International Luxury Buyer Trends and Demand - 2021 Report by Charter One Realty

SAINT-BARTHÉLEMY, SAINT BARTHELEMY | €14,900,000

REPORT 2021

INTERNATIONAL LUXURY BUYER TRENDS AND DEMAND A LUXURY PORTFOLIO INTERNATIONAL® REPORT

BRADENTON, FLORIDA, USA | $10,850,000

2 LUXURY PORTFOLIO INTERNATIONAL ®

INTERNATIONAL LUXURY BUYER TRENDS AND DEMAND 2021 REPORT

President’s Welcome

Letter 5 Executive Summary

Methodology 8 The Market for International Luxury Real Estate Buyers 12 Market Participation Rate

Top Destination Markets

Top Reasons for Choosing Destination Market

Next-Home Budget

Finding Their Next Home

Where Do I Want to Live?

The Home

LUXURY BUYER TRENDS AND DEM AND | 3

NEW YORK, NEW YORK, USA | $57,900,000

PRESIDENT’S WELCOME

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President’s Welcome

INTERNATIONAL LUXURY BUYER TRENDS AND DEMAND 2021 REPORT

I am sharing our latest research with you in anticipation of a great year for luxury real estate, and for our collective personal wellbeing. The past year has shown us that real estate is a timeless investment that can endure and even thrive in challenging economic conditions. At the same time, we have learned that our human spirit can adapt to new circumstances and overcome adversity. For our International Buyer Trends and Demand Report — which follows on our State of Luxury Real Estate 2021 report released in January — we have detailed the response from luxury buyers who plan to make an international purchase in the next three years. Taking from the trends we identified in our initial State of Luxury Real Estate report, we find the international buyer is highly mobile, motivated by feelings of self-reliance, and after many months of time at home, is looking to add excitement and fun in his or her daily life. Special thanks to Chandler Mount, principal research for Luxury Portfolio International® and CEO of Affluent Consumer Research Company, for his research and insights into the modern luxury home buyer. We encourage you to read this report from cover to cover and apply its insights in your business as you acquire and market some of the best residential real estate listings worldwide. Mickey ALAM KHAN | President, Luxury Portfolio International®

LUXURY BUYER TRENDS AND DEM AND | 5

Executive Summary

THE MARKET

THE BUYER

Luxury home buyers purchasing abroad number 2.25 million households worldwide.

Freedom of Movement: International buyers want the ability to move about the world with ease. An increasingly digital work-life paired with the desire to have a second passport is generating interest in homes far afield.

Asia Pacific is the largest market of international luxury buyers, and most buyers are looking for a property outside of the region. North America buyers represent the second largest market, and more than half are looking to move out of the Americas/Hawaii area (primarily to Europe). Europe buyers are the most likely to remain in their home region, with less than half moving away. International buying intentions are especially high in Europe even though it is the smallest opportunity market in absolute size. Italy and United Kingdom buyers are the most likely to seek residence in a new country. Hawaii is the world’s number one destination with one-in-five international buyers looking to purchase there in the next 3 years. The most common reasons for moving abroad are related to quality of life, such as education, culture and COVID-19 response, followed by investment potential such as real estate values, a strong economy and low crime.

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Embracing Spontaneity: After a year at home nearly all buyers agree it is time to have more fun and diversion available to them. This means changes in their living situation and resuming activities that were put on hold. Self-Reliance: Desire for more control over their environment and heightened personal security translates into homes that can handle the family (and guests) for a longer period. Smart home and sustainability technology take center stage. The international buyer is juggling many competing priorities, including a young family, a growing career in business, and a certain joie de vivre that spending too much time at home is squeezing. The result is buyers looking for some excitement to bring into their life as they continue to spend more time working, living and playing at home. These buyers are very confident in their financial strength and see upward potential in real estate investments. Personally, they are likely to be on the upswing in terms of career and often balancing a young family. Working and living life daily from home are key challenges their space must overcome.

Executive Summary

THE PROPERTY

REAL ESTATE PARTNERS

Most international luxury buyers are not making a permanent move with this home purchase — just 21% say this is a primary home purchase — which means investment potential is an important consideration. Nearly half (40%) classify the purchase as a secondary or vacation home, with another 27% intending to purchase as an investment/ rental property.

