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KILAUEA, HAWAII, USA | $9,000,000

SOLRE 2022

STATE OF LUXURY REAL ESTATE HOMEOWNERS TO THE RESCUE: LUXURY SELLERS RACE TO MEET DEMAND

Table of Contents Executive Summary

Methodology

Survey Details + Definitions + Regions Surveyed

Consumer Mindset in Luxury Buying

Luxury Buyers: Frame of Mind

#1 Confident in Their Personal Economy

#2 Discretionary Spending Power Could be Tested

#3 Luxury Buyers Experiencing FOMO Over a Frothy Luxury Real Estate Market

#4 COVID-19 Disruptions: Adjusting to a New Way of Life

#5 Anxiety Over Unquantified Risks

#6 Sustainability: Mitigates Risk from Climate Change

#7 Speaking of Anxiety and Disruptions: Working From Home Adds to the Stress

The Market for Luxury Real Estate 2022

Luxury Homeowners Come Around to Selling

Luxury Buyers: From a Frenzy to a Roar, Buyers and Sellers Come Closer Together

Buyer Trends in 2022

Welcome in a New Class of Entry-Level Luxury Buyers

A Behavioral Shift Impacting Traditional Brokerages: Video Conferencing

Cities are Set to Rebound

Where in the World: Top Cities for Luxury Home Buyers

Single-Family Homes Surge in Popularity

Investors Dive into Single-Family Homes

Sustainability: Critically Important and Worth Paying to Get

Conscientious Purchasing Achieves Two Primary Goals: Moral Right and Financial Savings

Sustainable Home Design Elements Favor Technology, Materials

LUXURY SELLERS R AC E TO MEET DEM AND | 2

Executive Summary

What happened in 2021? Demand surprised. Prices soared. Time-on-market shrunk. Inventory evaporated. Up next in 2022? Owners are incented to sell. The mass of buyers has gotten smaller, but still outnumbers the available market. Psychologically the game is still on. The market for luxury real estate remains strong after a record year of sales in many locations. Supply, demand, and price are all showing signs of normalizing suggesting the year ahead will be an active one. For luxury sellers, the strongest motivators are economic. They expect their home to be at-or-near peak value, and that economic conditions are stable enough to move forward with a deal and yet unpredictable enough to make it worth their while to cash out. From the luxury buyer POV, the market is even more competitive than last year, with backlogged, delayed and frustrated buyers chomping at the bit to buy their next property. The buyer who is planning to spend the most also fears they missed their opportunity to take part in this market. This fear of missing out (FOMO) will

bring psychological pricing into the mix, beyond what normal market conditions may demand. Buyer demands have not changed on the basics: location, quality, and well-run, family friendly places to live. Remote work and the accompanying frustration and stress of being in the home a lot continues to play a significant role in the purchase decision process. COVID-19 remains a significant concern and is a motivating factor for buyers looking to purchase in the next 12 to 15 months, but the market has already accounted for its effects. It no longer appears to be a significant driver of behavior, even if it is the underlying reason for the change. People are managing their daily lives to remain productive and happy; they are not, in general, making hasty decisions like they may have a year ago. Buyers therefore are looking at sustainability as a differentiator in luxury homes. Most consider it a criterion in a next luxury home purchase, and many expect to pay a premium to have the features and amenities that prepare them for the future. The battle between traditional luxury real estate brokerages and online upstarts is intensifying. As consumers learned to go online for everything last year, a growing number see the value in buying a home this way. Fueling that trend is the increased comfort with buying a home sight-unseen, and this is especially true for international buyers and long-distance purchases like a vacation home. Brokers and agents ahead of the curve with experiential technology will develop more resilient relationships for years to come.

