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December 2015

Complex Luxury Consumers Crave Experiences, Not Things

In decades past, luxury consumers were a primarily homogeneous group with ostentatious style and a taste for status-setting items with luxury labels. Today, however, these values are all but obsolete. Luxury consumers are more varied, diverse, numerous, and complex than ever before, and thus less receptive to old marketing and branding tactics such as regionally- and demographically-targeted messaging. Market research shows that the “new” luxury consumer—in all of her instantiations—demands a fresh approach from luxury brands and service providers.

Luxury Experiences In High Demand

One of the most important changes in the luxury consumer is the shift in interest from luxury “things” to luxury experiences. “Shock of the New Chic,” a recent research article by BCG Perspectives, reports that “newly affluent buyers tend to amass tangible goods that show off their wealth. Those who have acquired the ‘things’ they want tend to move on to one-of-a-kind experiences that they can share with others.”

From free-diving with hammerhead sharks to attending art auctions, the interest in luxury experiences is growing across all levels of affluence. American Millennials, for example, generally place much more stock in shared experiences than the elder and wealthier Baby Boomers. BCG’s 2013 Global Consumer Sentiment Survey showed that 51% of American consumers prefer enriching experiences to products. Remarkably, experiential luxury constitutes 55% of luxury spending worldwide, and sales of luxury experiences now outstrip sales of high-end products.

Adapting To The New Complex Consumer

As market research reveals the luxury consumer’s ongoing transformation and diversification, there is mounting evidence that it’s time for big changes in the luxury industry. Although luxury brands generally put less stock into research than their mainstream counterparts, opting instead for creativity and exclusivity, BCG Perspectives stressed that “the formulas for success have become much more complicated.”

Here are 3 ways that luxury service providers can change their “business as usual.”

  • Offer luxury experiences. This might mean organizing exclusive events, hosting community meet-ups for high-net-worth individuals, or throwing soirées featuring local luxury brands and products. Think of creative, on-brand ways to enhance your clients’ experience and enable them to share and “live” luxury, rather than just live in it.
  • Enrich your sales process. To excel with today’s consumer, all aspects and stages of your service need to be top-tier. “Turning sales activities into deluxe experiences in their own right is nothing new,” according to BCG’s research. “But the practice is reaching new levels of excellence across a widening range of luxury segments . . . and across all channels.” Ask yourself how you can enhance your sales experience in the office, online, and everywhere in between.

Test out new “experiential” business models. Over the past decade, the luxury market has seen a proliferation of businesses based on “sampling” luxury items or experiences, sometimes through rental or subscription models like those of Bag Borrow Or Steal and Birchbox. BCG noted that, “Although some see such businesses as democratizing luxury—perhaps even diluting the participating brands—the new model clearly resonates with consumers, especially Millennials.” In other words, it’s time to second guess the old assumption


Institute Members Receive Industry Leading Online Education and Advanced Resources through New Partnership

The Institute announces new strategic partnership with McKissock Learning

Starting in 2016, all Members of The Institute of Luxury Home Marketing will receive free online Continuing Education (CE) and Professional Development courses from McKissock Learning, a national leader in real estate education. The list of benefits for Institute Members is already extensive - including access to WealthEngine through Online Wealth Lookup (OWL) and a free standard account with the international MLS Proxio - and now unlimited access to McKissock Learning’s online course library represents yet another competitive edge for Institute Members.

As a result of this new strategic partnership between The Institute and McKissock Learning, Institute Members will have unlimited access to online courses free of charge, including state-required credits for license renewal as well as a growing collection of elective professional development courses to help real estate professionals take their careers to the next level.

Here is just a small sample of elective topics from the company's Real Estate course library:

  • Pocket Listings: Is This Trend for You?
  • Navigating a Hot Seller’s Market
  • Millennials are Changing Real Estate: Are You Ready?
  • Navigating a Hot Seller’s Market
  • Technology, Relationships, and the Digital Consumer

The benefit to Members won’t stop there! Throughout 2016 McKissock Learning, in partnership with The Institute will be producing and launching a special series of luxury focused Continuing Education (CE) courses, all of which will be made available to Institute Members at no cost.

