – whether it’s exclusivity, sustainability, heritage or anything else. Speak in their language, offering depth and conviction and avoiding generalizations or bland statements. By doing this, you’ll position your development as not only deserving of their attention but as a reflection of their financial aspirations and principles.
Example: Castelfalfi, Brochure
Castelfalfi is a luxurious medieval estate in the heart of Tuscany, offering 5-star accommodations and private residences. Its target audience, who values heritage, history, and understated luxury, finds these qualities reflected in every detail. The brochure’s tone, therefore, mirrors this refined sensibility, capturing the estate’s timeless appeal with elegance and subtlety.
