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May 2016

LUXURY AND SAFETY — DEEP UNDERGROUND?

So if you’re one of the few people left on Earth, can you still live in luxury? What if you’re stuck in an underground bunker? Survivalists are already answering these questions — with incredible survival bunkers built with the luxury lifestyle in mind.

There’s one luxury bunker in Tifton, GA, built more than 40 feet underground. It features seven apartments, a 15-seat movie theater for residents, and even has working internet access. For practical purposes, it includes decontamination showers and an outdoor firing range. And of course, it can withstand a nuclear blast. But none of this comes cheap — the price tag is about $17.5 million.

Underground Bunker

About 687 miles northwest of Tifton, there’s an underground bunker (at an undisclosed location) called Vivos Indiana. Originally a government communications facility, it’s now been repurposed as a luxurious hangout for survivors of any type of catastrophe.

With 12-and-a-half-foot ceilings in the living area, plush carpets and rows of reclining chairs, the living area is a great place to spend some quality time. 60 varieties of freeze-dried and canned foods fill the cupboards, complemented by the fresh bounty of a hydroponic garden. Units designed for four to six residents feature double-queen bunks with gorgeous bedding — the kind you’d find at a Ritz-Carlton!

Pet kennels. A gun safe. Exercise and medical facilities. Powerful generators and high-grade filters built to keep the residents warm and safe. And just a $35,000 entry fee.

Built by a former real estate entrepreneur — who sold shares of villas in luxury destinations such as Aspen and the south of France — these kinds of facilities are attracting the interest of many affluent Americans. (In the last several years, the U.S. has added more than 1.5 million new millionaires.)

And this isn’t a uniquely American phenomenon. The Vivos franchise extends to europe, where a similar-but-larger facility was built in a former munitions storage facility in Germany. This billion-dollar property can house 34 families for a full year, with swimming pools, a wine cellar and more — priced in the $3 to $5 million range.

Clearly, if you have a few million dollars to spend — and you’re a bit worried about war or meteors or nuclear plant meltdowns — you have options.

The folks at SurvivalCondo.com can help you build your own luxury bunker, with half-floor, one-level units at about 920 sq. ft. starting at $1.5 million. Full-floor units are about twice that size and price, while “penthouse” units of about 3,200 sq. ft. on two levels start at $4.5 million.

As is always the case with luxury real estate, the bigger the budget, the more options you have. Luxury survival bunkers are a growth market — and while there is a natural limit to how big it will get, there’s definitely a need.

So if you have a client who’s a bit paranoid about world-changing events — but also a predilection for the finer things — now you know what kinds of showings to schedule!


6 Things to Know from the 2016 Wealth Report

There are a variety of challenges facing today’s ultra-high-net-worth-individuals (UHNWIs), according to the 10th edition of “The Wealth Report” — published by global real estate consulting company Knight Frank.

The 2016 Attitudes Survey is based on responses from approximately 400 of the world’s leading private bankers and wealth advisors who were surveyed in the 4th quarter of 2015. Their answers — concerning the UHNWIs in their client base — tell a story of growth slowdown, changes in family and succession dynamics, increased scrutiny and economic pressures.

Here are six of the most interesting findings from the report (in our opinion):

  1. Two-thirds of respondents believe that their clients’ wealth will increase at a slower rate over the next 10 years than it did over the previous decade.
    While a positive trend has lasted nearly a decade, the forecast for the next decade is slightly bearish, with growth expected to slow down. The main issues creating a challenge for wealth creation then — and now — include succession and inheritance considerations, increasing taxes, and the worldwide economy. Other important concerns include the fact that more families have members spreading out around the world, personal security and safety, and personal and family health.
  1. Threat to future growth #1: Succession and inheritance issues.
    More than 85% of respondents agree that their clients are more active in managing their wealth — so 92% believe that they need to work harder to earn their clients’ trust. These advisors also have to take a look at how they engage with clients, since nearly 80% of them see women taking a more prominent role in managing their family’s wealth — and UHNWIs are getting their children more involved in the family business at an earlier age.

