Whether it’s a new state-of-the-art kitchen, a landscaped front yard or the addition of a top floor and roof deck on a townhouse, some updates can translate to real value on the resale of a luxury property, while others can fall flat.
For Ken Jacobs, principal at Christie’s International Real Estate Australia, the more specific the updates are to the buyer, the more difficult they are to turn over to profit. "You can’t expect everyone else to have your taste," he said, noting that he once saw a $30 million-plus condo near Central Park that the owners had put more than $10 million into renovating—adding gold chandeliers and other top-line finishes, which most buyers found gaudy and overdone.
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"The days of ostentatious finishes are gone," agreed Mark Greenway, the sales manager at Harrods Estates’ Chelsea office in London.
That said, there are some changes that almost invariably increase a home’s value, which typically fall into one of two categories: those that make the home more convenient to live in, and those that aesthetically improve the home, and make it more broadly appealing to the largest swath of buyers.
When it comes to convenience, Tom Wexler, a senior real estate adviser at Leslie J. Garfield, a real estate company focusing on Manhattan townhouses, first looks to the kitchen, where he’s seen buyers attracted to homes with two dishwashers, two sinks and two ovens, perfect for entertaining and cooking and cleaning for a larger crowd.
Experts also say that, if possible, all of the bedrooms should have en-suite bathrooms, and that there should also be some separation between the sleeping quarters for increased privacy.
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In townhouses, installing an elevator can make a real difference to resale price, Mr. Wexler said, especially because the target market is baby boomers, who want to prepare for their futures.
For many buyers, owning a fully connected smart home with controls for a built-in music system, ambient temperature and lighting, and a security system, which can be controlled onsite or remotely, is on their list of must-haves. But before putting this type of update in, sellers should understand their potential buyer pool, and determine whether it’s worth the time and energy required to do it right. "This can be a very expensive exercise," Mr. Jacobs said.
Then there are the aesthetic and the physical changes that can be made to a property, so that it appeals to the largest pool of potential buyers.
Outdoor landscaping to add curb appeal is still among the top ways to increase a property’s value, said Dolly Lenz of Manhattan-based Dolly Lenz Real Estate, noting that "a quality landscape architect could be worth their weight in gold when it comes to getting the most value for your investment dollar." Same with changes to create an open floor plan, which increases the total livable space in the home’s main areas.
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Ensuring that there’s flexibility to the floor plan, and different ways that buyers can use the rooms, is also a way to appeal to a large buyer pool. For instance, Mr. Wexler said that he gives the option of a first- or second-floor dining room in the townhouses that he’s renovated. "Having that flexibility is paramount," he said, because "different people can imagine using that space in the way that will work best for their lives."
In terms of the finishes and the décor, Mr. Greenway has seen the most value when things are kept neutral and tailored, with bespoke and well thought out touches. "This helps people feel like they’re buying into a clean and contemporary lifestyle," he said.
But while aesthetics and convenience are certainly important, Ms. Lenz said that she thinks the most important updates of all involve the major systems of the house, which require the tearing down of walls as well as ceiling drops. One of the very first questions she gets asked from potential buyers, she said, is how old the air conditioning and humidifying systems are. "This type of major renovation is not something these buyers want to undertake themselves, and therefore assign great value if this work has already been done in the home," she said.
With all of this in mind, there are a few additional things to consider when marketing a property to specific buyer pools, experts say. In London, where there are currently a lot of Middle East buyers, a wine room or bar can actually be a turn off, and be seen as a waste of space, said Mr. Greenway. Same with a game room, which may be seen as a big plus for young buyers, but a waste of space to an older demographic.
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Jamie Mi, an international relationship executive, who works with mostly Asian buyers at Kay & Burton, a Melbourne-based real estate agency, said she makes sure to consider feng shui before she lists a property, knowing that much of the current market is made up of Chinese and other Asian buyers, for whom these principles are often important.
