Prime Resort Property: The Liquidity Discount

The discount is on speed, not on price#

The instinct that prime resort property is cheaper than prime urban property is the wrong frame, and it obscures the risk that actually matters. On a per-square-metre basis, a trophy villa on a constrained island shoreline or a lakefront can print at or above a comparable global-city apartment. The resort asset is not sold at a discount to the city asset. It is sold more slowly, to a smaller pool, with a wider gap between what the seller asks and what the market pays. That gap has a name in every other asset class. It is the liquidity discount, and in resort property it is the single most underwritten risk on the page.

Liquidity is the ease with which an asset converts to cash at a price close to its marked value, and prime resort property scores low on every component of it. The buyer pool for any single trophy asset is measured in dozens, not thousands. The comparable set used to anchor a price is thin to the point of being anecdotal. The demand is discretionary, seasonal and cross-border, which means it can disappear for reasons that have nothing to do with the asset. None of this shows up in a headline price index, because a price index only records the transactions that cleared. It is silent on the ones that did not, and on how long the ones that did took to get there.

The correct read is that the principal is not being compensated with a lower entry price for taking resort risk. The principal is taking a liquidity position and should price it as one. An allocator who underwrites a resort asset on the same exit assumptions as a Milan or London apartment is underwriting the wrong instrument. The price may be resilient. The exit is not the same, and the difference is not a rounding error. It is the difference between a sale that clears in months and one that sits, visibly, for years, repricing itself downward with every week it fails to transact. This note treats that liquidity as an underwriting input, not an externality — and, as developed below, brand and hotel management do not lift the resort asset's price so much as they widen its buyer pool and shorten its time to sale.

Two discounts, and only one is real#

There are two things the word discount can mean in prime resort property, and confusing them is the most common analytical error in the segment. The first is a price discount: the resort asset changing hands below the value of an equivalent urban asset. This is largely a myth at the prime end, because constrained supply on a good shoreline is scarce in exactly the way constrained supply in a global city is scarce, and prices accordingly. The second is a liquidity discount: the resort asset requiring more time, a wider ask-to-sale gap, or both, to convert to cash. This one is real, it is measurable, and it is the one that belongs in the model.

The liquidity discount is the price of certainty of exit, and it is paid in three currencies. The first is time — the days, and often years, an asset sits before the right buyer appears. The second is the spread between the aspirational asking price and the realised sale price. The third is optionality forgone: capital locked in an asset that cannot be exited on demand cannot be redeployed, and that opportunity cost compounds silently. An allocator who prices only the first of these, or none of them, has not priced the discount at all.

The reason the liquidity discount is so easily ignored is that it does not appear until the exit, which is the moment the model has already been signed off. The acquisition side of a resort development produces clean inputs: a land price, a build cost, a permit path. The exit produces a single negotiation with a single counterparty, shaped by that counterparty's currency, tax position and mood, in a market that may have no comparable transaction that year. The spreadsheet reduces all of that to one assumed exit price and one assumed timeline. The messiness it smooths over is the liquidity discount, and smoothing it over does not remove it. It defers it to the worst possible moment.

What the days-on-market data actually says#

The best-documented evidence on luxury liquidity comes from the US market, and it is unambiguous about direction even where it is limited about geography. Concierge Auctions' Luxury Homes Index, now in its tenth edition, examined the highest-grossing transactions across 56 top US luxury markets. In 2024 the average time on market for ultra-luxury property was 319 days, essentially unchanged from 2023, against under 60 days for the median US home — roughly four times slower. It is the cleanest published proxy for the liquidity gap between the top of the market and the middle, and it is measured, not estimated — though it is US stock, which we treat as directional for resort markets rather than as a resort statistic.

The distribution inside that average is where the resort read sharpens. In the same dataset, 54 per cent of the luxury properties that sold in 2024 took more than 180 days to clear, and those slow sales achieved only about 80 per cent of their original asking price; the 46 per cent that sold within 180 days achieved about 87 per cent. For the slow half, the average time on market was not 319 days but 569. Roughly one in eight sold only after more than 600 days. The market bifurcates: an asset either clears near its ask reasonably quickly, or it lingers and clears at a material discount. There is very little middle.

The mechanism behind the slow-and-cheap outcome is the one that defines the resort segment: a thin, illiquid buyer pool. Concierge Auctions' own framing is blunt — the pool of buyers for luxury property is small and highly illiquid, and each asset is unique enough that comparables barely exist. A resort asset compounds this. Its buyer is not only wealthy but specifically wants that location, that shoreline, that moment, and is frequently buying discretionary second-home exposure that can be deferred indefinitely. The urban prime asset draws on a deeper pool of primary-residence and institutional demand; the resort asset draws on a shallower, more optional one. Same price tier, different depth of market — and depth of market is liquidity.

