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 Net-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 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
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.
Castelfalfi, Brochure
3. Create Stunning Collateral
Just like any other luxury product, luxury real estate deserves marketing collateral that embodies every nuance of its exclusivity and elegance. From newsletters to brochures, each piece should capture the lifestyle you're selling, crafted with the same precision and care as the residences themselves.
Rather than opting for a standard brochure format, consider designing your project overview in a coffee table book format, using premium printing techniques like embossed textures or rich color saturation. These nuances offer potential buyers a tactile and visual connection that stands apart in a digital world, resembling works of art more than marketing tools, and thus reflecting the lifestyle you’re trying to sell. By investing in sophisticated collateral, you create a lasting, immersive impression that speaks directly to the exclusivity of your real estate project.
Example: ITZ'ANA, Belize, Marketing Collateral
ITZ'ANA, Belize, Marketing Collateral
4. Make Them Envision the Final Product
For HNWIs, time is precious, and they need to understand the full vision of your project quickly and clearly. High-quality renders, virtual staging, and 360-degree virtual tours are essential tools to help them imagine the finished development, especially when it’s still in the early stages.
On top of offering a preview of the final product, they allow potential buyers to picture themselves living in the space, feeling the atmosphere, and experiencing the luxury firsthand.This is particularly vital for second homes or vacation properties—purchases that are driven more by desire than necessity. For these buyers, the emotional connection and the ability to picture the lifestyle your project offers is often the deciding factor, making compelling visual representation even more critical.
Example: Rosewood Residences Beverly Hills, Renders by The Boundary
Rosewood Residences Beverly Hills, Renders by The Boundary
5. Develop Brand Partnerships
Consider partnering with renowned luxury brands and social media influencers that resonate with the HNWI market. This can help to boost credibility and attract the right attention to your properties.
Example: Puente Romano Beach Resort x Fendi Partnership
Puente Romano Beach Resort x Fendi Partnership
The resort recently made waves with the launch of the world’s first FENDI Beach Club, transforming its iconic Chiringuito Beach Club with bold colors, signature prints, and emblematic stripes inspired by the renowned fashion house’s collections – instantly drawing attention to both the beach club and the resort.
6. Host Invite-Only Pre-Launch Events
Pre-launch events, whether hosted on-site or in collaboration with high-profile venues in key locations, offer a powerful way to immerse your market in the lifestyle you’re selling. Curating an exclusive guest list is crucial, ensuring you target influential individuals who can amplify your brand’s message and drive interest.
Example: Sora Beach Residences Pre-Launch Event
Aark Developers recently built anticipation for Sora Beach Residences with an exclusive pre-launch event at Jumeirah Emirates Towers, where select guests were given a first look at the highly anticipated beachfront project. By unveiling luxurious design details and offering a sneak peek into the lifestyle that awaits, the event generated excitement and buzz ahead of the official launch.
Sora Beach Residences Pre-Launch Event IG Post
7. Showcase the Creative Team
Luxury properties often spotlight visionary architects and designers through interviews or blog content and utilizing the designers' established platforms to draw attention to the project. By leveraging their influence and reach, these properties captivate discerning buyers and elevate their exclusivity.
Example: Kelly Behun's promotion of the Whiteley London project
Kelly Behun, a celebrated AD100 designer with a prestigious clientele using her influence to spotlight The Whiteley London across her platforms, drawing significant attention to the project and enhancing its luxury appeal.
Kelly Behun's promotion of the Whiteley London project IG Post
8. Take a Hospitality Approach
What HNWIs value most is not the property itself, but the exclusive lifestyle that comes with it. From the very first touchpoint, integrating your property management team can set the tone for the level of service they can expect. Offer thoughtful, luxury-driven touches: chilled coconuts on a warm site tour, champagne in the sales office, with every detail tailored to suit your project and their preferences.
These elements not only convey that your development is in tune with their expectations, but they also create visually captivating moments that enhance your social media presence. By embracing a hospitality mindset, you're curating a bespoke memorable experience for the toughest customer: HNWIs who have seen it all.
The Proven Take:
“HNWIs are sophisticated and experienced - they respond to marketing strategies that tell the story of an authentic luxury lifestyle experience. It’s never just about selling a luxury property; you need to showcase the personalized components of the project in order to truly develop traction.”
- Colin Hannan, Principal
What is a HNWI?
The financial industry uses tiered categories to define High Net-Worth Individuals and to tailor services to them based on their liquid assets.
High Net-Worth Individuals (HNWIs) are typically those with liquid assets ranging between $1 million and $5 million.
Very-High-Net-Worth Individuals (VHNWIs) often have liquid assets between $5 million and $30 million.
Ultra-High-Net-Worth Individuals (UHNWI) usually possess over $30 million in liquid financial assets.
These figures exclude primary residences, but incorporate cash, bank accounts, stocks, bonds and other assets that are convertible.
What is Driving the Growth of HNWIs?
In 2023, North America hosted a record number of High Net-Worth Individuals. The number reached unprecedented levels, peaking at 7.9 million. In the Asia-Pacific region, 7.4 million HNWIs were identified, and in Europe, the Middle East, Africa and Latin America, figures are also rising.
The increase in HNWIs can be attributed to many factors, which primarily include:
1. Emergence of Technology: AI, Big Data and the Blockchain are all driving start-ups across a multitude of tech industries, leading to new products and services. The tech industry is attracting investment and fuelling the growth of HNWIs across the world.
2. Digital Asset Investments: According to CapGemini Research Institute, 71% of HNWIs (primarily under 40s) invested in cryptocurrencies or digital assets - an action that has increased their net worth over time.
3. Burgeoning Global Economy: The global economy is also now experiencing steady growth, elevating the HNWI population as a result.
4. Gains on the Stock Market: Many HNWIs have experienced consistent stock market gains in recent years which has helped to boost their wealth.
5. Real Estate Appreciation: The ongoing increase in the value of luxury real estate has helped to expand the pre-existing wealth of High Net-Worth Individuals too.
Conclusion
The increasing numbers of High Net-Worth Individuals globally provides a unique opportunity for luxury real estate developers. By tapping into and understanding the personal requirements of a HNWI, developers can craft projects that wholly cater to the tastes and preferences of an affluent market. The main takeaways for success include pairing a desirable project and location with a tailored digital marketing strategy, unmatched industry knowledge and a genuine, discreet and transparent service.
Planning a project targeting high-net worth clientele? Let us help you speak their language.
