How to buy a luxury holiday home
Most luxury coastal properties struggle to make returns over time but some are great at making their owners serious capital gains.
For many of us, summer means a beach holiday with the family crowded into a coastal rental or caravan park.
A trip to the local shopping strip often finds us enjoying an ice cream and peering into a real estate agent’s window, checking out the market.
Naturally, our eyes are drawn to luxury properties. While the prices may be eye-watering, one question lingers: if we bought that, would we actually make money?
Most luxury coastal properties struggle to make returns over time. But a few are great at making their owners serious capital gains.
To help me identify which ones have the right stuff, I turned to two of my contacts who specialise in coastal property to get their insights.
Perfectionism key to prestige property gold
Just over an hour’s drive south of Melbourne is the exclusive precinct of Portsea. Here, Maseratis, speed boats and tennis courts proliferate; and the home prices are steep.
Owners of Portsea property include rich listers Max Beck and the Deague family, Computershare co-founder Michele O’Halloran, and Rupert Murdoch’s sister, Janet Calvert-Jones.
Liz Jensen, Director at Kay & Burton, knows the Portsea market intimately. I started by asking her what quality makes a home stand out as a potential money-maker.
“It’s a case of position and location,” Ms Jensen said.
“When you fly overhead, it’s amazing to look down and see prime, solid gold positions while others nearby don’t have the same allure.”
Jensen tells me to start with the right location but pay a lot of attention to position - where the property sits in the topography and on the street - which can make a massive difference.
“Prime position delivers scarcity and that’s what makes the money at sale time.
“A great position also delivers views, which is gold medal material, and access to the beach or jetties, which is silver medal.
“Other factors come into play as well: whether it’s north facing, if it’s sheltered from the prevailing wind and whether it delivers good privacy, which is really important.”
No compromise on luxury
Once you’ve found the right position it’s time to consider the home itself.
Generally speaking, it’s a case of new trumps renovation opportunity in this market.
Ms Jensen puts it this way.
“Luxury home means there is no compromise. New doesn’t date for a while and the wealthy are busy people, they want to walk in and see it’s all done.”
“There are exceptions like Westbank (sold for $30 million two years ago), which has unique heritage but was a little dysfunctional as a house and needed remodelling.
“But these are the exceptions as in this market, buyers expectations are high.”
Pay attention to property’s details; all of them
Helen Huntly-Barratt, Director, First National in Byron Bay, has watched the region transform over the last two decades.
Renowned for its beauty and perfect climate, Byron has become a global playground for rich listers and celebrities like Chris Hemsworth, Matt Damon, Simon Baker and Carrie Bickmore.
It was also the destination for a lot of investment dollars during the Covid period, putting a rocket under prices.
Ms Huntly-Barratt puts that boom into perspective.
“For people wanting to make money in the luxury end of the market, it’s more a case of long term than short term.”
Using the $33.65 million sale of a house and estate in the Byron hinterland as an example, she notes to buy well in the top priced segment requires a lot of attention.
“The components that come into play need to be world class. The property, the build, the architecture and design, topped by beautiful views and generous accommodation in a home which is totally and utterly private.”
“It’s similar in the $10-$15 million bracket, so many elements come in to play: the location and position, outlook and the quality of the build, the reputation of that builder, the architect and their reputation, the gardens.
“And it’s the feel; the x-factor that people are really looking for.”
Bathrooms aplenty
Ms Jensen agrees, pointing out that a property that doesn’t fit in with the international resort style is a little suspect in the luxury market.
“Wealthy people make for cluey buyers and what they are after is a home away from home where they can shed their stress.
“If a property feels city-centric and has that intense heavy style, it’s not going to work well,” Ms Jensen says.
“What this market is after is a coastal style; lighter colours, plenty of space and light, with interiors spilling outside onto rich green lawns.
Typically in this market, four bedrooms is considered the minimum, with a bathroom for every bed.
Rich listers and important people tend to be big entertainers, with guests staying for the night or weekends.
“That means multiple entertaining areas, including formal dining areas inside and outside, are a must.
“Guest cabanas hold appeal as well and it has to feel glamourous, open and spacious,” Ms Jensen says.
Back to the future for design
If there’s one attribute a buyer of luxury coastal homes needs (apart from serious money), it’s an ability to see past current conditions.
You need to know the area well or have an adviser who specialises in the region so you appreciate what’s going on around the property.
Start with finding out if there are any planning applications for neighbouring properties, as this could affect your views or privacy.
But you also need to be able to look through current fads and identify the trends likely to be sustained.
Many who charged into country nooks three years ago looked like winners in 2021. They would be feeling more circumspect now as regional prices have not kept pace with metropolitan markets.
I would reserve any coastal property buys to precincts that have demonstrated staying power over a decade at least.
Yes, you can make money buying luxury costal property but you’ll need an eye for detail and some very authoritative advice to make the right decision.