LUXURY SELLERS R AC E TO MEET DEM AND | 3

NORTHFIELD, ILLINOIS, USA | $3,650,000

LUXURY SELLERS R AC E TO MEET DEM AND | 4

Methodology

Survey Details Affluent Consumer Research Company sourced survey participants from affluent neighborhoods in cities and towns in 20 countries around the world. In total, 4,673 interviews of global affluent consumers yielded a sample of 1,155 luxury home buyers in the next 3 years. Affluent Population Estimate:

31.9 million households

±2% margin of error

at the 95% confidence level

If the study were conducted 100 times we would expect that in 95 cases the results would fall within 2% of the data presented here. Indices presented in this report are combinations of scaled questions. In all cases the scale runs from 0 to 100 with higher scores indicating greater interest/acceptance of the idea. Items at or above 50 indicate moderate to strong acceptance.

Total Completed Interviews

Global Affluent

Luxury Buyers USD $1 Million or More

Asia Pacific

1,482

425

North America

2,093

393

Europe/Middle East

1,098

337

Grand Total

4,673

1,155

Definitions Within This Report

Regions Surveyed

Global Affluent—The total sample across all regions. Highest income earners per country; approximately the top 5 percent by income.

North America Canada, Mexico United States

Luxury Buyers—Affluent consumers in the market to purchase residential real estate worth approximately USD $1 million or more in the next 3 years. Luxury Sellers—Affluent consumers who own a primary home worth approximately USD $1 million or more, and in the market to sell in the next 3 years.

Europe France, Germany Italy, Spain United Kingdom *New in SOLRE 2022.

Middle East* Pacific Saudi Arabia, United Singapore, Indonesia, Arab Emirates Australia, New Zealand Asia China, Taiwan and Hong Kong* South Korea, Japan, India

LUXURY SELLERS R AC E TO MEET DEM AND | 5

DUBLIN, IRELAND | EUR €14,000,000

CONSUMER MINDSET IN LUXURY BUYING STARTING WITH THE WHY BEHIND THE WHAT

LUXURY SELLERS R AC E TO MEET DEM AND | 6

Consumer Mindset in Luxury Buying

Luxury Buyers: Frame of Mind The SOLRE 2022 research has identified six primary motivators for seeking a new residence. These reasons often do overlap in the real world, but we have analyzed response patterns and created separate groups that are “primarily motivated” by the following reasons. Reasons in the Market for a New Residence | LUXURY HOME BUYERS

Better Place To Live UPGRADE NEIGHBORHOOD UPGRADE LIVING SPACE

Investment Property RENTAL INCOME CAPITAL GAINS

Better Location BETTER WEATHER BETTER VIEW OR SETTING

Settling Down & Nesting MORE PRIVACY STARTING A FAMILY

Better Run City/Town LOWER TAXES BUSINESS ENVIRONMENT CRIME

Next Chapter in Life MOVING FOR CAREER CLOSER TO FAMILY CHILDS EDUCATION

PERCENT FOR WHOM EACH FACTOR IS A PRIMARY DRIVER IN THEIR LUXURY RESIDENCE PURCHASE

19%

35%

13%

10%

$917

$972

$1,833

60%

67%

MEDIAN PRICE PER SQUARE FOOT (IN USD)

$583

$750

$833

TOP QUARTILE PRICE PER SQUARE FOOT (IN USD)

$917

$1,167

$1,500

PERCENT CHANGE IN HOME VALUE FROM CURRENT TO NEXT PRIMARY HOME1

68%

47%

58%

Estimated by comparing the value of their current primary home to the budget for their next primary home. Does not include second/vacation or investment property buyers. A 50% increase in home value would be like trading up from a USD $1 million home to a USD $1.5 million home.

LUXURY SELLERS R AC E TO MEET DEM AND | 7

Consumer Mindset in Luxury Buying

#1 Confident in Their Personal Economy As remarked for many years, luxury buyers enjoy a heightened level of personal financial confidence, compared to the average affluent consumer (74 percent on average compared to 69 percent for all other affluent consumers). Highly educated, savvy in finances and management, this consumer is often very well prepared for what comes their way. With luxury buyers, their confidence contributes to their mindset: buyers moving into the next chapter in life or seeking a better-run city are feeling more confident than people buying for other reasons.

uxury buyers are L coming to [our market] because of business freedoms, low or no taxes, and appreciating prices. New residents are key in our market. — Luxury Portfolio Member

