Premium Real Estate: Why Trophy Assets Remain a Cornerstone of Global Wealth

In the global wealth conversation, premium real estate — often described as “trophy” real estate — occupies a category of its own. These assets are not simply expensive homes or iconic penthouses. They represent scarcity at its highest level: tightly regulated supply, prime geography, and prestige that cannot be manufactured at scale.

Within the portfolios of high-net-worth and ultra-high-net-worth families, trophy properties frequently function as a hybrid between lifestyle and strategy. They serve as private assets capable of preserving capital, anchoring multigenerational legacy, and providing geographic and financial optionality as geopolitics, currencies, and tax regimes evolve.

According to Knight Frank, “prime property” typically refers to the top slice of a market by value, often defined as the top 5% of each location. These prime segments consistently show a strong international buyer bias. That global orientation matters. Trophy buyers are rarely making a single-country bet; instead, they are building resilience across jurisdictions, currencies, and time zones.

What makes premium real estate investment particularly durable is that it is driven less by monthly affordability and more by balance sheets, liquidity events, and global capital flows. A separate Knight Frank forecast noted that cash buyers represented a growing share of prime residential transactions, rising from 46% to 52% within its research network over a six-month period. The data underscores a structural reality: the upper tier of real estate often behaves very differently from mortgage-dependent markets.

Below is a closer look at why trophy assets remain a cornerstone of global wealth — and how sophisticated buyers are underwriting them in 2026.

What Qualifies as a Trophy Asset in Premium Real Estate

While architectural styles vary by region, trophy real estate assets tend to share common structural characteristics across global markets.

Irreplaceable Locations

Location remains the defining variable. Examples include Central Park frontage in Manhattan, protected view corridors in London, water access with strict development limits in the Hamptons, landmark addresses in Paris, or low-density coastal enclaves where permitting is intentionally restrictive.

These are locations where new supply is either legally constrained or physically impossible.

Unique and Non-Replicable Attributes

Trophy properties are distinguished by features that cannot be easily recreated: elevation and views, privacy and security, historical relevance, signature architects, or direct integration with elite lifestyle ecosystems such as private aviation, yachting infrastructure, top-tier schools, healthcare access, and cultural institutions.

Liquidity Within an Illiquid Asset Class

Not all luxury property is easy to sell. However, the most credible trophy assets continue to attract a deep — albeit selective — buyer pool over time. The key differentiator is not price, but desirability under market stress.

The Economic Case for Premium Real Estate: Scarcity and Resilience

Trophy real estate sits at the intersection of constrained supply and highly mobile global wealth.

On the supply side, multiple global research institutions continue to flag shortages of prime-quality inventory and the long lead times required to deliver new developments, particularly in top-tier locations. According to JLL’s Global Real Estate Outlook, new building activity has declined amid elevated construction costs, financing constraints, and regulatory friction.

On the demand side, the primary driver is no longer local household formation but global wealth allocation. In its Prime International Residential Index, Knight Frank reported that global luxury house prices rose 3.6% through 2024, with price growth recorded in 77 out of the 100 markets tracked. Even as macro narratives turn cautious, this breadth of performance signals persistent underlying demand.

This dynamic explains why trophy assets often remain “bid” during periods when mid-market real estate stalls. When borrowing costs rise, prime buyers pivot to cash. When currencies fluctuate, cross-border buyers arbitrage purchasing power. When political risk intensifies, safe-haven behavior accelerates.

Why Ultra-High-Net-Worth Investors Return to Prime Property

Capital Preservation with Lifestyle Utility

A top-tier residence functions simultaneously as a store of value and a lived experience. For many families, this dual role is central. The asset is not competing with a bond; it is competing with other “must-own” exposures within a family’s lifestyle and legacy allocation.

Diversification Beyond Public Markets

Private real estate behaves differently from daily-priced equities and fixed income. For families thinking in decades — particularly those with concentrated exposure to operating companies or venture investments — this non-correlation remains attractive.

Geographic Optionality as a Strategic Hedge

Trophy real estate provides optionality: the ability to relocate quickly, establish an international base for education or healthcare, or anchor time in jurisdictions with favorable tax or residency frameworks. As global complexity increases, optionality itself becomes a form of value.

