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October 2011

Guardian UK: Luxury housing market unscathed while all around it suffers

MonteCarlo

Despite the European economic crisis, sales are up on luxury homes across Europe, and buyer confidence is high as evidenced in the The Guardian UK story in Sunday's paper: Luxury housing market unscathed while all around it suffers

Highlights from the story:

  • Sales of £1m-plus homes in London hit their highest level since the 2007 housing peak...
  • Sales of prestige property in France and Monaco leapt 38% in the third quarter of this year, compared with the previous quarter.
  • Prices on luxury homes in the French Riviere up 3.5% YOY.

They sum it up this way: "When the economic going gets tough, the rich get going in increasingly big houses."

Let's hope our global economic conditions improve.  In the meantime, this is more good news for luxury professionals.


Wealthy investors implement “catastrophe” investing

 Real estate still a prime portfolio play! 

In the face of concerns about the state of the global economy and global political instability, many of the super rich have shifted investment priorities.  Instead of trying to grow their wealth, they are focused on wealth preservation – maintaining the wealth they have in today’s challenging and unpredictable investment market.    A Reuter’s article calls the resulting investment strategy a “catastrophe portfolio” which "allocates one third of the money to gold, one third to defensive and internationally diversified blue chip company shares, and a third to the debt of ultra-safe developed countries.”  (Anyone have a clue as to what countries those might be?)

The affluent in Europe, the Middle East and China are also sending more of their money abroad, some of which ends up in high-end residential real estate.  Hence the property booms in London and Vancouver (B.C.).  Paris may be next in the growing list of very desirable places to buy luxury homes and condos.  While the “catastrophe portfolio” may be embraced by the most nervous of the wealthy, a 2011 study by Knight Frank and Citi Private Bank reports that the ultra high net worth individuals (UHNWI) still hold property close to their hearts.  According to their survey, it makes up 35% of the average UHNWI’s investment portfolio (this includes both residential and commercial). Those surveyed in this report had, on average a net worth of $100 million.  The report goes on to say, “The factors that encourage the wealthy to seek out and buy the very best property in cities such as London have, if anything, become even more important.”  

We note that this flight to quality real estate is also being seen in major U.S. and Canadian markets from New York and Washington D.C to Toronto and Los Angeles.  Factor in the importance of education to Asians -- especially the Chinese -- and you find one more reason for affluent Asians to purchase in the U.S. and Canada.  Many wealthy Asians are sending their children to U.S. and Canadian colleges and universities.  This often leads to a real estate purchase – either a condo for the expat student and/or a luxury residence for the family to use when visiting the scholar.  This education-related demand is the most important driver of Chinese purchases in the U.S. other than investment. This also means that Chinese buyers are popping up in many markets with colleges and universities.    

All this bodes well for foreign residential investment in the U.S.  Keep your eyes and ears open for opportunities in your markets.


Buy a House, Get a Visa

Two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S.

...The proposed measure would offer visas to any foreigner making a cash investment of at least $500,000 on residential real-estate—a single-family house, condo or townhouse. Applicants can spend the entire amount on one house or spend as little as $250,000 on a residence and invest the rest in other residential real estate, which can be rented out...

The Wall Street Journal

More coverage:

FOX: Senators Draft Bill to Give Visas to Foreigners Buying Pricey Homes

Financial Times Blog: Fixing America’s housing market… with Chinese landlords?

 


Starry, starry nights

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Marketing a remote luxury property?   Here’s a question you may not have considered – does the property have true night-time darkness?  According to a recent article in The Independent newspaper, a view of the stars  -- unaffected by serious light pollution -- may be a positive property feature to promote. 

Not sure light pollution, or the lack of it, has much bearing on a home’s desirability?   Stephen Richards, an estate agent with U.K. brokerage Chesterton Humberts, says, “The absence of light pollution can be a selling point, particularly for a London-based buyer seeking complete serenity.”  

