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For the global elite, vacation properties are rarely investment opportunities. For the world’s wealthiest people, entirely different aspects are decisive – aspects that also hold lessons for ordinary buyers.
For most people, buying a property is probably the biggest financial decision of their lives; for the ultra-wealthy, it’s often just the most expensive souvenir in the world.
The price per square meter is then just as irrelevant as the distance to the nearest supermarket. Rather, it’s about ultimate luxury, absolute privacy, and the manifestation of one’s status in concrete and natural stone.
But anyone who believes that the elite’s palaces are merely a display of emotional extravagance underestimates the cold logic of big money. Behind the acquisition of a luxurious vacation property lies a calculated bet on the principle of absolute uncopyability – and the super-rich have developed their own strategy for this. One from which even investors without vast fortunes can learn something.
The key to this logic lies in Knight Frank’s “Wealth Report,” an annual study. The report’s central finding is strikingly simple: it’s not buildings that are scarce, but locations. A luxury vacation home can be built. A penthouse can be copied. Even entire residential areas can spring up. What cannot be multiplied, however, are prime locations overlooking Portofino Bay , unobstructed views of the Rocky Mountains, or vacant plots on a stretch of beach that the global elite have claimed for themselves.
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While many economies grapple with inflation, recession fears, and geopolitical crises, the global wealth elite continues to grow unabated. Between 2021 and 2026, the number of people worldwide with a net worth exceeding $30 million rose from approximately 551,000 to more than 713,000, according to Knight Frank. The analysts summarize this historic surge in wealth with a single figure: Every day, 89 people worldwide cross the $30 million wealth threshold.
This means that demand for the world’s most desirable addresses is growing significantly faster than supply. The report describes the result as a chronic shortage of prime, immediately available housing. After all, those who spend 20, 50, or 100 million dollars on a vacation home aren’t looking for a construction site. They’re looking for perfection. The house should be move-in ready, the view unobstructed, and the neighborhood as unassailable as possible.
This fundamentally changes the function of such holiday residences. They are no longer “just” vacation homes. They form the infrastructure of a mobile lifestyle. The global elite no longer lives in one place, but moves between several centers of life: winter in Aspen, spring in London, summer on the French Riviera, autumn in New York.
With this shift, the traditional meaning of luxury is also changing. For decades, wealthy people demonstrated their status through possessions: fast cars, large yachts, expensive jewelry. Today, something else is gaining value. Luxury increasingly means being able to escape public scrutiny. Andrew Hay, a former Knight Frank executive, sums up this motivation succinctly: “Privacy is the greatest luxury for these families.”
Buyers want control
This is an experience that Sabine Lenzer encounters time and again. She heads international real estate sales at Riedel Immobilien, a brokerage firm for the wealthy. “Privacy is very concrete for our clients,” says the expert. It’s not about the super-rich not having any neighbors. “At its core, it’s about control: Who has access? Who sees what? When am I visible?” she explains. This manifests itself on several levels. What’s in demand isn’t completely isolated fortresses, but rather discreet neighborhoods where like-minded individuals can keep to themselves. Equally important are secluded driveways that create distance.
Architecture often follows this logic, says Lenzer. Buildings are oriented in such a way that they open up to the landscape and protect against prying eyes. According to the expert, greenery, differences in elevation, and generous distances often fulfill the same function as fences or walls – only more elegantly.
In addition, there is a service that, while omnipresent, should above all be invisible. Staff, security, and logistics must function without being noticeable. The same applies to the technology: cameras, access controls, and even secure rooms are now standard, but are integrated into the architecture as seamlessly as possible.
For buyers, it’s about far more than security. “Privacy doesn’t mean withdrawal, but rather sovereignty – deciding for oneself when one is visible and when not,” explains the real estate agent. In her experience, however, many other parameters play a role for the super-rich when deciding for or against a vacation property: political stability in their chosen country, taxes, and regulation.
“These factors are often more decisive than the property itself,” says Lenzer. A buyer doesn’t invest in isolation, but always in a complete system. Therefore, trust is so important – trust in stable local politics, clear property rights, and predictable regulations. “In this context, reliability and continuity are more important than the lowest tax rate.”
Currently, a clear divide is discernible in this regard. There are “pull markets” that attract capital through political stability or tax incentives. These are countries like Switzerland, Monaco, Italy, Portugal, and Greece. “Other markets lose their appeal when taxes rise or regulations become unpredictable. It’s not just about the location, but about being able to trust a system in the long term,” emphasizes Sabine Lenzer.
This proverbial cherry-picking is only possible, however, because the super-rich don’t aim to achieve the highest possible return on their vacation properties – unlike traditional investors. “It’s not about ongoing income, but about capital preservation and stability. The property isn’t an investment, but a stable component of their overall assets,” explains the real estate agent.
Beware of cognitive biases
According to Christian Langosch, using a holiday property as an investment is a common misconception. Langosch, co-head of real estate at the family office “HQ Trust,” explains: “In most cases, the rental income – that is, during the periods when the owner is not present – doesn’t even cover the running costs.” Only rarely are the costs fully covered, and this is even true for properties that the owner never uses themselves. “The return on investment from rental income is therefore usually negative.”
Even a value-enhancing strategy only helps to a limited extent. While market developments can contribute to the overall return, “holiday properties are rarely acquired with a defined holding period and a planned exit. Many properties remain in family ownership for generations,” explains Christian Langosch.
Moreover, the relevant markets are difficult for international buyers to assess: “They are often dominated by local players who have informational advantages and networks that are almost impossible to replicate from the outside,” says the expert from HQ Trust. A classic return-on-investment approach therefore makes only limited sense for holiday properties.
Seek advice
In any case, holiday homes are not a sensible part of strategic asset planning or portfolio construction. Christian Langosch explains this with a structural problem: “The purchase volumes for attractive properties are typically so high that this would quickly create a significant concentration risk in the overall portfolio.”
This concentration risk doesn’t just affect the super-rich, but even more so investors without millions in assets. According to Sabine Lenzer, several principles can generally be applied to the “normal” market. This includes, firstly, the location, which should be considered within the overall context. “It’s not just the beautiful street that counts, but also accessibility, good infrastructure, and future prospects. A property is only as good as its surroundings – today and in ten years,” says the expert.
Question of location
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Secondly, it is helpful to thoroughly understand the purchasing process and to seek professional guidance. “For international purchases, it is crucial to gather comprehensive information beforehand about procedures, legal frameworks, and ancillary costs.” Good advice is invaluable in this regard.
Ultimately, every buyer – regardless of their capital – must be honest with themselves. “The question should always be: Does this property truly work in everyday life? Does it fit my lifestyle, not just today, but also in the medium term?” Sabine Lenzer lists important questions. According to the expert, a good decision combines rational criteria with a clear understanding of one’s own life situation. “These points make the difference between a good decision in the short term and the right one in the long term.”