She said that her company often pays for a feng shui master to walk through the property before it’s listed to provide advice about how the space’s energy and flow can be improved. This service, which can cost between A$2,000 (US$1,544) to A$20,000 (US$15,400) for a one-hour consultation, is incredibly valuable, Ms. Mi said, and can lead to small changes, like adding a wooden door or wooden window frames on a concrete house to add a more welcoming feel and balance the elements that are represented, or much larger structural or landscaping changes that can take months to complete.
Whatever updates are made, Mr. Jacobs said that property owners should be sure to keep changes consistent with the home’s character, the time period in which it was built and its location. "You have to have a logic and a consistency to these changes," he said, "and really think these things through."
Here’s a look at other news from around the world compiled by Mansion Global:
Beijing’s Measures To Calm Down Its Housing Market Are Already Working
New regulations in Beijing meant to slow down the out-of-control property market seem to have had an immediate effect, according to a statement from the city’s municipal commission of housing and urban-rural development. "The effects of housing policy measures are showing, market expectations are stabilizing and buyer behavior is more rational," the agency wrote on its website, citing the fact that both sales transactions and applications to buy properties have dropped since new measures went into effect on Sept. 30th. (Reuters)
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Zika’s Effect on Miami Beach Real Estate? Negligible
While the Zika virus has had a dampening effect on parts of Florida’s tourism industry, the same doesn’t seem to hold true in the real estate market. According to real estate agents working in Miami Dade County, where Zika cases are still on the rise, some young couples trying to conceive have put purchases on pause, but since a large portion of Miami Beach buyers are baby boomers, there hasn’t been a notable downturn in sales since Zika arrived on U.S. shores. The strength of the dollar has helped keep demand high, as well, and after the election is over, one broker predicts the market will see "a lot of pent-up demand" and "buying regardless of Zika." (The Real Deal Miami)
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Toronto May Hit Airbnb With New Restrictions In an Effort To Regulate the Rental Market
Amid rising prices and plummeting vacancy rates, the City of Toronto is eyeing the short-term rental market as a potential culprit, releasing a report this week showing that Airbnb rentals have recently doubled in the city. The report also suggests potential new regulations, including licensing, updates to current zoning rules, and additional taxes. "Toronto residents have raised questions and concerns about whether short-term rentals are permitted in the city and whether short-term rentals should be subject to further regulation," said the report. "Cities around the world are facing similar issues and are in various stages of researching and regulating short-term rentals." Policy makers are set to consider the report’s proposals next week, with the possibility to implement new regulations as early as next year. (Bloomberg)
One Australian Economist Says Property is Becoming "The Worst Investment"
An increasing number of Australian economists are warning of a slowdown in the nation’s real estate market, with Deloitte Access Economics economist Chris Richardson going so far as to say that property will become the "worst investment" in coming years. The end to the rising market is predicted in part due to a pending flattening of apartment prices, as well as a likely rise in interest rates, and the fact that tens of thousands apartments are set to come online in Australian cities over the next couple of years. However, the drop in prices is expected to look more like a market correction than a significant downturn, according to Nigel Stapledon of the University of New South Wales Business School. (news.com.au)
Gwen Stefani and Gavin Rossdale’s Palatial Beverly Hills Spread Hits the Market
In the wake of their April divorce, Gwen Stefani and ex-husband Gavin Rossdale are marketing their Beverly Hills mansion for $35 million, after buying it from Jennifer Lopez for $13.3 million in 2006. The home is located in a gated community with 24-hour guards, and features a pool, tennis court, gym, theater, outdoor kitchen and living areas, as well as a house manager’s office and guest house. (Luxury Listings NYC)
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Mexican Nationals Flock To Buy Condos in Tijuana’s New Construction Boom
Condo development is quite literally on the rise in Tijuana, with 2,000 condos in towers currently in the works to be completed over the next two years. With prices far lower than in nearby San Diego, a popular destination for workers from Tijuana, the majority of units are being snapped up by a combination of Mexicans who work in San Diego county, current Tijuana residents, and retirees. Just 2% of presales have been bought by Americans, according to real estate agency Probien. The boom is likely to continue, as the recession and drug violence had previously slowed down construction, leading to pent up demand in the market. "Give us five years. The whole city is going to be vertical," said Probien’s business developer Sergio Gonzalez. (Los Angeles Times)