“Luxury”: A New Way of Marketing Overpriced Apartments

I have previously posted on the massive increase in the supply of apartments in Brisbane that we are seeing. In a market with a glut of apartment stock, developers and sales agents are trying to differentiate their own offerings as best they can, and many are labeling their apartments as “luxury.” While for many this is a sales gimmick, there are several developments that represent a relatively new level of luxury for Brisbane. This post considers what distinguishes a true luxury apartment from the rest. It is co-authored by my friend Dr Parisa Mahyari, who is a Brisbane-based expert on luxury branding and a property market analyst. GT

“Luxury”: A New Way of Marketing Overpriced Apartments

by Dr Parisa Mahyari and Gene Tunny

If you drive around Brisbane’s inner city suburbs, you will notice signs promoting so-called luxury apartment developments. Luxury seems to be an over-used term, and only a handful of the properties labelled as such would meet a true definition of luxury. Luxury is often confused with high price only, and there seems not to be a unified definition of it, especially when it comes to the property market. Newstead/Teneriffe is one of the areas that is known as an upmarket suburb in Brisbane with a high number of units where most buildings are associated with luxury; however, the number of actual luxury apartments are limited. While a suburb with the right up-market lifestyle is a suitable place to build a luxury property in, the suburb by itself does not make a property luxury. This seems to have been the case in some areas, which has led to the overpricing of apartments without offering any luxury features.

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A prime location can be an important factor distinguishing a true luxury apartment.

The way individuals define a luxury apartment seems to be subjective. It can have different meanings to various people, depending on where and how they have been brought up. For instance, if you were raised in a Beverly Hills’ mansion, the first few words that you might associate a luxury building with, can be size, craftsmanship and quality, whereas for someone who grew up in a small suburb in Queensland it might be the location, price, and something that is out of reach. However, the inseparable part of luxury is perfection – impeccable finishes with no fault.

Luxury is ‘timeless’ and is not necessarily complicated or traditional. It can be a simple classy impressive design with a high-end superb contemporary style and great utilisation of space. Luxury is a combination of factors, and there is no single factor defining luxury. Some of the aspects that you need to look for in a luxury apartment are as follows.

EXCLUSIVITY:

A property needs to be rare or scarce to be considered as exclusive. For example, it could be positioned in a unique waterfront location with boatyard and one unit on each level that can hardly be found anywhere else. It could contain very high ceilings and custom designed handcrafted pieces that can only be found in a particular building. For instance, O-14, in Dubai has one-metre wide spaces between the glass windows and the facade that allows the building to cool down in the desert heat.

WOW FACTOR:

The moment that something enjoyably surprises or impresses you, and makes you pay the premium price to secure a property, is when you have experienced a wow factor. It can be the spaciousness of an apartment, the view, the shape of the building or rooms, unique architecture and design, extra features such as a big beautiful butler’s pantry or a high-end wine cellar, and even the innovation and the technologies used in the apartment (e.g. being able to control everything through your phone from the air-conditioning temperature to the lights’ brightness) which makes your life more pleasurable and comfortable. These are features that are increasingly being seen in Brisbane luxury apartments.

PRIME LOCATION:

Location plays a significant role in making a property a luxury one. Prime locations may be in areas long-known as prestige and upmarket, with beautiful natural surroundings, and which have a short proximity to fine dining, luxury shopping, galleries, museums, entertainment, leisure and parks, for example. Or they may be places where you can get panoramic view of the ocean, river or city in an unrivaled location. A prime location, typically with an excellent view, is something a luxury apartment must have.

REPUTATION:

It is important that the developer and the architect of the building have a rich heritage and fine reputation, and are well-recognised in delivering the best projects in the market.  A good example is an eleven-storey luxury building designed by Zaha Hadid in NYC, with the asking price of $50M for penthouses.

QUALITY:

The material that is used in the building from interior to exterior needs to be of top quality (i.e. everlasting). As the kitchen is usually the main part of each property, its design (e.g. luxurious high quality bench top and bench top rangehood) and quality of appliances as well as their functionality matter the most. Miele and Gaggenau appliances are found in most of the luxury apartments.

