China’s NWBs: Coming to a Luxury Home Near You

According to NAR’s 2014 Profile of International Home Buying Activity, China is the second largest source of international buyers in the United States. Chinese buyers rank first in terms of dollar value of sales because they most often buy high-end luxury homes. The recent drop in Chinese stock markets, however, wiped out an estimated US$3.35 trillion of wealth. Where U.S. luxury real estate professionals are concerned, these turning economic tides might bring a change in clientele.

 

What’s an NWB?

 

Have you heard of NWBs? If not, you should make yourself familiar. The world’s fastest growing wealth segment is that of the NWBs—or “new wealth builders”—who hold financial assets between US$100,000 and US$2 million. While high-net-worth individuals (those with more than US$2 million in assets) accounted for US$43 trillion in global wealth last year, the NWB segment accounted for more than US$88 trillion. Translation: NWBs have a total of double the wealth of high-net-worth individuals! China’s NWBs, in particular, are amongst the world’s wealthiest and fastest growing economic group. It is estimated that China’s NWBs will hold double the wealth of American NWBs by the year 2020.

Most importantly, China’s NWBs seem to be fairing the economic storm better than most, and they are consequently in search of investments that protect their wealth, appreciate over time, or provide stable revenue streams. This makes them prime prospects for luxury real estate professionals in the United States.

Chinese NWBs: What They’re Looking For

A recent McKinsey Quarterly report shows that 69 million Chinese citizens possess the wealth to invest in U.S. properties. This figure is expected to reach 220 million by 2022. These numbers will likely yield an uptick in the number of Chinese buyers who invest in luxury homes abroad. In general, Chinese buyers are likely to be looking for these key features in U.S. real estate:

  • Great educational institutions. As far as Chinese buyers are concerned, education is king.
  • An expanding market with room for new businesses. Chinese buyers are looking to set down roots, and many want to open a business in the U.S. city where they buy a home.
  • Long-term ownership. Property laws in China effectively dictate that individuals hold long-term leases on properties, but can never fully own them. Chinese buyers want to own their homes outright so that they can pass them from one generation to the next.

 

Amongst Chinese buyers in general, NWBs are unique. Here are some things that luxury real estate professionals need to know about them:

 

  • Compared to individuals in the higher income bracket, NWBs are younger, more internet savvy, and more likely to rely on online resources when making investment decisions.
  • Chinese buyers take six months to research properties before they begin visiting and making purchasing decisions.
  • NWBs are more likely to look for investment opportunities in secondary cities.
  • NWBs are likely to only visit properties or work with real estate professionals that were visible online (and behind the Great Firewall of China).
  • Chinese prospects prefer to do their research in Chinese, on websites hosted in China.

 

China’s NWBs seem to be fairing well amidst economic upheaval and will likely be looking to make stable, long-term investments in foreign markets. For luxury real estate professionals, marketing your services and listings on Chinese sites will be paramount for reaching this growing group of international prospects.


Leaders in Luxury Advisory Board selected for 2015 event in Puerto Rico

Ten luxury professionals have been selected to serve on the Advisory Board for Leaders in Luxury (LIL), The Institute’sexclusive, invitation-only educational and networking event for real estate professionals who work in the million and multi-million dollar home and estate market.  This year’s Leaders in Luxury event is scheduled for October 4-6, in San Juan, Puerto Rico at The Ritz-Carlton Hotel and will cater to professionals who are true experts in the luxury residential market – those who work from the $1,000,000 to $100,000,000 price point.

 

The 2015 Leaders in Luxury Advisory Board includes

  • Val Arbona, RE/MAX Vintage, Houston (TX)
  • Christine Battista, Keller Williams, Denver Tech Center, Denver (CO)
  • Ann Chiasson, RE/MAX  Sea to Sky, Whistler (BC)
  • Christopher Fling, Fling Santy, Keller Williams, Phoenix (AZ)
  • Colleen Hensley, Keller Williams, Carlsbad (CA) 
  • Maggie Miggins, Keller Williams, Short Hills (NJ)
  • Margaret Parma, Kuper Sotheby’s International, Austin (TX)
  • Loretta Phinney, Royal LePage, Toronto (ON)
  • Raziel Ungar, Pacific Union, Christies International, Burlingame (CA)
  • Jim Walberg, Pacific Union, Christies International, Danville (CA)   

 

Our LIL Advisory Board is made up of a diverse group of luxury professionals from across North America who are leaders in their luxury residential markets.  What they have in common is strong expertise in the luxury home niche and a commitment to providing outstanding service to affluent buyers and sellers.  The Advisory Board provides input on topics and speakers for the event and helps promote the meeting to their peers across North America and abroad.

 

For information: Leaders in Luxury

214-485-3000

info@luxuryhomemarketing.com


Follow the money!