Most international luxury home buyers are planning to work with a traditional company to buy their next property. The traditionalcompany client tends to seek more familiar features associated with luxury homes e.g., gated communities, waterfront properties, branded hotels/resorts, newly developed neighborhoods, and the specialty rooms and amenities of the class.

International luxury home buyers prefer newer builds that offer lots of space to accommodate family and guests, and amenities that promote security, safety, diversions, and a resort-like atmosphere. Extras that make daily living easier, such as concierge or valet services, bring a premium and are in demand for those who seek a city/town or resort setting. The average luxury home buyer is interested in features and amenities that fit with modern life: great Internet, space for each family member, and specialty rooms (gym, media, office) that can be outfitted with smart home and sustainability technology. Ultimately, there are many who feel the home should enable their self-sufficiency, especially in a place where they may not be established with a social network. Local real estate agents can play a valuable role in connecting new owners with local services.

When it comes down to selecting a service-related company, such as a real estate firm, most cite basic needs are important to cover. This includes efficient customer service, high-quality product offerings, a strong reputation and the use of new technologies. As the market diverges based on price, higher-value buyers (USD $5 million and above) place greater emphasis on corporate citizenship (corporate social responsibility, or CSR, activities) and relationships with the brand and its employees.

LUXURY BUYER TRENDS AND DEM AND | 7

ORO-MEDONTE, ONTARIO, CANADA | C$13,000,000

METHODOLOGY

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Methodology

Total Completed Interviews

Global Affluent

Luxury Buyers: USD $1 Million or More

Luxury Buyers Margin of Error

Asia Pacific

1,307

764

±4%

North America

1,201

315

±6%

617

227

±7%

Europe

Grand Total

3,125 1,306

The State of Luxury Real Estate 2021 (SOLRE) study was conducted by Affluent Consumer Research Company, with online interviews in 17 countries from November 25– December 16, 2020. Qualified respondents are among the top 1–5% of their nation’s economy, based on household income; approximately USD $250,000 equivalent in local currency.

±3%

25,000+

3,125

30.49 million

Affluent consumers invited to participate in the research

Completed the interviews

Households represented from the countries interviewed

50%

Minutes in duration on average

Completed on a mobile device

Household estimates are extrapolated from government statistical bureaus and World Bank data for income/consumption share. China and India estimates are based on urban dwellers to adjust for income distribution patterns.

±2%

MARGIN OF ERROR AT THE 95% CONFIDENCE LEVEL

If the study were conducted 100 times we would expect that in 95 cases the results would fall within 2% of the data presented here. Indices presented in this report are combinations of scaled questions. In all cases the scale runs from 0 to 100 with higher scores indicating greater interest/acceptance of the idea. Items at or above 50 indicate moderate to strong acceptance.

LUXURY BUYER TRENDS AND DEM AND | 9

Methodology

Definitions Within This Report

Global Affluent

Luxury Home Buyers

The total sample across all regions

Global affluent consumers seeking to purchase residential real estate valued at USD $1,000,000 or more between the end of 2020 and 2023.

Asia Pacific Affluent from Australia, China, India, Indonesia, Japan, New Zealand, South Korea, Singapore, or Taiwan North America

1,306 respondents in total Domestic Luxury Home Buyers Buyers who are likely to purchase in the same country as their current primary residence.

Affluent from Canada, Mexico, or United States

993 respondents in total

Europe

International Luxury Home Buyers

Affluent from France, Germany, Italy, Spain, or United Kingdom

Buyers who are likely to purchase in a different country than their current primary residence. 313 respondents in total, APAC (150), North America (85), Europe (78) USD $1 Million to $4.9 Million Budget International buyers searching in this price range. 168 respondents in total USD $5 Million or More Budget International buyers searching in this price range. 145 respondents in total

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CHICAGO, ILLINOIS, USA | $6,750,000

