How is the luxury property market influenced by global economic growth and low interest rates?
Over the past year, we witnessed a 3.6% higher-than-expected global economic growth. All regions - Europe, Asia, North and South America - contributed. Even the Russian economy in 2017 began to emerge from the deep recession due to rising oil prices. Ultimately, the combination of strong economic growth and low interest rates has resulted in a very favorable luxury property market, especially where low oil prices in 2015 and 2016 have led buyers to withdraw. In 2018, we expect US interest rates to rise as a result of high economic growth. Insofar as it does gradually and is expected, it does not necessarily lead to a drop in the desire of luxury property acquisitions.
How are luxury properties perceived by modern buyers - more like a good investment or a prestigious acquisition?
Both. For a modern buyer, a luxury property is a long-term investment that provides security for its money, and at the same time - an asset that is more visible and therefore more prestige than shares and bonds. Higher return on shares globally in 2017 made luxury segment buyers feel richer and therefore more likely to spend money on new acquisitions, including real estate. In this context, more cautious investors now need assets to rebalance their portfolio, driven by high profits on stock markets, and will therefore seek to increase the share of their investment in real estate.
Nowadays born after 1980, the so-called millenas are an increasingly important factor in the different markets. What is their profile as buyers of luxury properties?
In a number of locations around the world, the 20-30-year-old generation of buyers is gradually replacing those born after World War II, who have dominated the luxury property market for decades. New buyers are young, more open to the world and interesred in technology. They are definitely people who work a lot, but at the same time have grown in a much greater wealth than their parents. That is why quality of life is of great importance to them when choosing a home.
In this context, how did the idea of luxury property change over the years?
Luxury properties have always existed, but they were accessible to an extremely small part of the population. Back then, this market was a privilege for the aristocrats and few outside their circle, but the modern economy blurs the boundaries between the different strata and the related concepts. In fact, the twentieth century brought a higher standard of living to much of the world's population, led to the creation of a middle class in the global context, and allowed many people outside the aristocratic profession to gain wealth. This has led to growing demand for luxury properties. Initially, the notion of luxury was associated with old aristocratic mansions, but over the years this has changed considerably. Now luxury is more about the attitude and perception of the world than about a particular type of property.
Let's look at the future. How will the luxury property market look like in 10 years?
It will definitely be younger as the millennium will be a growing population. At the same time, it will be more global, as young people feel more comfortable in the world beyond national borders. It will certainly be more and more digital, considering how block technology transforms markets and property deals. At the moment, this technology is at a very early stage of development and, like the Internet, it will take years to realize its full potential. But this is the future.