Average Level of Confidence in Household Financial Strength (0–100 Very Confident) | LUXURY BUYERS

74% 73% 74% 75% 77% 78% Better Place To Live

Investment Property

Better Location

Settling Down & Nesting

Better Run City/Town

Next Chapter in Life

LUXURY SELLERS R AC E TO MEET DEM AND | 8

Consumer Mindset in Luxury Buying

#2 Discretionary Spending Power Could be Tested Affluent consumers at all stages and mindsets are aware that their ability to spend money could be tested, and soon. This test comes in the combination of increased taxes, slower economic growth (affecting income and capital gains), and currency devaluation (as higher interest rates and lower purchasing power of money). Percent Select: Significant Concern in the Coming Year | IN THE MARKET TO BUY NEXT 3 YEARS g LUXURY BUYERS

g NON-LUXURY BUYERS

Buyer Insight: The primary issue facing governments, consumers, and the luxury real estate market — is the continued ability for private individuals to spend their wealth on the things they want. Luxury buyers of all mindsets share in this concern, especially those buying investment properties. CONCERNS BY LUXURY PURCHASE MINDSET g INVESTMENT PROPERTY g PERSONAL USE

75% 77%

34% 39%

25% 33%

25% 36%

25% 27%

26% 28%

30% 22%

31% 24%

ABILITY TO SPEND (NET)

TAX INCREASE

RECESSION

PURCHASE POWER IN DECLINE

STOCK MARKET GROWTH SLOWS

INTEREST RATES

STOCK MARKET GROWTH SLOWS

INTEREST RATES RISE

LUXURY SELLERS R AC E TO MEET DEM AND | 9

Consumer Mindset in Luxury Buying

#3 Luxury Buyers Experiencing FOMO Over a Frothy Luxury Real Estate Market Fear of missing out (FOMO) is the feeling of anxiety that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on social media. With a year at home and headlines touting the hot market, this has become a significant concern for 26 percent of luxury buyers. FOMO manifests in different ways, first as a true “missed the boat” moment where prices extend beyond reach. A second concern — equally impactful — is arranging finances for major purchases. Percent Select: Significant Concern in the Coming Year | LUXURY BUYERS g FEAR OF MISSING OUT (NET) g ARRANGING FINANCING FOR MAJOR PURCHASES g REAL ESTATE PRICES WILL BE UNAFFORDABLE FOR PEOPLE LIKE ME

23% 10% 15%

25% 9% 20%

22% 10% 11%

31% 24% 11%

Better Place To Live

Investment Property

Better Location

Settling Down & Nesting

15%

Better Run City/Town

Buyer Insight: As LPI members have noted in many geographies the land, the building, and the materials all cost more than normal. This extends beyond real estate but harkens back to concerns over weaker purchasing power and rising interest rates.

41% 22% 23%

Next Chapter in Life

LUXURY SELLERS R AC E TO MEET DEM AND | 10

Consumer Mindset in Luxury Buying

#4 COVID-19 Disruptions: Adjusting to a New Way of Life It is clear that COVID-19 is not behind us as we begin 2022, and half have a significant concern that it will disrupt their life again in the coming year (50 percent of luxury buyers). This is a motivator for a sooner timeframe-to-purchase as buyers want to be settled in case of delay in the future. Investment property buyers are particularly concerned about the impact for financial reasons. Whether buying in a vacation spot or downtown, the potential for restrictions increases the perceived risk of the deal.

Buyer Insight: Buyers seeking a better location with concerns for COVID-19 are often motivated to act in the near term and have relatively high purchase budgets. This bodes well for areas serving international clients and those in “perfect” areas with great weather and views.

