Second Homes in Luxurious Locations Prove a 

Popular Investment

 
Purchasing a second home is not just a way of escaping from the city, 

it can also be a safe haven for your money.

 By David Nicholson and Monica Herring

A villa on the French Riviera, a beach house in the Algarve or a rustic home in Tuscany — these are all places intended to make you forget about work and the pressures of city life. With low-cost airlines serving relatively remote locations, many regions of Europe are now more accessible, and weekend trips to holiday homes increasingly popular.

But advances in information technology and communications are also making it possible for increasing numbers of people to work from almost anywhere. With more people now able to conduct business from their holiday homes, investment in the luxury-property market is increasing and raising the standard and cost of second homes abroad.

Areas like the French Riviera and Tuscany have long been popular places for people purchasing luxury homes. The beautiful scenery and warm climate have been magnets over the years. While those areas remain in favor, new hot-spots are emerging.

The prices of some luxury properties in Marbella, Spain, have doubled during the past two years, says Michael Braunholtz, sales director at Prestige Property Group in Dorset, U.K. It has moved from a resort area to a “super luxury market as there are many more luxury homes available now, and has become much more international,” he says.

Jean Claude Caputo, a representative of both Leading Estates of the World and FPD Savills International in Cannes, agrees that Marbella is a growing market. “Many people are looking for up-level places — micro markets for the wealthy where there is a high quality of life — with a great climate,” he says. “You get two to three more months of sun in Marbella than in Tuscany, for example.”

Mr. Braunholtz also cites the Spanish islands of Minorca and Mallorca as growing markets. The islands have benefited from the convenient flights on small, British-based budget carriers, such as Easyjet and Go, he says.

Alfredo Merat president of Villas of the World in Sag Harbor, New York, says the Amalfi Coast in Italy is another popular luxury-property location, with a largely unspoilt coastline, compared to the south of France. “It’s a high net-worth-individual’s paradise, with great weather,” says Richard Willsher, a London-based  writer and frequent visitor to the area.

In addition to the ease of travel and the ability to work from anywhere, new luxury-property markets are being driven by access to golf and boating. Mr. Braunholtz says many people are now seeking second homes with easy access to world-class golf courses. Properties in waterfront areas remain in vogue, especially those that have access to a marina.

Donna Lee Laue, founder and CEO of San Francisco-based World Luxury Estates, also sees a trend toward secure developments. “Long before the tragedy of the World Trade Center, people were forgoing the waterfront estate in favor of the gated and alarmed compound that offered more security and usable space,” she says. “Although waterfront property will always be desirable, they must also be secure,” she adds. “In the 1980s, I saw a major change in the motivation for purchasing residential real estate,” says Ms. Laue. “The move was toward privacy and security.”  Rising population levels and the incidence of crime in affluent areas have meant that secure property comes at a premium.

Mr. Caputo of Leading Estates of the World says the terrorist attacks and the threat of war will accelerate the trend toward more security. “We don’t know what the consequences will be, but these places are safer than cities. People with money may decide that is where they want to be,” he says.

Purchasing a second home is not just a way of escaping from the city, it can also be a safe haven for your money. The current economic slowdown means that many people are pulling out of equity markets. “If you take your money out of the stock market and you only get 3.5% in a bank account, where do you put it? Real estate is among the most secure investments, so I see prices holding up for a while,” says Mr. Merat of Villas of the World.

Ms. Laue agrees: “It’s a cyclical business. When the economy is uncertain, and especially if the stock market is down and the interest rates are low, investors want something they can reach out and touch, and that is well-located real estate.”

Jim Nemetz, of Hammond Residential GMAC Real Estate in Boston, agrees that people are still buying but says that buyers are more price-conscious than they used to be.  "The buyers are still out there and will move quickly on houses that are fairly valued,” he says.  “Anyone who thinks that prices are going to continue to rise the way they have in the past is sticking his head in the sand. But they aren't going to fall by all that much either."

Architect Martin Santiti says, "Nothing has changed in this market since September 11.  People still want to build and, in this range, many can afford to. Besides, it is the best investment they can think of."

Now that the dot-com craze has fizzled, and there are fewer instant millionaires, the pool of clients for the luxury-property market has stabilized.  People who have the means to buy a second home do so and then gradually buy larger and larger properties. “It is an internalized market. People upgrade a bit, making money by doing so,” says Mr. Braunholtz of Prestige Properties.

For those looking to purchase a second home in another country, the distance may cause difficulties in finding a property. But estate agents have stepped in to help solve that problem. Most estate agents now use the Internet, creating Web sites that allow customers to search a database of properties available world-wide and, in many cases, to view photographs of the homes.

“We have the largest database of luxury properties in excess of $1 million around the world for our buyers to choose from, and we have global partnerships with the top agents to give the buyers the critical local knowledge needed to finalize the purchase,” says Ms. Laue.

Mr. Caputo is an example of the global partnerships between estate agents.  He works as the southern France representative of both Leading Estates of the World, based in Los Angeles, California, and FPD Savills International, which has offices throughout Europe, Asia and Africa.

Robert H. Kelsey, chairman and CEO of Leading Estates of the World, also uses a broker network and believes his company’s web site is a great resource for those looking for property around the world.  “[With] our dynamic Web site with over $3 billion in luxury real estate—the most exclusive and expensive collection to be found on the World Wide Web—we have become the consummate source for luxury properties,” he says.  “[You can] visit exclusive villas, castles, chalets, private islands, penthouses, country houses, ski retreats, waterfront estates, thoroughbred farms, ranches, celebrity homes, and historic properties all over the world.