The very wealthy are on the move.  According to New York-based international  law, firm Fragomen, Del Rey, Bernsen & Loewy, which specializes in immigration services, the last ten years have seen the largest inflows and outflows of high net worth individuals (HNWI) relocating in history. In the last decade 11,000 HNWI left Switzerland, 14,000 left Russia, 32,000 left France, 43,000 left India and a huge 76,000 exited China. Many will keep assets and property in their home countries, yet most will buy real estate and set up bank accounts in their new locations, according to Fragomen.

Where did these HNWI move?  Over the same period, 212,000 relocating households and their destinations were identified by Fragomen. About 14,000 HNWI relocated to Canada, 20,000 to Hong Kong, 22,000 to Australia, 42,000 to the USA and an impressive 114,000 to the UK. The remaining 36,000 went elsewhere in the world. 

 


Film producer/developer building $500 million spec residence in Bel Air

Film producer and speculative residential developer, Nile Niami, is pouring the concrete for a spec residential compound including a 74,000-square-foot trophy home and three smaller companion homes which he says will hit the market at $500 million.  The project will exceed 100,000 square feet, including a 5,000-square-foot master bedroom, four pools, a 30-car garage and a “Monaco-style casino.”

If the property sells for anything close to this amount, it might set a new world record as the world’s most expensive residence sold.  The priciest home sale to date was a $221 million London penthouse which changed hands in 2011.  Competitive properties include a $425 million estate in France’s Cote d’Azur, a $400 million penthouse in Monaco and a $365 million London residence.

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Have you met the HENRYs?


If not, let us introduce you. The HENRYs are High-Earners-Not-Yet-Rich households who represent an increasingly important consumer group with strong spending power today and the potential of becoming wealthy. Not defined by age or occupation, they are identified by income. HENRY’s represent a growing group of homebuyers who, in many cases, can afford high-end homes.

Defined as consumers with combined household incomes between $100,000 and $250,000, HENRYs come in all age groups (no, they are not all young). They are excellent prospects for luxury home purchases, beginning at the entry level of luxury and moving up. About 25 million U. S. households fall into this category. That’s about 20% of total households. More important, HENRYs make up about 90% of the affluent consumer market.

HENRYs

HENRY’s are also a key market segment for luxury Realtors. In almost any spending category, the affluent top 20 percent account for about 40 percent of total consumer spending, as measured by the Bureau of Labor Statistics. While this group may not be buyers and sellers of homes in the double digit millions, they are often buying in the top 10% of the market. And – they may get richer!

Here are a few characteristics of HENRYs which Unity Marketing has identified:

  • They appreciate a high level of service and want to work with pleasant people
  • They respond to stories. What stories are you telling about your listings?
  • They are executives and managers and they don’t leave their smarts at the office. They are careful buyers and their bragging rights come from making a good deal. So, think VALUE and remember that a good deal isn’t always lowest price. 
  • They buy premium products. Is your service premium or standard?

How do you find them? How about using one of your Institute for Luxury Home Marketing member benefits to acquire target lists of HENRYs in the geographic areas you serve. You can select by income, education level, family size and other criteria. Then, farm the list with a market update report, and other information rich materials. HENRYs represent great potential in the high-end market for SLREPs (Successful Luxury Real Estate Professionals)!


FAA releases new temporary regulations on drone photography


image from upload.wikimedia.org

Is your drone photography breaking the law?

Excited about the idea of using drone photography for your latest luxury listing? Choose your drone photographer carefully or you may be violating the Federal Aviation Administration’s latest rules and regulations and subjecting your photographer, yourself, and your seller to injunctions and stiff fines.

In order to legally use drones, or what the FAA calls “unmanned aircraft systems” for a commercial purpose--including real estate photography--new temporary FAA guidelines require that your photographer apply for and receive an exemption from the FAA to operate drones commercially. Final regulations are not yet in place, but proposed details can be reviewed in the Federal Register. To see if your photographer has an operating exemption under the newly released temporary guidelines, check the list of exemption holders on the FAA website. For more information about how to apply for an exemption, visit the FAA’s "Section 333" information page. New regulations are expected to be published later this year.


High-End Security Systems: Really, Really Safe

In luxury homes, security often goes beyond a simple alarm system (and sometimes beyond the bounds of imagination). For luxury real estate professionals, it’s important to be in touch with the particular security concerns of high-end clientele, and the most popular and effective luxury home security systems available. Also, be aware that it’s commonplace for sellers to ask real estate professionals and prospective buyers to sign non-disclosure agreements covering their safe room or bunker.

Home security systems favored by high-income homeowners all share the same central goal: fast and secure isolation from potential intruders.

