Can the sale of a Picasso affect the price of your penthouse? Retail experts have recently suggested that the rate of procurement of luxury assets can be used to estimate upcoming high-end property sales. With real estate growth driven by global trends such as how and where wealth is distributed, it’s perhaps not surprising that expensive purchases in the art world may now pre-empt those in the luxury housing market.
Recent research suggests that the luxury real estate and fine art markets are intrinsically linked, with prices rising and falling in tandem. Over the course of the past 12 months, both have been performing exceptionally well, with each experiencing a significant growth rate. However, during the same period general housing sales increased by a considerably smaller percentage, indicating that this trend only affects the top end of the market. The figures strongly suggest that where the art world goes, the ever-exclusive high-end real estate market is sure to follow.
The secret behind the link
A wealth of common factors uniting the dealers, buyers and products in both markets goes some way toward explaining this phenomenon. Many luxury homes are designed to rival works of art, envisioned by leading architects and decorated by experts in the interiors industry. It therefore corresponds that an art dealer or buyer with a keen eye for a masterpiece might find similar joy in these exquisite pieces of architecture. Many investors in luxury properties will also place particular importance on a home’s suitability as a backdrop for their favourite pieces, building an entire design aesthetic around one notable artwork or a gallery wall.
Increasing demand for both markets
The increase in demand for fine artworks could also be related to the growing trend towards investing in accomplishments and experiences, rather than more modern signifiers of wealth. It’s been reported that High Net Worth Individuals (HNWIs) are increasingly choosing to spend their wealth on unique experiences, which may include attending an art auction, or an exclusive travel opportunity. Owning a Rembrandt or a stately, historic home therefore becomes a form of long-term wish fulfilment, as opposed to a simple monetary transaction, with the end purchase perceived as having a value that goes far beyond the price tag.
This year, there has been positive news for both markets. Luxury real estate is thriving, particularly in established global cities like London, San Francisco, Miami and New York. However, this trend has also extended to South Africa and Indonesia, where The Wall Street Journal reported property prices in Jakarta escalating by almost 40% last year.
If you’re planning on investing in luxury real estate or considering the sale of a high-end property, speak to Engel & Völkers. Our agents have experience in buying and selling high-end properties in over 38 countries, with extensive local and international knowledge that can help you find spectacular homes in some of the world’s most sought-after locations.