Percent Select: Significant Concern in the Coming Year | LUXURY BUYERS g COVID-19 DISRUPTION (NET)

g COVID-19 SHUTDOWNS

48% 26% 21% 19%

52% 29% 26% 23%

Better Place To Live

Investment Property

g BECOMING VERY SICK WITH COVID-19

35% 25% 7%

Better Location

g LOSS OF INCOME DUE TO COVID-19

53% 27% 21% 20%

52% 33% 19% 19%

58% 35% 30% 27%

Settling Down & Nesting

Better Run City/Town

Next Chapter in Life

LUXURY SELLERS R AC E TO MEET DEM AND | 11

Consumer Mindset in Luxury Buying

#5 Anxiety Over Unquantified Risks Luxury buyers are not immune to feeling anxiety over the future (57 percent select one or more). One anxiety they dislike the most is not having a clear picture of what will happen next. This consumer thrives on predictability, planning and feeling in control of what happens to them. Of these three concerns, only climate change impacting my property has an actionable and satisfying path toward resolution. In fact, as this concern grows so too does the budget for their next home.

Buyer Insight: Many affluent consumers equate luxury with relaxation. They derive satisfaction from experiences when their needs are anticipated, they are treated kindly, and guided confidently throughout a process.

Percent Select: Significant Concern in the Coming Year | LUXURY BUYERS g FUTURE RISKS (NET)

g WORSENING ECONOMIC INEQUALITY

g CHILDREN’S FUTURE g CLIMATE CHANGE IMPACTING MY PROPERTY

64% 31% 30% 25%

60% 31% 30% 19%

45% 25% 21% 13%

57% 29% 24% 24%

51% 22% 22% 26%

62% 24% 34% 32%

Better Place To Live

Investment Property

Better Location

Settling Down & Nesting

Better Run City/Town

Next Chapter in Life

LUXURY SELLERS R AC E TO MEET DEM AND | 12

Consumer Mindset in Luxury Buying

#6 Sustainability: Mitigates Risk from Climate Change Most luxury buyers are choosing their next home with environmental sustainability in mind (75 percent), and this buyer is thinking for the long-term. Luxury buyers seeking sustainability features and amenities are 71 percent more likely than non-seekers to consider this purchase as a legacy home that will be passed on to heirs. Further, as interest in sustainability grows the quality of buyer improves: they want to transact sooner and for relatively higher budget.

Buyer Insight: The intention to buy sustainable housing for the long term is a strong endorsement for including these features in marketing materials and encouraging developers and renovators to keep these themes central in future plans.

Percent Select Yes: Does Environmental Sustainability Factor Into Your Home Search Criteria | LUXURY BUYERS

63% Better Place To Live

81% Investment Property

56%

83%

Better Location

Settling Down & Nesting

79% Better Run City/Town

90% Next Chapter in Life

LUXURY SELLERS R AC E TO MEET DEM AND | 13

Consumer Mindset in Luxury Buying

#7 Speaking of Anxiety and Disruptions: Working from Home Adds to the Stress The top trend in luxury real estate last year was finding a home that works for the family that works from home. Today, 27 percent of luxury buyers cite it as a significant concern. For buyers concerned about de-stressing the house it is important to fill it with plenty of diversions. This includes entertainment at home, night life nearby, and relaxation-inducing amenities like a spa/hot tub, a specialty cocktail scale, and specialty rooms for media and gaming. Percent Select: Significant Concern in the Coming Year | LUXURY BUYERS g WORKING FROM HOME (NET)

29%

20%

14%

Better Place To Live

g EXCESSIVE FAMILY STRESS DUE TO WORKING FROM HOME

26%

19%

12%

Investment Property

12%

Better Location

33%

g REMOTE WORK

13%

23%

Settling Down & Nesting

30%

14%

20%

Better Run City/Town

35%

21%

22%

Next Chapter in Life

LUXURY SELLERS R AC E TO MEET DEM AND | 14

NEW CANAAN, CONNECTICUT, USA | $3,499,000

THE MARKET FOR LUXURY REAL ESTATE BUYERS AND SELLERS HEADING TOWARD EQUILIBRIUM

LUXURY SELLERS R AC E TO MEET DEM AND | 15

The Market for Luxury Real Estate 2022

Luxury Homeowners Come Around to Selling With new construction experiencing delays — and outright stoppages — there has been increasing interest for existing homes. However, owners were not necessarily ready to sell last year. This lack of inventory has been a significant price driver in most luxury markets. Now, it seems that luxury owners are convinced that the iron is hot and their interest in selling has increased by more than double (to 28 percent from 11 percent). In fact, 71 percent of owners believe their home value will increase this year, creating a strong incentive to sell. The average luxury homeowner expects an increase of approximately four to five percent compared to three to four percent last year. Percent in the Market to Sell Residential Real Estate | CURRENT LUXURY HOME OWNERS g 2021 SURVEY