McKissock is among the best-regarded continuing education providers in the U.S., with tens of thousands of real estate professionals rating courses an average of 4.7 out of 5 stars. “We are excited to bring this new benefit to Institute Members,” says Tyler Duncan, General Manager of Real Estate for McKissock Learning. “In today’s ever-changing real estate market, continuing education and professional development play a vital role in the success of a real estate professional’s career and we look forward to helping members of The Institute capitalize on that knowledge.”

Curious to know more about this benefit and other benefits The Institute offers? Contact The Institute for Luxury Home Marketing at 214-485-3000. Institute Members can access this benefit along with more detailed information under their membership accounts at www.LuxuryHomeMarketing.com/McKissock.


World’s Most Expensive Home: Château Louis XIV Sells For US$301 Million

A mansion outside Paris just shattered the record for the world’s most expensive home, selling for 275 million Euros. Although it was constructed in 2011, the Château Louis XIV is built in the style of 17th-centruy French estates, featuring a gold-leaf fountain, ceilings painted in the style of the Sistine Chapel, and 56 acres of gardens that rival those of Versailles.

Although the sale was private, two sources close to the deal report that the unnamed buyer was Middle Eastern. Christie's International Real Estate was involved with brokering this incredible sale, one of the sources said.

Considered as a wedding venue for Kim Kardashian and Kanye West, the Château Louis XIV boasts both rich old-world aesthetics and cutting edge technology: a cinema, wine cellar, lavish ballroom, underground nightclub, squash room, and an underwater room with fish and sharks swimming in the clear walls.

Chateau back

Click the image above to view a property tour video in French

The mansion sits between Versailles and Marly-le-Roi, on the same land where Louis XIV developed a palace in the 18th century. The land was cleared in 1888 and used for agricultural purposes until 2008 when Emad Khashoggi decided to restore it to its regal heritage. The project was coordinated by Cogemad, a French company that develops luxury villas in Europe, Russia, and the Middle East. The construction reportedly took 3 years.

Cogemad provides 360-degree panoramic photos, and this video shows the grand scale of this record-breaking home. Cogemad’s website describes the attention to detail in the mansion’s interior: “The automated high-tech controls are incorporated with the utmost discretion, blending invisibly with the interior’s breathtaking Grand Siècle décor: gold-leaf moldings, marble inlays, tables sculpted from solid stone,  the finest silks, hand painted frescoes, elegant metalwork, and countless other refined details.” According to Cogemad’s website, the expansive gardens feature “elegantly planted parterres, a gleaming gold-leafed fountain, an infinite array of flowers, marble statues, bridle paths, and a hedged labyrinth.”

The previous record for highest confirmed sales price was $221 million, set when a London penthouse apartment sold in 2011.


Luxury Homes Use “Smart” Tech To Go Green In 2015

 

While luxury homes are often criticized for being excessive and wasteful, the last few years have seen high-end construction make a concerted turn toward improved sustainability and efficiency. In 2015, more than ever, smart home technology is being applied to the problem of energy consumption and environmental impact, resulting in luxury homes that are simultaneously high-end and eco-friendly.

Jennifer Egbert, a REALTOR based in Boulder, Colorado who specializes in luxury homes, has noticed a steady uptick in the combination of smart home technology and eco-friendly design practices in new luxury home constructions. “Smart home design is evolving quickly to meet the demands of current homeowners and future buyers,” Egbert wrote in a recent online article for At Home Colorado. “Especially here in Boulder, high-tech and energy efficient houses continue to rise in popularity.”

According to Egbert, an ILHM-certified real estate professional, four of today’s most popular luxury home design features focus on solar power, water conservation, efficient energy storage, and smart home technology.

Passive Solar Homes

In addition to harnessing the sun’s power with high-efficiency solar panels, today’s most ecologically oriented luxury residences are built using passive solar home design. With careful window positioning and insulation, passive solar homes are heated and cooled naturally by the environment, reducing reliance on A/C and furnace units that are famously inefficient—particularly in spacious, open-plan homes like those on the luxury market. Egbert is currently featuring a Boulder-area high-tech passive house on her website, and she sees the passive house trend as both unique and important. “It’s paving the way for a new type of lifestyle—one that emphasizes an appreciation for nature while providing high-end building components.”

