Luxury Lifestyles

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


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.


2015 Leaders in Luxury Marketing Awards Winners

Thank you to all those who submitted entries for this year's Leaders in Luxury Marketing Awards. We were blown away by the amount of entries submitted, and what our members have accomplished. Congratulations to the winners of the 2015 Leaders in Luxury Marketing Awards.

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Jennifer Egbert, Dawn Thomas, Christine Battista, Carl Battista, Norka Parodi, Patrick Ryan

2015 Best Agent Market Report

Winner: Dawn Thomas, Dreyfus Sotheby’s International Realty, Palo Alto, CA

2015 Overall Excellence in Personal Marketing

Winner: Jennifer Egbert, JP Egbert Associates, Modern Luxury Real Estate, RE/MAX Alliance; Boulder, CO

2015 Best Marketing Campaign for a Property

Winner: Norka Parodi The Norka Group, Boca Raton, FL

2015 Outstanding Personal Achievement

Winner: Patrick Ryan, Ryan Residential, Related Realty Chicago, IL

2015 Best Marketing Video

Winner: Carl Battista & Christine Battista, The Battista Team, Keller Williams Denver Tech, Denver, CO

Watch for more on these winning entries in upcoming blog posts. Also watch for a webinar in the next few months featuring the marketing award winners’ entries.


China’s UHNWIs Invest In Top-Tier Homes & Higher Education

For luxury real estate professionals in certain markets, international buyers are a growing source of opportunity. According to the Knight Frank 2015 Wealth Report, there are 172,850 individuals globally who have a net worth of $30 million or more. An estimated 32% of an UHNW individual’s assets are invested in real estate, and that 81% of UHNWIs are most interested in the residential market. Amidst the growing pool of wealthy international investors, Chinese clients stand above the rest.

The NAR’s 2015 Profile of Home Buying Activity of International Clients showed that, for the first time ever, international buyers from China exceeded all other foreign buyers in both units and dollar volume, spending $28.6 billion on United States residential real estate last year. While Chinese buyers are undoubtedly attempting to shelter their wealth from a chaotic domestic market, reports show that they are dually motivated by an interest in the United States’ prestigious universities.

Chinese students account for approximately one third of all international students in America, and an estimated 10% of Chinese UHNWIs send their children to college in the United States. It is becoming increasingly popular for wealthy Chinese parents to invest in residential property near their child’s university, constituting a simultaneous investment in real estate and education. Chinese buyers show a strong preference for American cities on the west coast, such as San Francisco, Los Angeles, and Seattle, which boast a wealth of educational and business opportunities, as well as relative proximity to China.

Learning To Work Effectively With Chinese Clients

Shake Bow Book Series

Chinese buyers have a unique set of customs and perspectives concerning social and business transactions. Luckily, there are many resources available to luxury real estate professionals who want the tools to attract Chinese buyers and exceed their expectations.


Middle Eastern Royalty Negotiating for Lavish 68-room Sardinian Estate, Will $541 Million be the Final Price?

Saudi king blog post
Rumors are rife that former Italian Prime Minister Silvio Berlusconi is selling Villa Certosa, his lavish estate on Sardinia’s exclusive Costa Esmeralda, to Saudi Arabian royalty for $541 million. The estate sprawls over 296 acres and features 68 rooms, six swimming pools, an underground grotto where small boats can dock, an amphitheater, and a man-made volcano that erupts on command.

Arabian Business reports that Saudi Arabian Prime Minister, Prince Mohammed bin Nayef, is buying the property on behalf of his uncle King Salman bin Abdulaziz Al Saud.

Italian daily Corriere della Sera previously reported that Berlusconi was seeking $552 million for the secluded Mediterranean estate, which became a symbol of his flamboyant lifestyle during his years in power.  


The Luxury Shed: So Much More Than A “Man-Cave”

She Shed
I know what you’re thinking: luxury shed? Sheds have historically been used as a place to store farm equipment, garden supplies, firewood, and seasonal sports equipment. Not so long ago, you would’ve been more likely to find a possum in a backyard shed than someone reading a novel on a rainy day! But you can forget the corrugated metal and plastic siding. Luxury homeowners today are recasting backyard sheds as a vessel for their dreams, built and decorated with the same attention to detail and quality of materials as the main household.