The bid-ask spread is the resort tax#

The clearest single expression of the liquidity discount is the spread between the asking price and the realised price, and in luxury it is large and persistent. In the Concierge Auctions data, luxury sellers in 2024 realised on average about 13 per cent below their initial listing price, and properties were listed on average 15 per cent above — up to 25 per cent above — their eventual market value. This is not a distressed-sale figure. It is the ordinary, revealed gap between what a unique asset is listed at and what a thin pool will pay. In a liquid market that spread is a point or two. At the illiquid top it is double digits, and in the resort segment it is structurally at the wide end.

The spread widens the longer the asset sits, because time on market is itself information the buyer reads and prices against. An asset that lists high and then reduces does not simply return to the correct price and clear there. Its price history is now public, and a sophisticated buyer reads the sequence of reductions as weakening resolve, anchoring to the trajectory rather than the current ask. Concierge Auctions found time on market to be the single largest factor determining the price an ultra-luxury property finally achieves. In the resort segment, where the pool is thinner and the wait longer, the penalty for mispricing at listing is correspondingly heavier.

The realised discount is visible even in liquid second-home proxy markets, which tells the allocator the effect is structural rather than exotic. In mid-2026, Redfin data showed homes selling below asking in 38 of the 50 largest US markets, with the Florida second-home metros of Miami and West Palm Beach among the widest — buyers paying close to 5 per cent below asking on average. Florida is not an emerging island market; it is one of the deepest, most transacted resort-adjacent markets in the world. That even it prints a measurable ask-to-sale gap in a soft month is the point: the thinner the demand, the wider that gap runs.

Price is resilient; liquidity is not#

The paradox of the resort segment is that its prices have been more resilient than its liquidity, and the two are routinely confused. Knight Frank's Prime International Residential Index recorded global luxury residential prices rising 3.2 per cent in 2025, the second consecutive year of prime outperforming mainstream housing, if slightly below the 3.6 per cent of 2024. Resort and second-home markets have led that growth: in the index's 2025 read, resort locations had posted the strongest cumulative post-pandemic gains, ahead of ski markets and well ahead of cities. On price, the resort thesis has worked.

But a resilient price index and a liquid market are not the same claim, and the index cannot tell you which one you have. A price index is built from transactions that cleared. It says nothing about the assets that were listed and did not sell, the time the cleared ones took, or the concession the seller made to get there. An asset can appreciate on paper and still be extraordinarily hard to exit — indeed the two often travel together, because the same scarcity that supports the price thins the buyer pool. Strong PIRI prints are evidence the resort price is real. They are not evidence the resort exit is easy, and reading them as such is the error the liquidity frame exists to correct.

For the allocator, this resolves a genuine tension: the resort asset can be simultaneously a good price position and a poor liquidity position. The correct underwriting holds the two apart. Price the asset on the scarcity and the demand — where the resort case is strong. Then price the exit separately, on the depth of the buyer pool, the realistic time to sale and the ask-to-sale spread — where the resort case is weak. The mistake is to let the strong price number stand in for a liquidity number that was never measured.

What compresses the discount: brand and management#

The most useful thing an operator can do to a resort asset is not raise its price but widen its buyer pool, and the two instruments that do this are brand and hotel management. A branded, managed residence converts an illiquid trophy into something closer to a yielding, serviced asset, and in doing so it enlarges the set of people who will buy it. To the discretionary lifestyle buyer it adds the investor who wants a rental return, the buyer who wants a managed asset they never have to run, and the cross-border purchaser who trusts a known operator's name. A deeper pool is, by definition, a more liquid asset, and the premium the market pays for brand is, in large part, a premium for that liquidity.

The branded-residence premium is measurable, and it is widest exactly where liquidity is thinnest. Savills' 2025-26 analysis puts the average global price premium for branded residences over comparable non-branded stock at around 33 per cent, and — tellingly — the premium in resort locations, at roughly 39 per cent, runs ahead of the urban premium of about 30 per cent. The reading that fits the liquidity frame is straightforward: in a dense global city a non-branded prime asset already has a deep pool, so brand adds less; in a thin resort market brand does more work, because it supplies the depth the location lacks. The premium is largest where the liquidity problem it solves is largest.

A rental programme is the same idea expressed as cash flow, and it is the mechanism that most directly attacks the discount. An asset that produces a managed, professionally let income stream is legible to a larger buyer than a dark second home. It can be underwritten on yield, not only on capital appreciation and lifestyle, which brings a return-seeking buyer into a pool that would otherwise be purely discretionary. This is the argument for the resort asset that pays: the yield is welcome in itself, but its more important function is to widen the exit pool and shorten the time to sale. It converts a liquidity liability into a partial liquidity hedge.

None of this is a promise, and the honest operator says so, because brand is a probabilistic compression of the discount, not a removal of it. A managed, branded, yielding resort asset is more liquid than a bare trophy villa. It is still less liquid than a prime city apartment. The instruments narrow the spread and shorten the wait; they do not close the gap to urban liquidity, and they carry their own costs — management fees, service charges, brand dependency — that the underwriting has to net against the liquidity they buy.