    Also, UHNWIs traditionally have been concerned that future generations would not be successful in maintaining the family’s wealth — almost expecting the third generation to waste much of it. Recently, however, the attitude has been that the second generation is more likely to fail at growing the family’s fortunes. When asked, 62% worried that their children would be encouraged to earn their own wealth, and nearly 50% felt that they wouldn’t know how to handle the family’s investments.
  1. Threat to future growth #2: Wealth taxes.
    Nearly 70% of respondents agreed that their clients feel that they are under increased scrutiny by the public and authorities, so they are more aware of displaying their wealth publicly. One example of this increased attention is in the U.S., where “the 1%” are being criticized for currently favorable tax rates, as well as corporate tax benefits.
  1. Threat to future growth #3: The global economy.
    Many respondents felt that UHNWIs are being scapegoated by governments who are failing to address wealth-inequality issues.
  1. The majority of respondents said that their clients will be increasing their philanthropic activities.
    As always, philanthropy is an important part of the UHNWI agenda — perhaps more so than ever before. According to the survey respondents, most of them noted indicated that their clients would be expanding their philanthropic activities, which continues the trend over the past decade.

    Approximately 67% of UHNWIs had already been growing their philanthropic efforts over the past 10 years, while nearly 80% noted that they would continue that growth over the next 10. The main reason cited was “a sense of personal fulfillment,” although religious beliefs were also mentioned as an important reason (specifically in the Middle East).
  1. 30% of UHNWIs are considering a residential purchase in 2016.
    Another important part of the Wealth Report is the coverage of the current attitudes of wealthy individuals with regard to property — whether as a place to live and/or as an investment.

    Over the past decade, more than half of respondents noted that their clients were allocating more of their investable wealth to residential property, while more than 40% expected that to increase over the next decade — with 30% of them being likely to think about a residential purchase this year.

    According to the report, UHNWIs have designated about a quarter of their investable wealth for residential properties, and another 11% on commercial real estate. The major motivators for this expected growth in residential real estate purchases? The most popular reason (55%) was as a re-sellable investment, while other key factors include as a safe haven for funds (47%) and investment diversification (46%).

    In addition, commercial real estate interest is growing. Nearly half of wealth advisors foresee increases in their clients’ portfolio allocations in the next 10 years. Their most likely targets include offices and hotels (the standard investments of choice), although warehousing and logistics are increasingly popular.

While new challenges are out there, 2016 should be a year of opportunity. Even with a variety of issues facing UHNWIs and the professionals who work with them — from slowing growth and changes in family/succession planning to increased public and media scrutiny and economic pressures — these challenges should be viewed as opportunities for advisors to develop creative solutions and prove their value.

 


Luxury Garages Become A Swanky Social Space

Along with clothes, watches, and wine, high-end and vintage cars are a favorite collector’s item for high-net-worth individuals. And—just as many luxury homes have custom wine cellars and walk-in closets—luxury homeowners with treasured car collections are likely to want a special space for their high-end vehicles.

Luxury Garage

Top end luxury garages have little in common with the dusty cement rooms that immediately come to mind and they’re about much more than car storage. For individuals with prized vehicles—whether 1 or 100—the ideal luxury garage might be used for:

  • Entertaining. A high-end car enthusiast wants to be able to spend time socializing amidst their car collection, so luxury garages can boast an entertainment system, seating area, wet bar, and card table or billiard table to widen the space’s utility.
  • Showcasing. For car collectors, each vehicle is a work of art, and so a luxury garage acts as the gallery. Custom lighting and rotating turntable displays can enhance the presentation of a homeowner’s favorite vehicles.
  • Maintenance. Many car collectors like to get under the hood of their cars and a well-equipped maintenance bay is the perfect space to tinker.
  • Preservation. Finally, a collector will want their high-end vehicles to be cared for and protected from the elements, so climate control is a must in humid climates where weather can speed deterioration and encourage rusting.

If the luxury home is in an area without space restrictions, then an added garage can span thousands of square feet and accommodate dozens of vehicles without issue. For city dwellers, however, a car storage space can prove more elusive. One popular solution for wealthy collectors is a car elevator such as the PhantomPark, which starts at about $40,000, is custom built to fit the homeowner’s needs, and stores cars below ground. It is important to note, however, that while a lack of garage may diminish a home’s value and desirability, luxury garage renovations see a mere 52% return on investment in resale.