Investing is the paramount source of ‘Living and Leaving behind a Legacy’, and when it’s coupled with passion, the results are for everyone to see.
Passion Investing and Luxury Real Estate –
Dr Rachel Pownall described Passion Investing very beautifully: “An investment of passion is a collectable asset that is real and tangible and has the potential to increase in value over time because it is rare and desired by many.”
Something with passion is far better than many things with just interest, and this adage is worth every word when it comes about investing, especially in Luxury Real Estate which has a plush touch of Fine Arts with it. Like the world would have it, the key traits of it being rare, of fine quality, being in great demand and a cultural value, all these tenets make Luxury Real Estate a great instrument for passion investing.
What and Why of Luxury Real Estate –
To start with, many of us have this misconception that ONLY a very expensive or highly priced property is Luxury Real Estate. But there is more to it than what meets the eye. Undoubtedly, it comes with a price tag that is heavy, but it’s the experience that truly establishes luxury. And that experience comes from posh locations, surrounding view, splendid features, lavish designs which are ably complemented by beautiful interiors, paintings and artefacts by prominent artists, a grandiose architecture and plush fixtures.
There can be so many types of properties as well which fall under the Luxury Real Estate category, such as a Mansion overlooking a large pool, a Top Floor Sea-facing condominium, a weekend home overlooking the golf course, or a holiday home in hills with a view of the valley. What matters the most is that designing should be relevant, because designing is luxury made visible.
Unlike many other instruments of Passion Investing, Luxury Real Estate is different in ways of:
Investment Returns: While like any other investment, Luxury Real Estate is also subject to price fluctuations, if carefully chosen and given enough time to appreciate, their returns are usually handsome. Passion investments allow investors to enjoy their wealth while satiating their luxury desires. With growing number of passion investors worldwide, such investments can be lucrative investment option with rewarding returns.
Secondly, it acts as a good diversification tool. A lot of such assets including art, wine, collectibles, sport clubs, luxury yachts, high-end real estate, etc have shown a fair amount of negative correlation to traditional assets such as equities, bonds, mutual funds or gold. For UNHIs such investments are ideal to diversify portfolio.
• Identity: This class of investment gives the investor a way to express his style quotient. The joy of owning a luxurious space that can adorn best of the collector’s pieces fuels the passion. Space permits the enthusiasts to not just limit the collection to jewellery, or art pieces but extend it to vintage cars, aircrafts and more. In fact, the estate and collections combined enhance the luxury quotient thereby upping the excitement to invest.
This trend has become pronounced in the last 18 months of Pandemic. Many of the HNIs & Ultra-Wealthy Individuals who had invested in sprawling luxurious real estate, got an opportunity to actually live and enjoy their properties due to limited travel, the ‘work from home’ or ‘host at home’ phenomena. They have started to visualise their residences differently. The line between investments and consumption is blurring in some cases. More and more people are preferring to own residences, which they will not only be proud to own today as ‘trophy properties’ but even pass it on to generations as legacy.
As they say, Passion Investing goes way beyond money and returns. All of us want to enjoy finer things in life, and it’s an added advantage if the enjoyment gives financial returns as well. That’s what Luxury Real Estate does; it increases wealth and makes you a tad bit richer.
The author, Yuvraj S Rajan, is Director at Raiaskaran Group. The views expressed are personal