A Beginner's Guide to Luxury Property Investment

Given its high-end status, luxury real estate can have a much higher price point than regular properties on the market. Some luxury properties on the UK market will go for up to £1 million or more.

The most expensive property in London, for example, was valued at £58 million in 2022, a townhouse built as part of the Chelsea Barracks development that is only available on their exclusive portal.

This range in values are extremes of either end, with the average price of luxury properties in London averaging at around £2.5 million.

Having such a high price point may be daunting for those beginning their investment portfolios, but it also comes with the benefits of higher capital appreciation and rental income. As well as this, there is likely to be less competition in the housing market due to luxury real estate’s uniqueness.

However, although many luxury properties will be valued at high price points, there is actually a rise in demand for luxury rental apartments in the UK. This has led top UK developers to create modern new luxury developments in key parts of the country, such as Manchester and Liverpool.

Take Central Park, for instance, Liverpool’s latest luxury buy-to-let opportunity. This upcoming development will bring a touch of luxury New York living to Liverpool’s Baltic Triangle area, with stunning design features, amazing onsite facilities for tenants to access, and a distinct focus on resident wellbeing.

But unlike the million-pound luxury properties investors may be expecting, Central Park apartments start from just £164,950, with exclusive payment plans allowing investors to secure a unit with as little as a 15% deposit. Developments like this make investing in luxury property a lot more accessible than some may think.

There are several reasons why luxury property can make for a good investment and several why it might not. Here is a breakdown of the pros and cons of investing in luxury properties:

Pros:

• High rental income due to the exclusivity, high-end furnishings, and prime locations.
• A safe way to invest large amounts of money due to how stable the property market currently is.
• Capital appreciation will increase the value of your property over time, meaning you can sell it for a profit later.

Cons:

• High entry costs due to high property prices depending on the area and property.
• Depending on the area, it could be a struggle to find occupants due to the high rental fees.
• For certain properties, renovation costs will be expensive.

As you can see, there are cases for luxury property being both a good and bad investment, depending on your point of view and the location and property type you choose to invest in. In Liverpool, for instance, high entry costs for luxury property investments wouldn’t usually apply due to lower average house prices. And if your luxury property is off-plan, even better savings can be made.

There are several methods you could consider if luxury property investment is for you. Talking to an experienced property professional can give you advice on what to look for. Luxury properties will have real estate agents specialised in this area of the real estate market.

Depending on your investment goals, there are several options you can consider if luxury property investment is for you:

Renovate An Older Property

This has a cheaper initial price point as properties in need of renovation will go for less on the market. These kinds of luxury properties are often in prime real estate locations but will need a lot of work before they are fit to live in.

Be prepared to spend a lot of money over time to source materials, labour and other expenses that come with the renovation. However, by the end of it, you will have a luxury property with all the benefits of modern amenities combined with the look and style of older housing, a classy touch which residents will approve of.

Invest Abroad

If you are looking for luxury properties that you intend to rent out to tenants or a holiday home to retire in, then searching internationally offers a bounty of luxury properties available to invest in.

From prime locations such as New York and Dubai, where some of the most valuable properties on Earth are located to more exotic locations like the Turks and Caicos Islands in the Atlantic Ocean, there are a variety of luxury properties to suit any need.

Invest in Luxury Buy-to-Let

So long as you are investing to earn rental income and not find somewhere to live, then there are many attractive buy-to-let opportunities in the luxury property market. This option is a good way to get a strong return on your investment, with a hands-off strategy if you choose to hire a property manager.

Investing in luxury buy-to-let properties offers you the benefit of paying over time through a buy-to-let mortgage, as well as a regular cash flow through rental income. Buy-to-let properties are becoming one of the most popular ways to invest money right now due to rental yields rising across the country.

Construct A New Build

This is undoubtedly the most expensive way to invest in luxury property but offers you the chance to build the home you have always dreamed of. This will take the longest and cost the most money, but might be your chosen strategy if you’re prepared to put the time and effort in before seeing returns.

With this strategy, you can either build a home to live in exactly how you want or sell a brand-new property that will surely attract high-net-worth individuals as buyers or tenants. It is a high-risk, high-reward way of investing in luxury property.