Real Estate Revolution: How Is the Premium Market Changing?

In the premium segment, unlike the popular segment, demand far exceeds supply, often despite fluctuations in the economy. Let’s take a look at what today’s premium is and what aspects make up its definition.

Premium real estate used to mean a spacious apartment, high-quality architectural design, excellent location and available concierge service. Today, this is definitely not enough to be in the luxury real estate segment. The revolution in this market is led by both developers, who set new trends, and clients, whose appetite for a unique investment product is constantly growing.

Today, luxury real estate can include both large spacious interiors and small apartments, even below 30 m2, because their premium status is determined by factors other than square footage. So what is today’s premium? How do investors invest their savings to have a unique product on the one hand, and be sure of a high profit on the other?

– In my experience, luxury means scarcity. In the context of real estate, skilled investors are perfectly capable of finding a unique product that meets their highest expectations, and sometimes even exceeds them. Certainly, what influences their purchasing decisions is access to common areas on a five-star hotel scale. The fact that a customer can take the elevator straight from their apartment to a private spa area with a 25-meter pool, use a sauna complex or coworking makes them feel like they have the highest standard of living in a unique place, available only to a narrow group. This in turn translates into a sense of comfort and certainty of the best invested capital, regardless of global crises and economic conditions. – he estimates Inez OttoSales and Marketing Director at Angel Poland Group, premium real estate market expert.

Guaranteed time savings

Until recently, when investing in premium real estate, apartment owners were looking for architects and even contractors on their own, whose task was to create a unique interior. They decided on such a solution, despite the fact that it involves a lot of time, which each of us lacks today. Why? Because they expected equally high quality in the finishing and arrangement of their space, and developers often offered ready-made solutions. However, the times when premium real estate owners received an apartment in a developer’s condition are already a thing of the past.

Thanks to the cooperation of developers specializing in the premium segment with top-class architects, clients are increasingly opting for a comprehensive turnkey finishing service. They receive a guarantee not only of time savings, but also of a functional design, the use of premium materials, often imported from Italy or Spain, and a stunning design complemented by unique works of art.

– Nowadays, not only the material is an element associated with luxury, but alsoand also the unique, original way of using it and the efficient organization of the interior finishing so that the investor has to think about the whole process as little as possible. His role is to convey his expectations to a company that will comprehensively implement the project and allow him to save time. When fulfilling customer orders, we not only finish apartments or residences on a turnkey basis, but also select movable furniture, create built-ins in our carpentry shop, and equip apartments with additional elements – from curtains and other textile elements to cutlery or plates. – he explains Jacob BartosManaging Director of Decoroom.

Outside the market, or off-market shopping

According to the latest ThinkCo report, experienced investors, active on the premium market for years, are purchasing further investment products as part of off-market transactions, and therefore excluded from the generally available offer. An individual approach to the client, who becomes our business partner, strengthens the mutual bond and trust. He has the feeling of buying a one-of-a-kind, most exclusive product available on the market.

– Wealthy buyers of luxury properties are resistant to price and market fluctuations related to potential crises. They are investors with a stable financial position, who direct their surpluses to the real estate market in order to protect capital, invest, but also acquire unique gems in specific addresses. They often use cash in whole or in large part, counting primarily on a significant increase in the value of unique apartments or residences purchased for their portfolio in the long term. The income that these properties generate from renting in the so-called meantime is also important to them. – he adds Radoslaw Wojak from WOJAK Properties.

Comprehensive investor care

When buying real estate for investment purposes, clients expect profit. And profit is generated by rent or sale on the secondary market. Here, once again, it is perfectly visible how important mutual relations are in the premium segment. The developer managing the completed projects ensures constant investment service, thus ensuring its further maintenance and increase in value.

– Being with the client at every stage, we have an extremely important task: we take care of their investment portfolio. We build long-term relationships, manage the lease or deal with sales, which is why we provide them with comprehensive service. What ultimately convinces clients to invest a large amount of capital in a premium property is the increase in the value of the investment. As an example, it is worth mentioning one of the apartments in Krakow’s Angel Stradom, the sale of which broke a record on the secondary market, and its owner gained over PLN 3 million on the transaction. He bought it for PLN 30,000 per square meter, and after a year and a half he sold it for PLN 48,000. – sums up Inez Otto.

New definition

Returning to the question of what is premium today, we should take into account the location and unique interiors, but with access to the highest class of amenities and services. Often, it is service referring to that known from the best hotels.

The developer’s role is also different, because after the premises are sold, they remain in relations with the buyer, watching over the maintenance and even increasing the value of the property. The developer undertakes to manage the property and sometimes modernizes some elements in order to maintain their standard at the highest level. We know of cases where the same developer who sold the premises to the client helps him find a new buyer later.

The evolution of premium, which involves increasing the role of services relative to the value of the property itself, can be a valuable lesson for other segments. Investing in additional services and long-term customer service can attract more demanding buyers outside the luxury segment, increasing the overall value of the products offered.

Also listen to the podcast about the premium standard in construction. Scan the QR code and listen: https://bit.ly/PodcastPremium

Author: Krzysztof Kuniewicz