We are running very low on inventory because there is not enough new product that has been built in the last 10 years. Our average contract time is 17 days and prices are 30 percent higher. — Luxury Portfolio Member

Expected Change In Current Home Value in the Next 12 Months CURRENT LUXURY HOME OWNERS g I NCREASE IN VALUE g DECREASE IN VALUE

g 2022 SURVEY

11% 28%

17% 10%

11%

BY END OF NEXT YEAR

THE FOLLOWING YEAR

THREE YEARS OUT

61% 55% MORE THAN THREE YEARS NOT IN THE MARKET

g NO CHANGE g NOT SURE

3% 11% 23%

2% 10% 16%

63%

71%

2021 SURVEY

2022 SURVEY

LUXURY SELLERS R AC E TO MEET DEM AND | 16

The Market for Luxury Real Estate 2022

Luxury Market: From a Frenzy to a Roar, Buyers and Sellers Come Closer Together As affluent consumers participate in the residential market, luxury-residence seekers are down 58 percent this year (from 34 percent to 20 percent of the total affluent). In this delicate balancing act, the number of luxury sellers is on the rise by 26 percent (up to 16 percent from 13 percent). The perception, however, is that the luxury market is getting stronger, with more buyers coming to the table. Psychologically it remains a sellers market. In practice, we can expect a more balanced ratio of buyers and sellers in the year to come. Percent in the Market to Purchase/Sell Residential Real Estate For USD $1 Million or More, Next Three Years GLOBAL AFFLUENT

Point of View on Luxury Residential Real Estate Market We have more space than I expected LUXURY BUYERS AND SELLERS

g 2021 SURVEY

g GETTING STRONGER

g 2022 SURVEY

% OF TOTAL PURCHASING LUXURY

% OF TOTAL SELLING LUXURY

Incidence of Luxury Buyers and Luxury Sellers among the Global Affluent

g GETTING SOFTER

g NOT CHANGING

g DON’T KNOW

21%

23%

17%

20%

31%

21%

35%

22%

45%

52%

46%

53%

2021 LUXURY BUYERS

2022 LUXURY BUYERS

2021 LUXURY SELLERS

2022 LUXURY SELLERS

Getting stronger (more buyers), Getting softer (more sellers)

LUXURY SELLERS R AC E TO MEET DEM AND | 17

CAPE TOWN, SOUTH AFRICA | ZAR R65,000,000

BUYER TRENDS IN 2022 NEW DEVELOPMENTS OVER THE PAST YEAR

LUXURY SELLERS R AC E TO MEET DEM AND | 18

Buyer Trends in 2022

Welcome in a New Class of Entry-level Luxury Buyers Across the full spectrum of affluent consumers, there is greater interest in purchasing real estate under USD $1 million. This signals a resurgence of uppermiddle class buyers either those who were delayed in purchasing last year, or who are now willing and able to acquire. Consequently, this is creating a modest increase in the number of entry-level luxury buyers, up to 44 percent from 39 percent in the USD $1–1.9MM range. All told, the year-on-year budget level is stable within luxury, at a median price of USD $2.25 million. This democratic luxury-for-the-many effect is most pronounced in North America and less so in Asia Pacific and Europe/Middle East, where the wealthy class tends to skew toward relatively small groups of people with very high concentrations of wealth.

