Real estate has long been considered one of the most stable and rewarding asset classes globally. Within this realm, high-end properties – those situated in premium locations and built to luxury standards – are increasingly attracting long-term investors.
These assets, often associated with prestige and exclusivity, are proving to be more than just lifestyle statements. They offer tangible long-term value, consistent returns and a hedge against volatility.
What works for high-end real estate
Resilience in market cycles
Luxury real estate has shown remarkable resilience through economic cycles. While low and mid-range properties often experience dramatic price swings during downturns, high-end properties tend to hold their value more steadily. This is primarily due to limited supply, the quality of construction, location desirability and increased demand. In times of economic uncertainty, affluent investors gravitate toward tangible, safe-haven assets – making real estate a reliable store of wealth.
Capital appreciation
Premium properties typically appreciate at a higher rate over the long term compared to standard residential assets. Iconic developments in sought-after areas see strong demand, especially in cities like Dubai where ongoing investment in infrastructure, innovation and stability fuels capital growth. Investors who entered the luxury market five to 10 years ago have seen significant gains.
The UAE’s progressive foreign direct investment policies – such as 100 per cent foreign ownership and long-term visas – have created a stable, attractive environment for global investors. Combined with strong governance and continuous investment in infrastructure, these reforms drive demand and long-term value growth in the real estate sector.
Rental yield and income potential
High-end properties can deliver impressive rental yields, especially in markets with strong demand for corporate housing, tourism and short-term rentals. With the rise of digital nomads and remote work, luxury properties that offer lifestyle and convenience are increasingly favoured by tenants willing to pay a premium for quality living experiences. For investors, this translates into stable income streams that offset holding costs.
Portfolio diversification
Luxury real estate is a key diversification tool in any sophisticated investment portfolio. It is a physical asset, largely uncorrelated to stock market fluctuations or currency devaluation. For wealthy individuals, investing in trophy assets or branded residences helps spread risk across different asset classes while providing long-term capital protection.
Legacy value
Beyond financial returns, investing in high-end real estate offers intangible benefits, such as lifestyle, status and legacy. Many investors consider luxury properties not only as investments but also as generational assets. The opportunity to pass down a tangible, appreciating asset with emotional and practical utility adds another layer of long-term value.
Be mindful of risks
Despite these advantages, it’s important to approach high-end real estate investment with a well-informed strategy. Here are a few key considerations:
Liquidity
While stocks and bonds offer liquidity, real estate, particularly high-end properties, is less liquid. Selling can be a lengthy process, especially for specialised or bespoke properties. Therefore, investors should have a long-term outlook and maintain sufficient liquid assets in other parts of their portfolio. However, the UAE is one of the most forward-thinking jurisdictions globally for digital asset-backed property investment.
In short, real estate tokenisation improves liquidity by converting properties into fractional digital tokens that can be traded, allowing investors to buy and sell more easily – even during market downturns. It lowers entry barriers, enhances transparency and enables access to secondary markets, helping investors remain flexible and diversified.
High entry and maintenance costs
Luxury real estate comes with a premium price tag, and that’s just the beginning. Maintenance, service charges, furnishings and property management fees can add up. It’s essential to factor these costs into your yield and appreciation calculations. However, working with experienced developers and property managers can mitigate many of these risks and purchase prices can absorb multiple of these costs.
Over-speculation
The luxury segment can sometimes attract speculative buying, leading to inflated prices and slower absorption rates. It's important to assess whether a development offers genuine long-term demand and intrinsic value or is driven primarily by hype.
In conclusion, investing in high-end real estate is not a short-term play – it’s a strategic decision aimed at wealth preservation, steady growth and lifestyle enhancement. When chosen wisely, luxury properties can outperform many other asset classes, particularly in dynamic, future-focused cities such as Dubai, Abu Dhabi, London or Singapore.
Investors must look beyond surface-level opulence and assess the fundamentals – location, developer reputation, architectural excellence and long-term demand. When these align, luxury real estate becomes premium – not just a status symbol but a cornerstone of generational wealth.
Mohammad Rafiee is chief executive of Richmind
