Is 2024 the year to invest in luxury real estate?

In retrospect, the luxury real estate market remained buoyant in 2023. Less dependent on credit rates than the conventional real estate market, the luxury market has continued to grow. To acquire the most exceptional properties in the most desirable destinations, premium real estate clients are prepared to buy less in terms of volume in exchange for more in terms of value.

The knock-on effect is that luxury real estate specialists are seeing fewer sales of the most affordable properties (up to 150 m. sq. and 2 million euros) and more sales at the very top end of the market, sometimes dubbed “ultra-luxury.” What this trend reflects is an ever-increasing focus on finding a unique, extraordinary property, a dream home with inimitable charm, instead of acquiring several less exceptional residences in different destinations.

The real estate market is therefore focused on the most sought-after locations, particularly the sunny beaches of Portugal and Provence (Cannes, Nice, Marseille, Aix-en-Provence), the historic districts of European capital cities, and the most iconic ski resorts in the Southern Alps, such as Méribel in the 3 Valleys.

The Trend Report 2024 by Coldwell Banker Global Luxury, an international luxury real estate network, provides valuable insights into the latest market developments.

Stable prices with slight rises in select regions

This report highlights the structural differences between luxury and traditional real estate, which are likely to deepen throughout 2024:

• The volume of luxury property sales is driven by supply rather than demand. The most sought-after residences are generally desired by buyers for several years before being put up for sale. For example, some luxury chalets in the Alps are seen as “favorites” by their future owners. Potential buyers position themselves with regards to the property by working with trusted professionals (realtors, luxury property hunters, etc.), and ask to be the first to know if the owner is considering selling his or her chalet. Budget is not the main issue. In this extraordinary transaction, what matters most is successfully acquiring a dream property, whatever the cost. As a result, the ups and downs of inflation and mortgage rates have little impact on the sale of exceptional homes.
• The exclusive nature of the luxury real estate market, which offers a limited number of buyers a limited pool of properties for sale, leads to a certain pricing stability. In France in 2023, the average price growth for luxury real estate was 3%. These figures were highest in Provence, where the appeal of villas with sea views is an unwavering trend.
• The price negotiation rate for luxury properties is low. It is 8% for all countries combined, compared with 24% on the traditional real estate market. This shows that the sale price estimates for luxury properties are very precise, and that price is not the main criterion for acquiring an exceptional residence.

The rise of ultra-luxury

“Despite higher interest rates and fewer properties to choose from, they’ve become more demanding and selective than ever.” The Trend Report 2024, Coldwell Banker

Despite rising interest rates and a particularly limited supply of luxury properties, demand is growing and more exclusive than ever. Some specialists refer to a growing demand for ultra-luxury properties, including exceptional villas with private beaches, private mansions, architect-designed residences, and authentic châteaux.

Renewed interest in furnished residences with no work required

Early 2024 has been defined by increased interest in “turnkey” properties. While older homes requiring work have been quite popular in recent years, as renovation projects offer greater comfort and customization, a search for simplicity is the current trend. As a result, properties that have already been configured by interior designers, where buyers can simply arrive and unpack, are the most sought-after 2024 luxury real estate investments. Easy to rent and easy to live in, these properties immediately pay for themselves thanks to seasonal rentals.

The relaxed lifestyle of the Portuguese coast attracts many French people looking for a peaceful, well-located, main residence in which to enjoy their retirement.

Portugal is just two hours by plane from France and offers excellent investment opportunities. Prices for luxury real estate are lower than in France, and the Portuguese tax system offers a number of advantages.

French nationals living in Portugal for more than 183 days per year can benefit from a special status as a Non-Habitual Resident (NHR). This status exempts new owners from wealth tax for 10 years. Only income generated and received in Portugal is taxed, at a rate of 20%.

Portugal also has no inheritance tax. As a result, it is far easier to pass down a beautiful home as an inheritance, without the risk of it being resold to pay for the inheritance tax, as is unfortunately all too often the case in France.

Investing in luxury real estate in Portugal means enjoying the advantages of a buoyant market. In Lisbon and the Algarve, sustained growth in property prices and tourist appetite for seasonal rentals are two excellent indicators of a profitable real estate investment in 2024. In particular, the seaside resort of Ferragudo is a delightful yet little-known destination, featuring a fishing village with cobbled streets.

Who hasn’t dreamed of celebrating Christmas in the snow at the top of the French Alps?

As mid-range resorts are gradually closing, luxury real estate is becoming concentrated at higher altitudes. In the Southern Alps, new and existing developments are particularly dynamic in the major ski resorts of Megève, Méribel, Courchevel, and Val d’Isère.

Aside from the luxurious chalets and spa residences, wood-paneled walls and vintage stone fireplaces, these village resorts have reinvented themselves by expanding their off-ski activities and enabling visitors to experience the mountains in all their forms – whatever the season. This new line-up includes winter sports, gourmet discoveries, hiking through unspoiled wilderness, hang-gliding over the peaks, and more. In these destinations, where everything is possible, owning your own home is as much a dream as it is a wise investment. The value of this extraordinary real estate is constantly increasing, and vacation rentals are a constant, reliable source of income for those renting out their second homes outside their own vacation periods.

In 2023, the longstanding locations of beautiful villas inspired renewed interest in the Côte d’Azur. In Antibes, Cannes, and Nice, the search for an exceptional second home has led to significant price rises on premium properties:

• 14% in Antibes
• 10% in Cannes
• 9% in Nice

This increase is largely due to the French Riviera’s appeal among an international clientele. Once again, rental yields are closely tied to the beauty of each destination. Houses and villas with swimming pools never have an off-season when it comes to vacation rentals. Booked several months in advance via rental platforms, these homes represent a considerable investment opportunity for anyone looking to develop their real estate portfolio and diversify their income streams.

As you can see, luxury remains a solid investment this year. In today’s uncertain economic climate, exclusive real estate such the portfolio offered by Rising Stone provides reliable yields and undeniable appeal for anyone looking to combine pleasure, lifestyle, and profitability.