CreativeHomeEngineering

  • Safe rooms – The most popular luxury security option is the safe room, or panic room, which is typically centrally located so that it can be quickly and easily accessed in an emergency. There are dozens of companies that specialize in designing and installing bulletproof, entry-resistant rooms, which vary in size and comfort. To add an extra layer of security, many luxury homeowners ask that their safe room’s entrance be disguised. Companies like Creative Home Engineering specialize in customized and secure secret passageways, hiding safe room entrances behind bookshelves, mirrors, or even movable staircases. These security features could also be used to securely store your wealthy clientele’s art, valuables or guns.
  • Bunkers – Another less common security option is the bunker. Bunkers are hugely expensive and meant to withstand not only home invasion, but also natural disasters and even bombs. Bunkers are (of course) underground and typically designed to allow people to survive there for weeks or months. Check out this Forbes article about the trend of millionaire’s in-home bunkers.

There are a plethora of security solutions for luxury homeowners, but the best of today’s high-end security companies are offering all-in-one smart home technology that allows the homeowner to control things like climate, energy consumption, lighting, entertainment, and security, remotely and with ease.


Losing buyers due to poor headlines?


NowhereCreating a compelling headline requires more thought than using the street address as your property marketing headline. In fact, using the street address as the headline is one of the biggest mistakes real estate professionals make. It’s also ineffective. Unless the address is the most important thing about the home (1600 Pennsylvania Ave. for instance), use the street address elsewhere in your copy and begin to tell the home’s unique story in your headline. For instance, which headline is more likely to generate interest?

“7432 Johnson Drive”
or
“Just featured in Architectural Digest...yet only $750,000.”

Will a reader be more likely to want to know more about,

“1030 Edgewood”
or
“Small house, small price, BIG yard!”

Don’t be afraid of long headlines or long copy. If it’s good copy, it will be more effective than short copy. Yes, really. Advertising research backs this up, especially if you are writing about a product – like a property listing - that not everyone is familiar with. We’ve been taught in real estate to keep copy short, when in fact, we’d be creating more effective marketing pieces if we’d work to tell a compelling story about the home with plenty of descriptive copy. Here’s a combination headline and sub-headline that illustrates these principles. 

Your offer to buy must come with this promise:

  • I will appreciate the sweeping lake views, 
  • I will open the master bedroom wall and sleep under the stars, 
  • I promise not to gloat too much over the $445,000 price reduction!

This is likely to be more effective at attracting a buyer than, “1657 Hill Crest Lane.”

As you write your copy, do break long copy into short paragraphs and use some bold paragraph headings to help tell the story and create visual interest. Also, be sure there is plenty of white space between the lines. You can even use long copy online, if you format it so that it is reader friendly. Obviously your MLS descriptions have to be short. But don’t use MLS blurbs elsewhere, instead use good selling copy.

You should be getting the idea. In summary, headlines should begin to tell the story of your listing and should create curiosity. One advertising text book says that your headline should capture the reader and make them want to read the subhead and the subhead should pull the reader in to read the body copy.

Think about it this way: every home has a story and it’s your job to tell it in a compelling way. The headline is how you grab the reader’s attention by sharing something important about your listing. And once you’ve captured attention, don’t be afraid to use enough copy to weave your home’s story. After all, stories sell.


Monaco’s royal heirs develop super luxe residences

Monaco Royals Andrea and Pierre Casiraghi, heirs to Monaco’s throne and grandsons of Grace Kelly, have introduced one of the principality’s most expensive and exclusive condominium apartment developments as part of a plan to add new residences to Monaco’s scarce residential supply and reinforce Monaco as a destination for Ultra High Net Worth Individuals (UHNWI).

A conversion of the abandoned headquarters of the former Banca Commericiale Italiana, the project is in the desirable trophy neighborhood next to Monaco’s Casino Square. Named La Petite Afrique, the building is slated for completion in Winter of 2016 and is a joint project of the Casiraghi’s Fine Properties Monte Carlo and construction firm Pizzarotti Group.

Quietly being marketed by word of mouth only – which highlights how exclusive it is -- the building redo is the work of “starchitecht” Isay Weinfield. The two story penthouse is reported to have been sold already for about €200 million. Seven other residences of around 7,500 square feet each are also reported to be under contact. Prices for those apartments were believed to be in the €85,000 per square metre range (US$8,483 per square foot), or about US$72 million each. As of the end of March, only two units on the fifth floor are still available.

More details in this WealthX article.


A mini-movie for Valentine's Day

Romancing your listings is something we teach in our Institute for Luxury Home Marketing two-day training class. Other purveyors of luxury products and services strive to romance their products, too.

Since today is Valentine’s Day, we thought we’d share a marketing mini-movie with you, one that’s all about romance. Here is uber- jeweler Cartier’s latest mini-movie (actually, it is a composite of three mini-movies which you can also view individually):

(View video on YouTube)

In our opinion, Cartier knows how to tell an effective story that ties emotion and their jewelry together with a big red bow.

Happy Valentine’s Day!