Can the Price of Luxury Real Estate Increase with Time?
Luxury real estate can be some of the most interesting properties around with its creative designs. But how does it work when it comes to appreciation?
In many cases, a house will lose its value over time if it is not maintained. Anyway, usually we can consider that a luxury home has a good maintenance plan. This plan can include things like its exterior materials from a driveway to its exterior home, interior materials and appliances, roofing, etc…
In addition, there has to be a constant demand for luxury homes in the area. Also, a stable and quiet cultural / political environment is important in order to consider the property’s potential appreciation.
How to Evaluate the Potential?
With the assets being maintained to a standard level, we can wonder around price of goods sold over time from the financial standpoint. If the cost of materials and labor to build houses keeps rising over time in the area of the property, then we can assume that the value of the house will see its price rising up as well. This is valid of course when it is kept and maintained to a good standard, as mentioned above.
In addition, luxury materials and design may have different valuation benefits over time. Consider that many luxury homes could have been designed by famous and skilled architects and well known builders, and the materials used could also be unique. These facts may largely increase the value of the property. Over time, a similar combination of design, materials, architecture can lead to a consistent appreciation of a house.
Moreover, even though we are speaking about the home itself, we have to consider the land as well. Many luxury homes today are build in unity of its land or landscapes. The idea of “Organic architecture” supports this idea, in fact. Many luxury properties have been built to create a continuous flow within its natural environments, the house becomes part of the landscape, and cannot be considered as separate parts. This is for example the case of Italian Mansions in Tuscany, or of Castles on the Loire, in France.
After all, luxury properties have many elements that can for sure lead to a consistent home appreciation over time. Investing in luxury real estate can be a great option to drastically increase your capital in the long term.