LUXURY BUYER TRENDS AND DEM AND | 11

PRINCEVILLE, HAWAII, USA | $22,750,000

THE MARKET FOR INTERNATIONAL LUXURY REAL ESTATE BUYERS

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The Market

Market Participation Rate While 78% of luxury home buyers are interested in domestic home purchases, the remaining 22% of luxury home buyers are in the market for an international property in the next 3 years. Many in this segment are also looking domestically (55% are looking at home and abroad), leaving behind an exclusive group of about 10% who are solely looking to buy in another country. WHERE CONSIDERING THE PURCHASE OF NEXT RESIDENCE | Luxury Home Buyers g INTERNATIONAL ONLY

g INTERNATIONAL AND DOMESTIC

g DOMESTIC ONLY

10% 12%

78%

LUXURY BUYER TRENDS AND DEM AND | 13

The Market

Top Destination Markets Hawaii is the top destination among all international luxury home buyers, with one in five (20%) seeking a residence in the tropical Aloha State. It is the most popular destination by a significant margin with the continental United States (8%), France (6%), China (6%), New Zealand (5%), Mexico (4%), Greece (3%) and Canada (3%) rounding out the top destinations globally. As a contiguous region, Europe is receiving the most interest among international buyers. Nearly one-in-three (29%) are likely to end up there. To put these figures in context, here is an example of estimating market potential. Of the 2.25 million global luxury home buyers over the next 3 years, 8% are considering a home in the continental United States, or 180,000 households interested in owning U.S. luxury property.

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The Market

LIKELY DESTINATION FOR NEXT HOME PURCHASE International Luxury Buyers

Europe and Middle East 29%

Asia

France

China

Greece

(Incl. Hong Kong and Taiwan)

Spain

New Zealand

20%

Germany

Australia

Monaco

Singapore

North and Central America 17%

Portugal

Japan

Continental United States 8%

Ireland

Malaysia

Mexico

United Kingdom

Indonesia (Bali)

Canada

Switzerland

Islands of Tahiti

Virgin Islands (British)

Cyprus

Thailand

Colombia

Italy

Netherlands

Croatia

Malta

United Arab Emirates

Hawaii

Other countries less than 0.5% each (Net)

13%

18%

LUXURY BUYER TRENDS AND DEM AND | 15

The Market

Top Reasons for Choosing Destination Market The primary reason for luxury home buyers to look internationally for their next home is seeking a better quality of life (75%), followed by the investment potential from owning in the new country (69%). More than half (58%) are choosing locations that offer flexibility they may not currently enjoy, such as land ownership or a second passport. REASONS FOR CHOOSING THE DESTINATION FOR NEXT HOME | International Luxury Home Buyers

75%

69%

58%

45%

40%

23%

QUALITY OF LIFE (NET)

INVESTMENT POTENTIAL (NET)

FUTURE FLEXIBILITY (NET)

CONVENIENCE (NET)

WEATHER

FRIENDS/ FAMILY LIVE THERE

QUALITY OF LIFE (Education + COVID-19 response + Healthcare + Culture/History + Food and beverage/Cuisine) INVESTMENT POTENTIAL (Real estate values/investment + Economy is strong + Crime is low)

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FUTURE FLEXIBILITY (Land ownership + Pathway to citizenship or dual passport + Business friendly + Technology and infrastructure)

CONVENIENCE (Travel is easy/easy to get to from home + Favorable taxes) WEATHER FRIENDS/FAMILY LIVE THERE

The Market

Next-Home Budget International luxury home buyers planned spend for their next home is more than USD $4 million, on average, raised significantly by the 28% spending $5 million-plus. For most buyers, however, a purchase in the USD $1 million-to-$3 million range is more likely. Median expected purchase price is USD $2.75 million. PURCHASE BUDGET FOR NEXT HOME | International Luxury Home Buyers

Next Home Budget

AVERAGE:

$4.19

(USD MILLIONS)

MEDIAN:

$2.75

30%

24%

17%

20%

$1M TO $1.9M

$2M TO $2.9M

$3M TO $4.9M

$5M TO $9.9M

8% $10M OR MORE

LUXURY BUYER TRENDS AND DEM AND | 17

BEVERLY HILLS, CALIFORNIA, USA | $27,000,000

FINDING THEIR NEXT HOME

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Finding Their Next Home

Where Do I Want to Live? International luxury home buyers have diverse interests when it comes to home setting. Homes located in a city, by the ocean, in a resort community, or with a lake or river view have the highest interest.