You Call That A Shed?

A “man cave” is a room in the house dedicated to a male head of the household—essentially a no-girls-allowed clubhouse for adult men. The trend of tricked-out sheds really took flight when homeowners began moving these so-called “man caves” out of the house and into the outdoors. The women’s equivalent, which some refer to as the “she-shed,” is becoming increasingly popular.

In general, luxury sheds are designed to provide a private hideaway for working or relaxing. (Because sometimes being behind a locked door in the same house just isn’t enough space!) Sheds also offer an opportunity for homeowners to attain the home of their dreams. If the existing floor plan doesn’t have a room with adequate space or privacy for one of the homeowner’s needs, a luxury shed can offer the perfect solution.

Some of the most popular uses for luxury sheds:

  • Cozy, private reading room complete with coffee maker
  • Gardening shed and greenhouse for growing things year-round
  • Master bathroom expansion (if you want the bath to be really relaxing, put it in a different building)
  • Woodshop, workshop, or hobby space
  • Artist’s studio for painters or sculptors
  • Recording studio
  • Backyard home office
  • Adult tree house (for the young at heart)
  • Backyard bar or cocktail lounge

Endless Possibilities

For luxury real estate professionals, sheds are a way to expand the client’s possible uses of a given space or piece of property. If you are showing a home and the client says they are looking for something closer to the forest, why not suggest a luxury shed in a secluded wooded corner of the property? If an existing luxury home doesn’t have the right space for a bar and lounge, a private office, a craft space, or a recording studio—why not inform your client about the endless possibilities afforded by luxury sheds?

The best part? They are affordable, comfortable, and customizable. Because of their small footprint, sheds can be built virtually anywhere and erected in a matter of days.


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.

Read Article


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.


Qatar’s royal family to convert three London properties into palace worth more than US$300 million

Palace


The royal family of Qatar plans to convert three prime properties in London’s Regent’s Park into a huge palace, making it the UK’s first home worth £200 million (US$312 million). When completed, the mansion is expected to be the most valuable residential property in London in private hands.

According to a story in London’s Daily Mail, the 13-bedroom residence will be the London home of the current Emir Sheikh Tamim bin Hamad bin Khalifa Al Thani.

Sheikha Mozah Bint Nasser Al Missned, one of the three wives of former Qatari Emir Sheikh Hamad bin Khalifa Al Thani, purchased the homes for an estimated £120 million (US$187.67 million) in 2013 and has reportedly hired architects and lawyers to oversee the transformation of the properties into a 33,000-square-foot mansion which will include a spa, heated swimming pool, beauty salon, butler and nanny quarters, a children’s floor, games rooms, powder rooms, massage areas, two elevators and a gymnasium.

Complete story, floorplan and photographs in the Daily Mail.


Golden Visas - Real Estate Investment, Residency & Citizenship

There is an interesting article on WealthX today looking at the current trends in countries offering residency or citizenship to “immigrant investors” and in particular the shift among the Chinese from the US to the EU. The full article is worth a read. Here are some highlights:

  • In recent years 80%-90% of foreign investment visas in the US, Portugal, Canada and Australia are taken up by People’s Republic of China (PRC) nationals, but this is starting to change.
  • The US, UK, Australia and Canada are limiting some of their programs while they deal with the backlog of applications, or make them more expensive.
  • The US’ EB-5 visa requires investment of between US$500,000 and US$1 million in return for a conditional green card. There are just 10,000 of these visas issued annually and a cap on each nationality.
  • This year Canada stopped accepting applications for its immigrant investor program and the federal entrepreneur program, of which around 90 percent of applications were from China.
  • Investor programs for residence, like in Portugal, Spain, Greece, Hungary, UK, Canada, US, Australia, where the investor receives only Permanent Resident (PR) Status, are more popular in China. Under these programs it is legal for them to invest abroad and obtain PR, while applying for immediate citizenship is against the law in China.

Just for fun, here are the details on the Greek program that affords residency to real estate investors: 

Greece