Luxury Insights

Would you like a green card with that purchase?

Interesting article in this week's New York Times which highlights a government program that grants "green cards" to foreign nationals who invest $500k or more in U.S. real estate development.  Despite some criticisms, the program is gaining momentum--funding almost a BILLION dollars of new develpments in New York City alone.  

Affluent foreigners are rushing to take advantage of a federal immigration program that offers them the chance to obtain a green card in return for investing in construction projects in the United States. With credit tight, the program has unexpectedly turned into a mainstay for the financing of these projects in New York, California, Texas and other states.

The number of foreign applicants, each of whom must invest at least $500,000 in a project, has nearly quadrupled in the last two years, to more than 3,800 in the 2011 fiscal year, officials said. Demand has grown so fast that the Obama administration, which is championing the program, is seeking to streamline the application process...

It is certainly an interesting option for foreign buyers (and US developers).

WSJ: Developer Courts the Global Elite

Interesting story in today's Wall Street Journal looks at "One57" -- a new condo development that targets the world's ultra-affluent and will be the tallest residential tower in NYC.  

Designed by French architect Christian de Portzamparc, One57's 95 condos for sale have a combined price tag of $2 billion, or an average per unit of more than $21 million, which would match Manhattan's 15 Central Park West as the most expensive building ever sold.

While a hallmark of the economic downturn has been the collapse of the housing market, the extreme top of residential markets in New York, London, Hong Kong and other select cities has been resilient.

Mr. Barnett says the number of billionaire and multimillionaire investors in the world has never been greater. In addition to Russians and Western Europeans, he says, "you're seeing Latin Americans in a big way. You're seeing Chinese in a big way. You're seeing the return of the Middle Eastern buyer."

Thanks to this demand, the ultraluxury market in select cities is looking healthier than practically any other corner of the housing market.

WSJ.com: Developer Courts the Global Elite

Wow! What an Event.

The Leaders in Luxury 2011 Advisory Board on stage at the LIL 2011 Awards Dinner: Carole Smith, Gretchen Lambeth, Leslee Farrell, Kathleen Bucher, Maria Babaev

 

A big "thank you" to the more than 140 top agents from the U.S., Canada, and Mexico who gathered at the Ritz Carlton Laguna Niguel and made Leaders in Luxury 2011 a smashing success.  

Special thanks to our Advisory Board (pictured above), our International Team of Dawna Borg and Toni Viola, and also to Dave Wilkinson and Lori McGuire for letting us tour their listings.  

Thanks too to our speakers and panelists for sharing their unique knowledge and insights.  The information and ideas were fantastic and so was the networking!  

What a fantastic group.  Thank you all.  

Here are some photos of the cocktail and Awards Dinner: 

We're already looking forward to next year!

 

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

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.

October 'Wealth Report' Now Available

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...

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.

Top 10 streets with jaw-dropping home prices

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.  

Wealth Survey: Why the Rich ARE Buying

Here's another peek at some of the results of the Wealth Survey: Real Estate and Lifestyle.  See our previous post for more details. 

Here are the top reasons given by affluent Americans who ARE planning a real estate purchase this year.  

 
Are your marketing pieces and messaging highlighting these opportunities?  They should be!  

Wealth Survey: Why the Rich Are NOT Buying

Here's another peek at some of the results of the Wealth Survey: Real Estate and Lifestyle.  See our previous post for more details. 

Here are the top reasons given by affluent Americans who were NOT planning a real estate purchase this year.  

Do you have scripts to overcome these common concerns and objections?  Are you addressing these issues in your market update reports?  You should be!