The structural weaknesses, honestly disclosed#

The first and most important weakness is that liquidity, unlike price, cannot be hedged, and no instrument fully removes it. Brand, management and a rental programme compress the discount; they do not abolish it. A resort asset in a genuinely thin market can still take years to exit at a price the seller will accept, and there is no derivative, no insurance and no structuring that converts a fundamentally illiquid asset into a liquid one. The allocator who cannot tolerate a multi-year hold, or a forced sale at a wide discount in a soft window, should not be in the segment. That is not a caveat. It is the defining risk.

The second weakness is that the data underwriting all of this is US-weighted and does not measure emerging-market resort liquidity directly. The 319-day average, the 80-versus-87 per cent ask realisation, the below-asking metro prints — these are strong, published US figures, and we use them as directional proxies. There is no clean, consolidated public series for time on market or bid-ask spread in the emerging island and coastal markets where much of the resort opportunity actually sits: Bali and the Gili Islands, Zanzibar, the frontier coasts. We do not have that series, and we do not invent one. Where we apply US luxury data to those markets, we label it as a proxy, and the reader should discount it accordingly.

The third weakness is that the branded premium is an average around a wide distribution, and averages mislead in thin markets. Savills' own data notes materially higher variance in emerging markets, where brand alone guarantees nothing and where location, design and operational quality determine whether the premium is realised at all. A poorly executed branded scheme can carry the costs of brand — fees, service charges, dependency — without delivering the liquidity the premium is supposed to buy. The 39 per cent resort figure is the central tendency of a distribution with a long, unforgiving left tail, and quoting the average without the variance is quoting half the number.

The fourth weakness is currency, which sits on top of the liquidity problem and can dwarf it. A resort asset priced in one currency and sold to a buyer thinking in another carries an FX layer that can move the effective realised price by more than any ask-to-sale negotiation. For a cross-border resort asset — the norm, not the exception — currency and liquidity exposure interact: a soft exit window and an adverse currency move can arrive together, and the underwriting has to hold both.

The operator advantage#

Where an operator earns its place in the resort segment is precisely on the liquidity problem, because the discount is compressed by execution the passive owner cannot supply. A passive villa owner holds an illiquid asset and hopes the exit market is kind. An operator who builds to a brand standard, contracts professional management, runs a rental programme that produces legible yield, and holds the local distribution relationships that reach the actual buyer pool is doing the concrete work that widens the pool and shortens the sale. The liquidity discount is not a market constant to be accepted. It is partly a function of how the asset was built, positioned and distributed, and that part is the operator's to compress.

An operator who treats the resort exit as something to be figured out later is describing the liquidity risk without pricing it. One who has built the compression into the asset — the brand standard, the management contract, the rental programme, the distribution relationships — is the difference between a resort position and a resort trap. That work is done at acquisition, not discovered at handover.

The marketing line — that brand and management make resort property liquid — writes itself and should be resisted. They make it more liquid, from a low base, probabilistically, at a cost. That is the honest and the useful claim, and overstating it is how allocators end up holding assets they were told were easier to exit than they are.

What this means for the principal and the allocator#

The practical conclusion is that the resort underwriting must carry a liquidity line the urban underwriting can leave implicit. For a prime city asset, a deep and continuous buyer pool makes the exit relatively safe to assume. For a prime resort asset it is not, and the model should state, explicitly, the realistic time to sale, the ask-to-sale spread the segment carries, the hold period the capital can genuinely tolerate, and the instruments — brand, management, rental yield, distribution — used to compress the discount. A resort model that assumes an exit at a price without naming the depth of the pool that produces it is not a model. It is a hope with a spreadsheet attached.

For the principal choosing an operator, the diligence questions are specific and answerable. How liquid is this asset, honestly, and against which buyer pool? What is the realistic time to sale in a soft market, not a hot one? What is the ask-to-sale spread the operator is underwriting, and is it stress-tested against the wide end of the luxury distribution? Which instruments compress the discount here, what do they cost, and how much liquidity do they actually buy after those costs? An operator who answers these plainly is pricing the real risk. One who talks only about price appreciation is pricing the risk that was never the problem.

The single sentence to carry away is that in prime resort property the risk is liquidity, not price. The price has been resilient and the scarcity case is genuine. The exit is the hard part, it is structurally harder than in prime urban, and it is the part most likely to be mispriced because it does not appear until the asset is finished and the capital is committed. Price the liquidity discount at acquisition, compress it with brand, management and yield, and hold capital patient enough to survive a slow window. Do the opposite — assume the exit, ignore the spread, and mistake a strong price index for a liquid market — and the discount is paid anyway, at the worst possible time, in full.

Skin in the game disclosure. Victaura, through its parent Greystone B.V. (Netherlands), holds an active operating position in prime resort property markets, including the Gili Islands (Indonesia). Readers should assume that commentary on this market may be influenced by, or may benefit, Greystone's existing position. This document is classified as marketing material under MiFID II Article 24(3). It is not investment advice, it is not a personal recommendation, and it is not an offer to sell or a solicitation to buy any security or interest in any vehicle. Any investment decision should be taken on the basis of formal documentation, independent professional advice, and a documented assessment of suitability for the investor's specific circumstances.