Imagine the buyer who wants to share star-filled skies with their children, teach grandchildren the constellations, or simply enjoys astronomy.  A “dark sky” home, may be just what they’re looking for.  Do you have one listed?   If so, add starry skies to your list of benefits and features.


October 'Wealth Report' Now Available

Wealth Report

The October 2011 Wealth Report Newsletter is now available for Members.

In this month's issue:

  • Luxury Retailers Again Show Strength In September
    Despite another 10% drop in the S&P 500 stock index, high-end retailers post increases in monthly comparable sales nearly double the growth seen in the overall retail universe in August. 
  • WealthSurvey: The State of the Luxury Industry -A Global Comparison of Consumers in Top Markets
    Luxury spending surge picks up strength in China even as wealthy consumers report plans to throttle back on purchases in Europe, Japan and the U.S. 

There is some really interesting data on the attitudes of the wealthy in China.  Here's a peek:

 Nearly four out of five (78%) wealthy Chinese consumers say that luxury goods and services are more important in today's economy, although the reverse is true in the U.S. where 80% of wealthy shoppers say that luxury has become less important. 

Members can access this report and an archive of past reports on our website (login required). 

The report is produced by the New York based Luxury Institute, a uniquely impartial, independent and objective ratings and research organization that is the global voice of the high net-worth consumer. 


America's Most Expensive Zip Codes

Forbes has published a list of America's Most Expensive Zip Codes.  It uses the same data set as our ILHM National Luxury Market Report but provides a different view -- more of a short term peek at the market by zip code--but it is fun nonetheless.  Kind of like a billionaire list for neighborhoods...

Top_10

If you enjoy "house porn" check out their What $1 Million Buys In America's Most Expensive Zip Codes and Homes In The 50 Most Expensive Zip Codes articles too.


ForSalebyOwner.com founder fails to sell own home

Listing with real estate broker results in higher price, greater net to seller!

The Founder and former CEO of ForSalebyOwner.com may be rethinking the value of listing a property with a REALTOR.  Colby Sambrotto listed his New York condominium on his own and promoted it on FSBO websites and in online classified ads.  All to no avail.  

After six months, he gave up as a FSBO and listed his 2000 square foot unit with New York broker Jesse Buckler.  His new listing agent recommended retargeting the property to different buyer groups and suggested a new list price.  

The Wall Street Journal reports that the listing sold for $2.15 million with a 6% professional fee to the broker.  Since the condo sold for $150,000 more that the original asking price, Sambrotto netted an extra $21,000 after the professional fee was paid.  

Bottom line -- it paid the FSBO website founder to use a pro!


Top 10 streets with jaw-dropping home prices

Monaco

Despite the global economic downturn, there are still markets where residential real estate prices are in the stratosphere.  Wonder where the most expensive residential real estate in the world can be found?  

Here’s the list of the ten priciest streets in the world, according to a post on the Overseas Property Mall blog.  

  1. Severn St., Hong Kong, China:  
    $78,200 per square foot
  2. Kensington Palace Gardens, London, England:  
    $76,600 per square foot
  3. Avenue Princess Grace, Monte-Carlo, Monaco:  
    $69,700 per square foot
  4. Chemin de Saint-Hospice, Saint-Jean-Cap-Ferrat, France:  
    $62,700 per square foot
  5. Fifth Avenue, New York City, United States of America:  
    $62,700 per square foot
  6. Quai Anatole, Paris, France:
    $44,600 per square foot 
  7. Rue Bellot, Geneva, Switzerland:  
    $43,000 per square foot
  8. Via Romazzino, Porto Cervo, Sardinia, Italy:  
    $23,700 per square foot
  9. Wolseley Road, Point Piper, Sydney, Australia:  
    $20,900 per square foot
  10. Ostozhenka, Moscow, Russia:  
    $18,000 per square foot

It might be interesting to see if you can figure out the most expensive street in your market and do your own blog post, press release, or newsletter article comparing your market with the world’s most expensive.