The Tribune

By CHRIS ILLING

CCo @ ActivTrades Corp

Whether it is fine whisky or trendy Warhol painting, many things are becoming more expensive, even for the ultra-wealthy. This leads to a bull market in luxury properties because many rich people are eager to demonstrate to their community how bulging their wallets are.

The Mercedes Gullwing 300 SLR Uhlenhaut Coupé, the Hermès handbag "Himalaya Crocodile Kelly", and the 81-year-old single-malt "The Macallan The Reach" all have in common that they are quite expensive. They also owe their sky-high prices to the snob effect.

Last year, the Mercedes Coupé 300 SLR Uhlenhaut from 1955 sold for 135 million euros at a confidential auction at the Mercedes-Benz Museum.

The effect of the price is reversed compared to the classic market effect. The demand in such cases increases when the price increases. And once a market is running hot, it gives true treasure hunters a truly childlike joy when they can snatch something rare from others thanks to their financial strength. The higher the price, the cooler the item.

This effect has recently been seen in many luxury goods. Whether it is classic cars, art, watches, coins or even whisky, the prices for everything dear to aficionados have been rising and rising for a decade.

What applies to paintings, furniture and cars also applies in a weaker form to the dwellings in which the precious objects are to be displayed and exhibited after the purchase. Here, in The Bahamas, the luxury real estate market has risen by approximately 15 percent. In Dubai, prices have risen by more than 40 percent in just one year. In second place is the US luxury ski resort of Aspen, with an increase of almost 30 percent.

If you are still pondering whether you should buy another place to stay in Miami, London or Dubai, you would also do well to study the price per square foot in these cities. The comparison reveals how many square feet of luxury domicile a buyer gets for $1m. The world leader is Monaco with 183 square feet. For a modest three-bedroom condo with 915 square feet, $5m is needed in the small principality on the Mediterranean. Compared to those prices, a house on the beach in The Bahamas is a clear bargain.