Water Conservation

Newer eco-friendly luxury homes are doing away with expansive green lawns and non-native plants that require mind-boggling volumes of water. “Homeowners are becoming increasingly concerned with conserving water,” noted Egbert, “which is why many residences are employing water-saving landscaping design techniques like hardscaping or xeriscaping.” In addition, wealthy eco-minded homeowners are installing simple design features to reduce water consumption, such as high-efficiency toilets, showerheads, and faucets, as well as water capture systems that harvest rainwater for in-home use.

Tesla Home Energy Battery

One of the most groundbreaking recent innovations in eco-technology is the Tesla home energy battery, which is out of stock until 2016—proof of its popularity. The Tesla Powerwall links with a home’s solar panels, stores energy for later consumption, and provides energy to run a residence regardless of weather conditions. If the residence is connected to the grid, the Powerwall further helps to cut utility bills by charging during times of day when energy costs are at their lowest. “Energy efficiency is on most people’s minds these days,” said Egbert, “so some homeowners are going to great lengths to cut down on their utility bills.”

Smart Home Technology

Along with incorporating eco-friendly design features into their residences, luxury homeowners are implementing cutting-edge “smart home” technology, which integrates seamlessly with mobile devices and offers easy manipulation of home functions like temperature, humidity, lighting, irrigation, and entertainment. Ambient intelligent systems (AmI) go one step further by predicting and responding to residents’ needs. A network of sensors tracks movements and behavioral patterns and, as a result, the system can turn up the lights as you enter a dark hallway or adjust the heating when you’re expected to get home late from work. Remarking on the growing popularity of high-tech luxury homes, Egbert said, “To many homeowners, the phrase ‘smart home’ still conjures up images of futuristic gadgets, but that technology is definitely available and many builders and home owners are choosing to implement it.”


Chinese Nationals Buy Luxury US Real Estate Via Social App WeChat

WeChat1

Affluent Chinese nationals are scrambling to invest their wealth in US real estate. As of last year, Chinese consumers are the biggest foreign buyer of US real estate, and they’re the nationality willing to pay the highest prices for their properties. Chinese nationals are also the largest group of luxury consumers in the world, accounting for 32% of global luxury consumption. But with traditional avenues of engagement such as Google and Facebook being banned in China, how do US real estate professionals tap into this high-volume, high-demand market? Believe it or not, one solution might be found in a smartphone app.

WeChat Connects US Brokers With Chinese Buyers

You’ve likely never heard of WeChat, but this social app currently boasts 650 million predominantly-Chinese users. (That’s more than double the population of the United States of America!) Launched by Chinese internet giant Tencent in 2011, WeChat is a one-stop super-app that enables users to do pretty much anything: watch movies, share photos and videos, play games, chat with friends, call cabs, buy clothing, and offer personal loans.

Not only has WeChat had a profound impact on Chinese internet culture and mobile usage, but it’s now becoming something of a gateway between US real estate professionals and Chinese buyers.

Because a flight from the east coast of China to New York City takes a staggering 15 hours, many Chinese prospects are understandably hesitant to personally visit US properties. Instead, some are choosing to carry out the entire process through WeChat—going from initial contact with a US broker all the way to closing without ever setting foot in the country, let alone the purchased property. Significantly, the real estate being bought and sold via WeChat falls within the luxury bracket; a recent Business Insider article features interviews with US real estate professionals who’ve used the app to sell properties worth up to $5million.

How You Can Attract Chinese Buyers On WeChat

If you’re considering getting a WeChat account to tap into the Chinese market, here is some information to get you started.

  • It’s free! Like Instagram or Twitter, it doesn’t cost anything to create an account on WeChat.
  • Blog to build trust. In order to bridge the great distance between agent and prospect, use your WeChat account as a personal blog. In addition to posting your listings, share personal thoughts and photos from everyday life to reassure prospects that you are a real, trustworthy person. A strong personality on WeChat will lead to sales.
  • Virtual tours. Real estate professionals can share photos, walk-through videos, blueprints and other information to “show” a property via WeChat. Clients may also have locally-based representatives tour properties on their behalf.
  • To make communication easier across a massive time difference, you can leave voice messages via WeChat, which your clients can respond to the next day.
  • All digital. Once a deal reaches its final stages, a legal representative will cement your digital communications as binding and send an electronic version of the contract to the client.

Want to know more about working with the affluent Chinese buyer? Checkout The Institute's upcoming Member webinar, on December 17th at 3 pm Central Standard Time. Members of The Institute can register at www.LuxuryHomeMarketing.com/webinars.