3 4

Price Range for Next Home | In the Market Next Three Years TOTAL AFFLUENT 2021 SURVEY

Under USD $500K

2022 SURVEY

LUXURY BUYERS 2021 SURVEY

2022 SURVEY

ASIA PACIFIC

NORTH AMERICA

EUROPE/ MIDDLE EAST

11% 19% — — — — —

$500K under $999K 23% 34% — — — — — $1MM to $1.9MM

26%

21%

39%

44% 39% 57% 37%

$2MM to $2.9MM

15%

23%

18%

22%

11%

21%

$3MM to $4.9MM

11%

17%

12%

15%

10%

12%

$5MM to $9.9MM

10%

15%

17%

14%

24%

$10MM or more

10%

Average

2.6MM 2.2MM 3.6MM 3.8MM 3.8MM 3.4MM 4.1MM

Median

1.75MM $1.25MM 2.25MM 2.25MM 2.25MM 1.75MM 2.25MM

Average square feet3

—

2,973

—

3,670

3,427

3,904

3,710

Average price per sf4

—

$420

—

$613

$657

$448

$606

sked in categories in both square feet and square meters. Median values between categories used to calculate average size. A Average price per square foot is calculated as median price point divided by median square feet

LUXURY SELLERS R AC E TO MEET DEM AND | 19

Buyer Trends in 2022

A Behavioral Shift Impacting Traditional Brokerages: Video Conferencing With so many people becoming used to Zoom calls and long-distance everything, we find an uptick in the interest in using online agencies to purchase luxury real estate. Additionally, 40 percent of luxury buyers are willing to buy a home without visiting it in person first. These two forces combined are increasing the pressure on traditional brokerages and agencies to stand out. Read on for more information; the short answer is the network, the product, and the fundamentally better service that can be provided is what separates digital and human agents for luxury buyers.

Buyer Insight: The trend of virtual home buying is not confined to international purchases. 32 percent of primary home buyers and 53 percent of vacation home buyers would be willing to buy without a visit.

Percent Select: Type of Agency Most Likely to Use | LUXURY BUYERS g 2021 SURVEY

Would Buy a Residence Without Personally Visiting, 2022 g YES g NO g NOT SURE

g 2022 SURVEY

7% 40%

70% 61%

19% 26%

TRADITIONAL AGENCY

ONLINE AGENCY

NOT SURE

53%

NOT APPLICABLE — NO AGENCY

LUXURY SELLERS R AC E TO MEET DEM AND | 20

Buyer Trends in 2022

Cities are Set to Rebound Over half of luxury buyers worldwide (55 percent) expect to buy their next residence in a city and 77 percent will be within commuting range. Notably, Asia-Pacific luxury buyers are significantly more likely to buy in the city center than their global counterparts. There is little variation in suburban and ex-urban living, but second/vacation home settings are more popular with buyers in North America and Europe/Middle East. As next home budgets increase, there is a stronger draw to being part of the city center (36 percent spending USD $2 million or more compared to 28 percent spending USD $1–1.9 million). Type of Neighborhood for Next Home | LUXURY BUYERS Percent Selected by Region

15% 8% 22%

Percent Selected by Budget

17%

19%

21% 9%

11%

16% 9%

23%

25%

22%

25%

22%

23%

22%

23%

26%

28%

NORTH AMERICA

EUROPE/MIDDLE EAST

$1M TO $1.9M

23% 32% LUXURY BUYERS

44% ASIA PACIFIC

g I N THE CITY CENTER g IN THE CITY BUT OUTSIDE THE CENTER g A SECOND HOME OR VACATION SETTING

g RESIDENTIAL AREA OUTSIDE THE CITY

14% 8% 18% 24% 36% $2M+

g LOW-DENSITY AREA FAR AWAY FROM A CITY

LUXURY SELLERS R AC E TO MEET DEM AND | 21

Buyer Trends in 2022

Where in the World: Top Cities for Luxury Home Buyers Where do you Expect to Move to? | LUXURY BUYERS

