The All-Cash Luxury Real Estate Surge: Where Undervalued Markets Are Hiding the Next Growth Spurts

The luxury real estate market is undergoing a seismic shift. In 2025, 88% of transactions for properties valued at $10 million or more were paid in cash, according to Scenic Sotheby's International Realty. Coldwell Banker Global Luxury reports an even starker trend: 96% of luxury buyers are maintaining or increasing cash purchases, driven by real estate's role as a “safe haven” amid market volatility. This cash-fueled buying frenzy isn't just a sign of investor confidence—it's a compass pointing toward undervalued markets poised for explosive growth.

Why Cash Purchases Signal Undervalued Opportunities

All-cash deals are the ultimate expression of investor confidence. Buyers bypassing mortgages or financing often do so to outbid others, lock in assets quickly, or avoid interest rate risks. In luxury markets, this trend highlights regions where growth hasn't yet been fully priced in.

Undervalued Markets to Watch: Where Cash Buyers Are Leading the Charge

1. Puerto Rico: Tax Incentives Meet Post-Disaster Resilience

Puerto Rico's luxury market has quietly boomed since Hurricane Maria, with sales surging from $2 million to $30 million over a decade. The island's Act 60 tax incentives—offering a 4% corporate tax rate and 0% capital gains tax for eligible residents—have drawn ultra-high-net-worth individuals and corporations.

• Key Opportunity: Developments like Esencia, a $2 billion eco-luxury community on the west coast, are attracting buyers seeking climate-resilient, sustainable properties.
• Data Query:

Despite its potential, Puerto Rico remains undervalued compared to mainland U.S. markets. Multifamily and resort-focused REITs with Caribbean exposure (e.g., Cayman Islands-based real estate funds) could capitalize on this gap.

2. India's Second-Tier Cities: The Next Billion-Dollar Playground

India's luxury real estate market is projected to triple in size, from $45 billion in 2024 to $105 billion by 2030 (MarkNtel Advisors). The focus is shifting from overcrowded megacities like Mumbai to second-tier cities such as Pune, Ahmedabad, and Bengaluru.

• Smart Luxury Drivers: Tech-driven wealth, government infrastructure projects, and tax reforms (e.g., reduced capital gains tax) are fueling demand for high-end homes with modern amenities.
• Data Query:

Investors should look to funds targeting mixed-use developments in these cities, which blend residential and commercial spaces—a trend coldwell bankered buyers prioritize.

3. Post-Disaster Regions: Buying Undervalued, Building Resilience

From wildfire-prone California to hurricane-hit Florida, disaster zones are now strategic investment hubs. Buyers are snapping up properties in these areas at discounts, betting on rebuilding booms and government subsidies.

• Key Catalyst: The Global Assessment Report 2025 emphasizes that resilient construction (e.g., solar panels, hurricane-proof materials) boosts property values by up to 15%.
• Play It Safe: Focus on regions with robust recovery plans and tax incentives, such as Florida's Opportunity Zones or Puerto Rico's post-Maria rebuilding.

REITs and Funds to Capitalize on This Trend

While no luxury-focused REITs are explicitly named in the data, investors can still tap into this trend through:
1. Multifamily REITs: These have proven resilient in downturns (returns of 29.19% YTD through March 2025). Consider Equity Residential (EQR) or Mid-America Realty (MAR), which often expand into undervalued regions.
2. International Real Estate Funds: Look for funds with exposure to Caribbean markets (e.g., Stonehenge Caribbean REIT) or India's tech hubs (e.g., India-focused private equity funds like Everstone Capital).
3. Resilience-Driven ETFs: The Sustainable Real Estate ETF (XRE) tracks companies investing in climate-resilient infrastructure, ideal for post-disaster markets.

Final Take: Follow the Cash, but Do Your Homework

The all-cash luxury buying spree isn't just a sign of wealth—it's a map to undervalued markets. Puerto Rico, India's second-tier cities, and disaster recovery zones offer asymmetric upside. However, risks remain:
- Puerto Rico: Bureaucratic delays and infrastructure gaps.
- India: Regulatory hurdles and currency volatility.
- Disaster Zones: Climate uncertainty and insurance costs.

Investors should pair cash-rich strategies with local expertise and diversification. REITs and funds with a proven track record in emerging markets—and a focus on sustainability—will be the winners.

In the end, the luxury real estate market isn't just about mansions and penthouses—it's about spotting where cash is flowing before the rest of the world catches on.

Disclosure: This analysis is for informational purposes only. Always consult a financial advisor before making investment decisions.