Crypto has caught the eye of affluent and wealthy investors. Finances of the Luxury Home Buyer, the latest report from Luxury Portfolio International (LPI), has found that cryptocurrency is becoming an increasingly popular commodity for affluent global households, now just three points behind gold in a survey of over 3,000 global respondents.
57 % of luxury home buyers and the overall affluent questioned believe that now is a good time to invest in a safety net — with 41% citing gold and 38% cryptocurrency as their preference. In fact, the probability that the two are considered ‘Buys’ in tandem outstrips gold alone (78% vs. 41% likelihood of a Buy sentiment).
Although the study found that the interest stems mainly from consumers in the United States and the United Kingdom, the interest in crypto will clearly continue, buoyed by last month’s announcement that El Salvador became the first country to make it a legal currency.
Although with no directly stated connection to real estate, it is interesting to note that FTX, a cryptocurrency exchange, recently signed sponsorship deals in two key real estate markets. In Berkeley, California, the home of the University of California Golden Bears will now be FTX Field at California Memorial Stadium, and in Miami, Florida, the home of the Miami Heat will now be FTX Arena.
Other interesting trends from the study included:
- There is a 94% probability that a luxury home buyer is already a luxury home buyer. That means that current luxury homeownership is a more accurate predictor of future home buying than net-worth only. So, if you’re a consumer of luxury homes, chances are you’ll remain a consumer of luxury homes.
- Ultra-high-net-worth individuals ($50 million or more in net worth) have increased in number by 73% since 2015 and are conservatively estimated to have consolidated another $4.5 trillion in assets to the class. The number of ultra-high-net-worth individuals added in just one year is 47,000, based on data from Credit Suisse Global Wealth Report 2021.
- Reselling of luxury goods continues at a torrid pace in 2021 and Luxury Home Buyers are taking part in an unusual way.
- The study revealed that by turning over their excess products, buyers are planning to use the proceeds to outfit their home gym, rec equipment and even art for display. As part of the study, our researchers checked in with the experts at TheRealReal.com, the online luxury reseller platform.
The ultra-high-net-worth individuals have been leaders and innovators in all facets of the financial arena, something which has continued throughout the impact of COVID-19 and will certainly continue as we move through these unusual times.
For example, while Blockchain and smart currency are still in their infancy in the real estate universe, there are some cases of developers and vendors accepting crypto currencies for payment, but this is of course a niche at present. That said, forward-looking tech-savvy economies such as Dubai (in which there is extraordinary wealth) are leading the charge and may indeed help establish standards in the future.
While real estate brokers and developers working with such new technology is a long way from becoming the norm in real estate acquisition, nonetheless the die is cast, even in this arena.
Mickey Alam Khan is president of Luxury Portfolio International®, the luxury marketing and intelligence arm of the Leading Real Estate Companies of the World. He is also founder and editor in chief of Luxury Daily, the world’s leading luxury business publication. In addition to the American Marketer publication and events business, he launched Mobile Marketer and Mobile Commerce Daily, turning both into leading titles in their space before he sold them in 2017. Prior to that, he was editor in chief of eMarketer and DM News. Early in his career, he was a correspondent on Advertising Age from 1993 to 1998.
Luxury Portfolio International is the leading network of the world’s premier luxury real estate brokerages and their top agents, offering unparalleled marketing and intelligence services. It is part of the Leading Real Estate Companies of the World.