NORTH AMERICA

EUROPE

MIDDLE EAST

ASIA

PACIFIC

United States NEW YORK LOS ANGELES SAN DIEGO

France PARIS MARSEILLE

Saudi Arabia RIYADH

China BEIJING GUANGZHOU SHANGHAI

Singapore EAST COAST

Canada TORONTO Mexico MONTERREY CANCUN

United Arab Emirates DUBAI ABU DHABI

Germany BERLIN STUTTGART Italy MILAN ANCONA ROME

Hong Kong HONG KONG TORONTO NEW ZEALAND Taiwan TAIPEI TAICHUNG HUALIEN

Spain MADRID United Kingdom LONDON

Australia MELBOURNE SYDNEY New Zealand AUCKLAND Indonesia JAKARTA BALI

Japan TOKYO South Korea SEOUL (GANGNAM) India DELHI MUMBAI

LUXURY SELLERS R AC E TO MEET DEM AND | 22

Buyer Trends in 2022

Single-family Homes Surge in Popularity The thoroughly North American single-family home is branching out across the globe, as 40 percent of Europe/Middle East buyers and 29 percent of Asia-Pacific buyers are seeking the luxury of additional space and privacy. Year on year, demand for this type of housing is increasing as, collectively, shared living spaces are becoming less attractive to the luxury buyer. North America remains the top driver for demand of this type of residence.

Buyer Insight: Space makes the difference these days. Space from neighbors, space in the home, and space outside.

Type of Residence Expect to Buy | LUXURY BUYERS Percent Selected, Global g 2022 SURVEY g 2021 SURVEY

Percent Selected, by Region g SINGLE-FAMILY HOME g CONDO/APT g TOWNHOUSE g PENTHOUSE g HOTEL/RESORT RESIDENCE

7% 20% 23% 20%

37% 44%

17% 17%

18% 17%

18% 16%

10% 7%

29%

SINGLE-FAMILY HOME

CONDO/ APARTMENT

TOWNHOUSE

HIGH-RISE PENTHOUSE

HOTEL RESORT RESIDENCE

ASIA PACIFIC

10% 11% 11%

8% 17% 15% 19%

62%

NORTH AMERICA

40% EUROPE/MIDDLE EAST

LUXURY SELLERS R AC E TO MEET DEM AND | 23

Buyer Trends in 2022

Investors Dive Into Single-family Homes As observed last year, the sentiment toward real estate as an investment was quite strong, and its performance is drawing buyers to the market. An additional 25 percent of buyers are buying with returns in mind (35 percent up from 28 percent). What makes this year different from last is the type of home being purchased as an investment. We find that investors are shifting away from high-rise and resort residences and instead are focusing on singlefamily homes. While it is not clear what is driving the shift, companies like Invitation Homes have made headlines from buying up middle-class housing at scale and making it available for rent and pocketing the difference.

Buyer Insight: A similar strategy may be at play with wealthy investors who have an advantage in a competitive market (cash plus access to cheap debt) and can see appreciation quickly in many cases.

Planned Use For Residence | LUXURY BUYERS Percent Selected, Global

g 2021 SURVEY

g 2022 SURVEY

Percent Selected by Investment Property Buyers

g 2021 SURVEY g 2022 SURVEY

72% 65%

33% 31%

19% 17%

20% 17%

28% 35%

29% 41%

27% 22%

15% 16%

18% 15%

PERSONAL USE

PRIMARY RESIDENCE

SECONDARY RESIDENCE

VACATION RESIDENCE

INVESTMENT RENTAL PROPERTY

SINGLE-FAMILY HOME

CONDO/ APARTMENT

TOWNHOUSE

HIGH-RISE PENTHOUSE

10%

HOTEL RESORT RESIDENCE

LUXURY SELLERS R AC E TO MEET DEM AND | 24

Buyer Trends in 2022

Sustainability: Critically Important and Worth Paying to Get Luxury home buyers demonstrate their commitment to environmental sustainability in their opinions and actions. Nearly 90 percent believe taking steps toward sustainability is worth doing, and 50 percent are willing to pay more for the features they care about. This trend is evident in residential real estate as well as other luxury durables like automobiles, electronics, and apparel. Even luxury consumables like travel, food and beverage, and services are working hard at doing good while also being good.

