The penthouse dream within reach: The rise of luxury real estate
With a wide array of luxury items flooding the market today coupled with an increasing number of ways people earn a living —I often get asked: “Do I really need to put premium into real estate over spoiling myself with luxury goods?”
This only becomes a question worth answering because of Filipinos’ lack of financial literacy. In the capital markets, I keep on reminding newbies not to skip steps. They should make sure they have an emergency fund, ideally, worth 6 to 12 times their average monthly expenses, before they dive into investing.
Psychologically-speaking, when we spend money on serious, #adulting stuff, it tends to be boring. When you save money, it’s boring. When you invest, it’s boring. When you get insured, it’s boring.
On the flip side, when you spend on wants, when you give in to ‘budol’, and when you splurge on luxuries—it makes you feel happy. It makes you feel proud. It makes you feel alive.
But that’s why following a budget is important—it allows you to enjoy both worlds. It gives you the opportunity to save, invest, take care of your needs and at the same time, still have money for wants and perhaps, even luxury.
So anything centered on investments should really be prioritized versus anything centered on luxury because it’s the most financially sensible thing to do, since you are converting your hard-earned money to an appreciating asset as time-tested as real estate.
Another question that gets asked a lot is: “What makes property investing unique versus luxury items?”
In the world of motor vehicles, for example you have base models and you have the top-of-the-line variants. In the world of stocks, you have penny stocks and you have blue chips. In the world of real estate, you have low-cost housing and you have luxury properties.
Not all investments are created equal.
Luxury cars, shoes, and bags are more than just an investment because they are also status symbols—what sets luxury real estate apart is the fact that whatever happens, it will always be able to provide you and your family with shelter and protection—one big reason why real estate keeps on attracting a wider market.
Not all investors are created equal.
This is precisely why at FirstMetroSec, we design our products, services and even our market education programs for a wide array of clients from investors to traders, from beginners to seasoned, even to those who are into the finer things in life.
Now, what exactly defines a luxury property? How do these characteristics contribute to its overall value?
Luxury property, by definition, is characterized by its amenities, features and qualities that go above and beyond the standard real estate property.
Apart from the bells and whistles, what largely contributes to its overall value is the location, the quality and detail of the build, the amenities, the size and space of the property, privacy and security and most importantly—exclusivity.
Look at it from a demand and supply perspective—because these types of properties are scarce, screams prestige and boasts high street—they are designed for people who value and who can afford such a lifestyle.
And despite the hefty price tag, demand for luxury real estate increased dramatically because of the COVID-19 pandemic.
The lockdown influenced the way we think about how we live day to day. It made us realize the importance of space—specially when we were trying to isolate individuals from the rest of the bunch. It made us realize the importance of having amenities within reach because we were locked down—no way for us to go to the office, book staycations, coffee runs, movie dates—so we crafted workspaces, coffee nooks and amped up our entertainment rooms.
What most people consider home improvement, renovation or D.I.Y. projects—these so-called ‘enhancements’ actually come with luxury properties by default.
While the pandemic influenced a deeper appreciation for luxury living, numbers suggest that there are still growth opportunities ahead and they seem to be largely market driven.
Developers like Ortigas Land have successfully been in the business this long because they understand the market, they listen to the market and they address the gap in the market.
Potential investors in the luxury real estate front are liquid. They aren’t concerned about the stock market, the economy, the interest rates. They are concerned about viability, long term potential and status symbol.
And the fact that we are seeing a rising middle class and discovering a lot more ways to earn a living, we are expecting to see a larger market for the luxury real estate segment within the next 3 to 5 years.
While luxury real estate can be very aspirational, it’s certainly not for everyone. I keep on telling people, it’s one thing you get to acquire a property, it’s another if you get to keep it in tip-top shape.
What more if you are talking about acquiring and maintaining a luxury property?
You need deep pockets. You are looking at a market which looks at grandeur, peace, quiet and exclusivity.
I am not saying money is no object—but in certain projects like The Galleon, you are talking about a market which does not look at the peso value. You are talking about a market which looks at the address, the attention to detail, and the exclusive lifestyle.