Scarcity Premium in Prime Destinations

In many marquee neighborhoods, the supply of best-in-class properties is effectively fixed. Scarcity compounds when cities impose stricter zoning, heritage protections, or physical constraints such as coastlines, parks, or protected skylines.

A Legacy Asset for Multigenerational Wealth

For legacy families, trophy properties often transcend financial modeling. They become part of the family narrative, reinforcing continuity, identity, and long-term presence across generations.

Where Trophy Real Estate Demand Concentrates Globally

Trophy demand tends to cluster in three overlapping categories.

Global Financial Centers

Cities such as New York, London, Singapore, Hong Kong (cyclical), and select European capitals continue to attract global capital. Even during slower price cycles, these markets retain liquidity due to their concentration of finance, law, education, and culture.

Lifestyle Capitals and Tax-Efficient Hubs

Dubai has repeatedly been highlighted in global forecasts as a prime-market outperformer, supported by supply pipelines, favorable tax structures, and its positioning as a global lifestyle hub.

Resort and Second-Home Markets

Knight Frank’s research indicates that sunbelt and resort-style destinations continue to show durable momentum, reflecting lifestyle priorities that remain elevated well beyond the pandemic period.

Risk Management in Premium Real Estate Investing

While premium real estate has proven resilient, it is not risk-free. Sophisticated buyers increasingly devote as much attention to downside protection as they do to finishes and design.

Pricing and Bubble Risk Indicators

The UBS Global Real Estate Bubble Index 2025 ranked Miami as the city with the highest bubble risk, followed by Tokyo and Zurich, while also flagging elevated risk in Los Angeles, Geneva, Amsterdam, and Dubai. For trophy buyers, this does not automatically signal avoidance, but it does raise underwriting standards: focus on irreplaceable assets, avoid commodity luxury, and stress-test exit scenarios.

Tax, Regulatory, and Policy Shifts

High-end investors closely monitor changes such as foreign buyer restrictions, stamp duties, “non-dom” reforms, wealth reporting rules, and zoning adjustments. Savills has identified policy uncertainty as a meaningful headwind in certain prime markets.

Carrying Costs and Structural Friction

Insurance, climate adaptation, security, staffing, and compliance can materially impact long-term returns. In several coastal markets, climate resilience and insurance availability are no longer secondary considerations but core underwriting variables.

Liquidity Realities

Trophy assets sell on their own timeline. Families that treat them as short-duration trades risk unfavorable outcomes. The prevailing strategy is alignment between holding period, family planning, and balance-sheet strength — not market timing.

How Sophisticated Buyers Underwrite Trophy Assets in 2026

Based on current market research and investor behavior, a modern underwriting framework typically includes:

• Asset quality before market cycles

• Verifiable and enforceable scarcity

• Climate, insurance, and resilience scoring

• Policy and tax scenario analysis

• Clearly defined exit logic and future buyer profile

JLL notes that in supply-constrained environments, top-tier quality often preserves value more effectively than broader luxury segments, reinforcing the premium placed on best-in-class assets.

The Bottom Line

Trophy real estate endures because it fulfills multiple functions simultaneously: a tangible anchor, a scarcity-driven store of value, a diversification tool, and a high-end lifestyle asset with global optionality.

As supply constraints intersect with regulatory shifts and climate realities, the premium real estate market is becoming increasingly bifurcated. The winners are the truly irreplaceable assets — the best address, the best view, the best construction, and the strongest long-term desirability.

For global wealth, that is the enduring appeal of premium real estate: when chosen carefully, the finest properties are not merely homes. They are strategic assets.

Disclaimer (Money In Focus)

Money In Focus provides news and educational content for general informational purposes only and does not offer investment, legal, tax, or financial advice. This article does not constitute a recommendation or solicitation to buy or sell any security or investment. Readers should consult qualified professional advisors regarding their specific circumstances.

References

Knight Frank 

Savills 

UBS 

JLL — Global Real Estate Outlook
https://www.jll.com/insights/global-real-estate-outlook