NEXT HOME SETTING | International Luxury Home Buyers

26%

URBAN/CITY

20%

OCEAN

RESORT COMMUNITY

LAKE OR RIVER VIEW

SUBURBAN/TOWN

RURAL ESTATE OR HOMESTEAD

MOUNTAIN OR MOUNTAIN VIEW

SECLUDED WOODLAND

RETIREMENT COMMUNITY

RAINFOREST

DESERT

LUXURY BUYER TRENDS AND DEM AND | 19

Finding Their Next Home

Where Do I Want to Live? (CONTINUED) Interest in proximity to city or town neighborhoods is substantially lower for the international luxury home buyers. Instead, nature (e.g., waterfront) or resort type settings are more attractive. This speaks to interest in secondary home markets and desire for an easy transition into living in a new country. NEXT HOME SETTING | Luxury Home Buyers g INTERNATIONAL LUXURY HOME BUYERS

57%

g DOMESTIC LUXURY HOME BUYERS

City or Town •U rban/City •S uburban/Town

49%

Nature Setting •L ake or river view •S ecluded woodland

34%

33%

•M ountain or mountain view •O cean •R ural estate or homestead

17% 9%

•D esert •R ainforest

Resort or Retirement Community •R esort community

CITY OR TOWN

NATURE SETTING

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RESORT OR RETIREMENT COMMUNITY

•R etirement community

Finding Their Next Home

The Home International luxury home buyers (USD $1 million or more in the next 3 years) come to the market with varying needs. Investment properties are among the most popular reasons for purchasing a home (with 27% buying for that purpose) as well as a vacation residence, which can at times fulfill a similar role. International luxury home buyers are most interested in a single-family (or landed) residence that is relatively new (built within the past 5 years). USE OF NEXT HOME | International Luxury Home Buyers

AGE OF RESIDENCE

40% 22%

27% 21% 12%

SECONDARY/ INVESTMENT/ VACATION RENTAL

PRIMARY

37%

41%

LAND/LOT

g NEW CONSTRUCTION g BUILT IN PAST 1–5 YEARS g MORE THAN 5 YEARS OLD

TYPE OF RESIDENCE

42%

17%

SINGLE-FAMILY TOWNHOUSE HOME

13%

PENTHOUSE

10%

CONDO/ APARTMENT

HOTEL OR RESORT

LUXURY BUYER TRENDS AND DEM AND | 21

Finding Their Next Home

The Home — Feature Rich International luxury home buyers’ next home feature wish list matches contemporary needs for working, living and playing at home. This list is ranked by the perceived value added by the feature, not by the most popular. For today’s luxury buyer, the great internet, quiet spaces, and a media room are examples of “tablestakes” where the popularity is high but the valued added is minimal. Room for live-in help, a game room, dual-key residences, and outdoor living spaces generate much greater value for the second/vacation home or investment property-minded buyer. DESIRED FEATURES IN FUTURE HOMES | International Luxury Home Buyers Desired Features

% Desired

Rooms for Live-In Help

26%

Game Room

42%

Dual-Key Residence

29%

Outdoor Living Area

50%

Chef’s Kitchen

53%

6 Playroom or Family Room

47%

Home Office

50%

Home Gym

53%

10 Home Theatre

66% 51%

11 Quiet Spaces for Each Family Member

56%

12 On-Property Guest House

36%

13 Wine Cellar

43%

9 Great Internet Connection

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Perceived Value

5 5 4 4 3 3 3 3 2 2 2 2 1

Finding Their Next Home

The Home — Amenities for Modern Living At-home recreation plays an important role for luxury buyers so it’s no surprise that the swimming pool is the most value-producing amenity. Sustainability technology and greater self-sufficiency are also associated with greater value, and these top 3 items together reach 88% of buyers. The most popular amenity, a home security system, has become a minimum barrier to entry as 71% want it but its not responsible for greater perceived home value. DESIRED AMENITIES IN FUTURE HOMES | International Luxury Home Buyers Desired Amenity

% Desired

Perceived Value

59%

2 Sustainability Technology

57%

3 Self-Sufficient

50%

Wellness Amenities

51%

5 Smart Home Technology

64%

6 Concierge or Valet Services

31%

Bathtub, Hot Tub, or Spa

60%

Security System

71%

Swimming Pool

(i.e., Better for environment)

(Can stay at home for longer periods of time)

(i.e., Convenience)

PARIS 7TH DISTRICT, FRANCE | €3,750,000

INTERNATIONAL LUXURY BUYER TRENDS AND DEMAND REPORT 2021

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