According to a recent survey, an estimated 22% of ultra-high-net-worth individuals (UHNWIs) plan to purchase a home in 2024, along with 19% of high-net-worth individuals (HNWIs).
The demand speaks for itself: premium real estate remains a preferred investment category in this segment of the market. Unsurprising as prime property values generally tend to appreciate over the mid to long term. To help increase the return on investment, many premium developers look for ways to make their assets work harder for them. One such approach is undertaking significant alterations that enhance the property, either by renovating existing areas or adding new facilities, spaces, or features.
At Tenn, we’ve always recognised that various complexities underpin the choice of alterations to the prime property, such as the property type, its location and market fluctuations. For that reason, engaging a professional design team or architect, with area specialism is essential before undertaking any major development.
1. Sustainability-Aligned Improvements
With environmental, social and governance (ESG) principles becoming a focal point around the world, it’s no surprise that 65% of UHNWIs and 75% of HNWIs are actively trying to reduce their personal carbon footprints. There are many ways that homes can be altered to create a healthier living space and one that has a lower impact on the environment. Some of these include the installation of energy-efficient appliances, solar panels, insulation materials, water-saving taps and facilities, leak-detection technology, and eco-friendly material alternatives.
2. Upgraded Kitchens and Bathrooms
Generally speaking, kitchen and bathroom renovations are known to yield a good ROI given they are often the most cherished rooms. Introducing modern, high-quality design elements can drastically improve a room’s visual appeal, but more than that, newer materials may be more durable and sustainable. Water-saving features and energy-efficient appliances can enhance attraction among environmentally conscious investors. And a well-thought-out renovation can improve the layout or ergonomics for comfortable use.
3. Landscaping Enhancements
When it comes to landscaping, the idea should be to enhance not only the curb appeal but also the outdoor living space. Manicured lawns and designed gardens create a sense of sophistication, while patios, fire pits or outdoor kitchens allow for al fresco dining. Swimming pools, hot tubs or water features add further visual appeal, and additions like a croquet lawn or putting green bolster value from an entertainment perspective. In a large enough garden, a greenhouse is a unique amenity while a living roof might be an inviting addition to a penthouse.
4. Tech Features
There is increasing demand for homes to be geared towards tech-savvy owners. While technology changes rapidly, there are features that would hold longer-term use. These include smart home infrastructure with expandable capabilities, high-speed internet facilities, smart thermostat and lighting systems that enable energy-saving, security systems with components that can be upgraded and other convenience-focused features like a central vacuum system.
5. Home Office or Meeting Facilities
Many HNWIs require a dedicated home office or meeting facilities where they can run their own business, work remotely, meet with associates or staff, or manage their investment portfolios and financial matters. Converting an existing space or constructing a multi-purpose room with tech capabilities allows for flexibility from one owner to the next, giving them the freedom to use the facilities as an office, boardroom, library or a media room.
6. Entertainment-Focused Features
Whether the property in question serves as a primary residence or a holiday getaway for one family or a space for hosting large groups, a focus on entertainment value undoubtedly adds appeal. There are almost endless options, from adding a home theatre, games room, bowling alley or sports simulator to including a home spa, sauna room, indoor or outdoor swimming pool, pickleball court or, simply, well-thought-out dining facilities.
7. Recreational Spaces
Similarly, there is no shortage of hobbies among HNWIs, so preferences may vary drastically from one person to the next, but creating a space that would likely be appreciated by others is a good approach. In an area where equestrian sport is popular, for example, stables and paddocks would likely be appealing features. On the other hand, constructing well-designed facilities that could easily be altered for different purposes, like an art gallery, wine tasting room, recording studio, music room or a Pilates studio could offer a sound return on investment.
8. Luxury Parking Units
Many UHNWIs and HNWIs own multiple high-value vehicles, so ample secure, off-street parking is a compelling feature. Garage designs that attract this audience could include high ceilings that provide clearance for roof racks, wide bays for large vehicles, additional space for recreational vehicles like golf carts, extra bays for guests or a display unit for car collections. Other noteworthy “extras” may include electric car charging stations or a car-wash area – and, beyond the garage, perhaps even a helipad.
9. Security and Access Control
HNWIs may be more security conscious than the average person since they typically possess collections of high-value items like jewellery, artwork and designer products that would require safekeeping. Some attractive “add-ons”, in addition to alarm and security systems that might typically be installed, include hidden or integrated safes, biometric security systems and even a panic room for emergency situations.
10. Improved Façade
Whether it is to increase visual aesthetics, for the sake of structural integrity, general maintenance or to preserve historical elements, some properties require a general “makeover”. This might include repairs, renovations, or changes to the face of the building or the roof, driveway or to other components of the property like the garden. Not only does a general overhaul gives owners the opportunity to refresh or restore their property, but it may also be a great time to look at introducing improvements like fire prevention systems, accessibility or security features, soundproofing, outdoor lighting, new plumbing or electrical systems or eco-friendly elements that could also add value.
What does the average renovation cost?
The cost of these projects is also largely dependent on the region and the scale of project briefed, the contractors’ fees and the materials used. What can be said, however, is that they would typically require a sizeable investment, often requiring a short-term finance solution.
To provide just one ballpark range, a London prime property construction and refurbishment company says that all-in refurbishment costs for a house or mansion block could cost around £1,500 to £4,000 per m² upwards, depending on the project.
What is the best way to Finance a Prime Property Renovation?
Redevelopment loans are often the natural choice for renovation projects, raised specifically for the funding of property development or renovation projects. The application process for redevelopment loans may, however, take some time and delay the start of the alteration project, which, as you know, your high-net-worth clients can’t always accommodate.
There are frequently instances where quick access to short-term finance is needed, and that’s where bridging finance literally closes the gap. No longer the “traditional bridging” it once was, high-value bridging is now a more versatile financing option for property aside from classic buy-to-let and residential mortgages. Bridging finance can be secured against the property in question and simply put, is used as a means of providing liquidity at speed, without all the “red tape” associated with traditional lending.
Find out more about our High-Value Bridging Finance solution
At Tenn, we specialise in international bridging finance and provide short-term finance facilities for borrowers with unusual or complicated circumstances. If you, or your client would benefit from using bridging finance to make alterations to a prime property anywhere in the world, get in touch – our team would be delighted to find out how we could help.