Buyer Insight: The trend toward a sustainable home is strongest with the luxury buyer, however non-luxury buyers are also invested in this concept. The fact that affluent consumers globally are leaning into the trend suggests it will be with us for the long haul.

What are Your Views On Environmental Sustainability? | LUXURY BUYERS Percent Selected, Sustainability Actions Are…

2% 9%

g CRITICALLY IMPORTANT g GOOD BUT DO NOT NEED

g g g g

MAJOR CHANGES

g NOT NECESSARY AT ALL g NOT SURE

Percent Selected, Willing To Pay... For Sustainability Features I Care About

23%

PAY MORE

PAY LESS PAY THE SAME NOT SURE

66%

36% 50% 11%

LUXURY SELLERS R AC E TO MEET DEM AND | 25

Buyer Trends in 2022

Conscientious Purchasing Achieves Two Primary Goals: Moral Right and Financial Savings Delving into the motivations behind buying an environmentally sustainable luxury home, we find two primary drivers: cost savings in the form of tax incentives, less maintenance, and lower operating costs is rivaled by a values-based decision that it is the ethical choice and is better for the planet to do so. These primary factors are held above all others in each region surveyed with only minor variations. For example, in North America the role of influence is less pronounced when compared to Asia-Pacific and Europe/Middle East buyers. There are clear differences by age of buyer with those Under 50 more likely to be motivated by influence and status associated with having a sustainable, modern home. They also put more emphasis on the future, citing children and grandchildren as their reasons for this new style of living.

Buyer Insight: It is time to believe that affluent consumers care about the wellbeing of the planet. Motivations align with opinions and actions — in other words, they put their money where their mouth is on this subject. Treat it as seriously as any other rational decision.

Percent Select as a Motivation to Have a Sustainable Home | LUXURY BUYERS g ETHICAL/BETTER FOR THE ENVIRONMENT

g FINANCIAL INCENTIVES

g CHILDREN OR GRANDCHILDREN

60% 58% 39% 39% 32%

62% 60% 39% 40% 40%

62% 58% 38% 31% 22%

56% 54% 39% 45% 35%

LUXURY BUYERS

ASIA PACIFIC

NORTH AMERICA

EUROPE/MIDDLE EAST

g INFLUENCED BY SOMEONE ELSE g TO INFLUENCE OTHERS

59% 56% 42% 41% 34% UNDER 50

65% 65% 19% 23% 25% 50 AND OLDER

LUXURY SELLERS R AC E TO MEET DEM AND | 26

Buyer Trends in 2022

Sustainable Home Design Elements Favor Technology, Materials Smart home automation and related technologies, efficient designs, appliances and building materials are the most in-demand aspects of sustainable home design. This speaks to not only the foundational elements of the home, but also the design sensibility toward technology and efficiency. Buyers from Asia Pacific show a higher-than-usual interest in Solar panels, and the use of non-toxic materials in the home. North America leans toward organic living, that is having a vegetable garden or orchard and composting on property. In Europe/Middle East, the luxury buyer is interested in locally sourced materials whenever possible. While this speaks specifically to design elements, the sense is that it would also pertain to art and style elements as well. Which of These Sustainable Home Design Elements, if any, are Essential in Your Next Residence? | LUXURY BUYERS g SMART HOME AUTOMATION

g ENERGY EFFICIENT APPLIANCES

73% 70% 43% 38% 36% 32% LUXURY BUYERS

g NON-TOXIC MATERIALS

g ORGANIC LIVING

g LOCAL MATERIALS

g SOLAR PANELS

79% 72% 47% 39% 36% 36%

72% 72% 39% 38% 30% 31%

65% 65% 42% 37% 43% 28%

ASIA PACIFIC

NORTH AMERICA

EUROPE/MIDDLE EAST

LUXURY SELLERS R AC E TO MEET DEM AND | 27

HILTON HEAD, SOUTH CAROLINA, USA | $7,900,000

STATE OF LUXURY REAL ESTATE SOLRE 2022

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