Investment properties have always been a popular choice for investors looking to grow their wealth. With property prices constantly rising in many parts of the world, real estate investment provides an opportunity for solid capital appreciation over time. Among the different types of investment properties, lifestyle properties are gaining popularity among investors recently. Lifestyle properties refer to residential properties built with luxury amenities and located in desirable recreational destinations. Investing in these types of properties can provide investors with passive income as well as potential for value growth. Here we will explore the advantages of choosing lifestyle properties as an investment option.
High rental yields from luxury amenities
Lifestyle properties are able to generate higher rental incomes for investors compared to normal residential properties. These types of properties cater to affluent tenants who desire luxury living experiences during their vacations. For instance, a beachfront villa or ski lodge with high-end furnishings and facilities can easily command premium rental rates. With travel restrictions easing globally post-pandemic, demand for short-term rental of luxury lifestyle properties is poised to surge. Investors can expect strong occupancy and rental yields from owning such assets.
Increasing capital values in recreational areas
Lifestyle properties in popular holiday destinations often see higher rates of capital appreciation over time. As more people seek unique travel experiences, places with natural attractions or extensive recreational facilities tend to become more desirable. Limited land supply coupled with rising demand drives up property valuations in these areas. For example, properties located near ski fields or wine regions have seen tremendous growth in capital values. Investors acquiring lifestyle properties in up-and-coming destinations early can benefit from such value increases.
Lower volatility compared to traditional hospitality
Hospitality properties like hotels and resorts are also popular investment choices but tend to be more vulnerable to market volatilities. In a downturn, leisure travel is often the first spending cut by consumers. However, lifestyle properties offering self-contained accommodation with full amenities can still attract tenants even during volatile markets. Short-term tenants are more flexible in their stays compared to hotels. This adaptability ensures relatively stable occupancy rates throughout market cycles, giving lifestyle properties lower risk profiles.
Higher yields than traditional residential
While ordinary residential properties can generate rental income, yields are typically lower than those achieved by luxury lifestyle properties. Tenants are willing to pay a premium for amenities, locations and the overall living experience provided by lifestyle properties. Handsome returns can be earned from properties located near natural attractions like lakes, forests and beaches. With appealing characteristics like larger floor areas and top-tier interiors, lifestyle properties give investors higher yields for their investment.
Lifestyle properties are a promising real estate investment option for leveraging value growth opportunities in popular recreational markets while earning attractive rental incomes. Investors should consider factors like location, projected infrastructure growth and types of amenities when selecting suitable lifestyle properties to purchase.