 AESTHETIC:

A property’s aesthetic features can distinguish a property as luxury. That is, the beauty of the design and features of the property that stimulates your senses and enhances your mood. It can be the lighting of the property (whether it is artificial or natural) that makes you feel welcomed and relaxed or having pleasing colours used in ceilings, floors, wardrobes, kitchen cabinets and appliances.

SIZE AND SPACIOUSNESS:

Luxury apartments have to be more spacious than typical apartments, to provide their owners with the level of comfort they desire. This applies to outdoor areas, too, and balconies have to be generously sized, for example, to entertain friends and to accommodate a large high-end barbeque and even a wine fridge in some instances.

AMENITIES:

In luxury buildings some of the amenities can include outstanding facilities such as  a rooftop garden and “infinity pool”, which gives you the illusion that the pool is ending in the river or ocean, a unique spa with a spectacular view of the city, private barbeque and rooftop sanctuary, a leading edge gym or a cinema with the best audio and visual appliances and design.

EXCEPTIONAL SERVICES:

The types of services that needs to be considered in luxury apartments are: 24/7 onsite management, secured residents lobby and parking, function rooms, on-site spa, and personalised services for owners through the concierge.

SAFETY AND PRIVACY:

Given that luxury apartment buyers will likely be wealthy people (e.g. doctors, lawyers, business people), and some may be in the public eye, they will demand a high level of safety and privacy. Restricted private lobbies for some floors may be attractive to some buyers, for example.

THE MARKET FOR LUXURY APARTMENTS

Ultimately, an apartment is luxury when people have strong desire and dream for it, when it is aspiring. This means they will be willing to pay a premium price for the apartment. Depending on the number of bedrooms, bathrooms, carparks and storage size, price will vary. Though, based on a consideration of properties in the Greater Brisbane area, and assessing them on the basis of the above factors, the starting price for a true luxury property is around $1 million.

The luxury apartment market appears to have several market segments. Arguably, Brisbane does not yet have an ultra-luxury market segment (e.g. Trump Tower in NYC and One Hyde Park in London where apartments sell for tens of millions of dollars). But Brisbane does appear to have a reasonably strong market for apartments in the $1-5M range, which may feature penthouse-style apartments, including half or full floors of exclusive apartment buildings, such as Riparian Plaza in the City, or the yet to be built Banyan Tree apartments at Kangaroo Point, Banc at Toowong, or Walan at Kangaroo Point developments.

Individuals who buy opulent properties are people who not only look for opportunities to show their social status, but also search for a pleasant experience that they cannot get anywhere else. Luxury apartment buyers would include affluent Chinese, baby boomers looking to downsize without compromising their lifestyles, as well as high-income earner young professionals, among other demographic groups. Different types of luxury apartments may appeal to these different groups. For example, younger buyers may be more attracted to luxury apartments with high quality on-site gyms or barbeque areas.

CONCLUSION

Brisbane currently has many apartments that are being marketed as “luxury” apartments, but arguably the number of true luxury apartments is much smaller. To develop true luxury apartments that will attract a premium price and meet an ever growing demand, developers should consider the range of factors we have identified above, particularly the need for a “wow factor”, prime location, exceptional services, and privacy and security among other factors.

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4 Responses to “Luxury”: A New Way of Marketing Overpriced Apartments

  1. Katrina Drake says:

    Who needs luxury ? A spacious workshop is the rarest luxury of all.

  2. No amount of luxury will save the property market from the Bubble it’s in and the inevitable decline. This is another sign the market is Bubbly. “The Age of Excess” just before the Great Depression comes to mind…

    • Gene Tunny says:

      Thanks for the comment, Alistair. Yes, a number of luxury buyers may be irrationally exuberant. But I’ve noticed there appears to be many wealthy Chinese and baby boomers interested in the higher end apartments such as Banyan Tree and Banc. The true luxury properties may hold their value better than others when the bubble bursts.

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