In the News

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.

China’s NWBs: Coming to a Luxury Home Near You

According to NAR’s 2014 Profile of International Home Buying Activity, China is the second largest source of international buyers in the United States. Chinese buyers rank first in terms of dollar value of sales because they most often buy high-end luxury homes. The recent drop in Chinese stock markets, however, wiped out an estimated US$3.35 trillion of wealth. Where U.S. luxury real estate professionals are concerned, these turning economic tides might bring a change in clientele.


What’s an NWB?


Have you heard of NWBs? If not, you should make yourself familiar. The world’s fastest growing wealth segment is that of the NWBs—or “new wealth builders”—who hold financial assets between US$100,000 and US$2 million. While high-net-worth individuals (those with more than US$2 million in assets) accounted for US$43 trillion in global wealth last year, the NWB segment accounted for more than US$88 trillion. Translation: NWBs have a total of double the wealth of high-net-worth individuals! China’s NWBs, in particular, are amongst the world’s wealthiest and fastest growing economic group. It is estimated that China’s NWBs will hold double the wealth of American NWBs by the year 2020.

Most importantly, China’s NWBs seem to be fairing the economic storm better than most, and they are consequently in search of investments that protect their wealth, appreciate over time, or provide stable revenue streams. This makes them prime prospects for luxury real estate professionals in the United States.

Chinese NWBs: What They’re Looking For

A recent McKinsey Quarterly report shows that 69 million Chinese citizens possess the wealth to invest in U.S. properties. This figure is expected to reach 220 million by 2022. These numbers will likely yield an uptick in the number of Chinese buyers who invest in luxury homes abroad. In general, Chinese buyers are likely to be looking for these key features in U.S. real estate:

  • Great educational institutions. As far as Chinese buyers are concerned, education is king.
  • An expanding market with room for new businesses. Chinese buyers are looking to set down roots, and many want to open a business in the U.S. city where they buy a home.
  • Long-term ownership. Property laws in China effectively dictate that individuals hold long-term leases on properties, but can never fully own them. Chinese buyers want to own their homes outright so that they can pass them from one generation to the next.


Amongst Chinese buyers in general, NWBs are unique. Here are some things that luxury real estate professionals need to know about them:


  • Compared to individuals in the higher income bracket, NWBs are younger, more internet savvy, and more likely to rely on online resources when making investment decisions.
  • Chinese buyers take six months to research properties before they begin visiting and making purchasing decisions.
  • NWBs are more likely to look for investment opportunities in secondary cities.
  • NWBs are likely to only visit properties or work with real estate professionals that were visible online (and behind the Great Firewall of China).
  • Chinese prospects prefer to do their research in Chinese, on websites hosted in China.


China’s NWBs seem to be fairing well amidst economic upheaval and will likely be looking to make stable, long-term investments in foreign markets. For luxury real estate professionals, marketing your services and listings on Chinese sites will be paramount for reaching this growing group of international prospects.

Follow the money!

The very wealthy are on the move.  According to New York-based international  law, firm Fragomen, Del Rey, Bernsen & Loewy, which specializes in immigration services, the last ten years have seen the largest inflows and outflows of high net worth individuals (HNWI) relocating in history. In the last decade 11,000 HNWI left Switzerland, 14,000 left Russia, 32,000 left France, 43,000 left India and a huge 76,000 exited China. Many will keep assets and property in their home countries, yet most will buy real estate and set up bank accounts in their new locations, according to Fragomen.

Where did these HNWI move?  Over the same period, 212,000 relocating households and their destinations were identified by Fragomen. About 14,000 HNWI relocated to Canada, 20,000 to Hong Kong, 22,000 to Australia, 42,000 to the USA and an impressive 114,000 to the UK. The remaining 36,000 went elsewhere in the world. 


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.

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FAA releases new temporary regulations on drone photography

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Is your drone photography breaking the law?

Excited about the idea of using drone photography for your latest luxury listing? Choose your drone photographer carefully or you may be violating the Federal Aviation Administration’s latest rules and regulations and subjecting your photographer, yourself, and your seller to injunctions and stiff fines.

In order to legally use drones, or what the FAA calls “unmanned aircraft systems” for a commercial purpose--including real estate photography--new temporary FAA guidelines require that your photographer apply for and receive an exemption from the FAA to operate drones commercially. Final regulations are not yet in place, but proposed details can be reviewed in the Federal Register. To see if your photographer has an operating exemption under the newly released temporary guidelines, check the list of exemption holders on the FAA website. For more information about how to apply for an exemption, visit the FAA’s "Section 333" information page. New regulations are expected to be published later this year.

Global Market Volatility and Safe Havens

This isn't a financial blog, but the current state of the world financial markets has us pondering volatility, safe havens, and of course, luxury real estate.  

Anyone reading the headlines (or filling their gas tanks)  in recent days knows that the price of oil has plunged. OPEC and Russia have stuck to their guns and have not cut production.

The currencies of oil producing nations have taken a hit, the most obvious being Russia which has seen a massive increase in interest rates from 10% to 17% and seen the Ruble tumble sharply against the US Dollar.  It is being reported that many western banks are suspending USD/RUB trading and closing all open positions (ouch!).


In the Middle East, equity markets are taking a big hit.

Here at home, some are speculating that U.S. and Canadian oil sands, shale oil, and other high priced petroleum ventures will be priced out of the market at these levels. The Financial Times reports that ,"Oil price fall threatens $1 trillion of projects." 

While we might be enjoying the numbers we're seeing at the gas pump, the global commodity, equity, and currency markets are experiencing high volatility, if not outright turmoil.  

Obviously what this means on a practical level depends on one's positions and exposure.  I think it is safe to say that we will being seeing a global flight to "safe havens" and that's probably not a bad thing for luxury real estate.  Interesting times...

“Million-Dollar Closet Heist” Raises Issue of High-End Home Insurance


If you saw the recent Good Morning America feature on the three-story, 3000 square foot closet located in a home in the Woodlands area of metro Houston, you may have also seen the follow-up story – the homeowner failed to set the home security system upon leaving the house and returned home to find the closet had been burglarized. Gone were about a $1 million in high-priced jewelry, watches, and designer handbags.

In an interesting twist, shortly after the burglary, the local Houston newspaper received an envelope of jewelry and other items from a person claiming to be responsible for the theft, along with a complaint from the disgruntled thief that the items were fakes.

Nonetheless, in the case of a theft of authentic valuables, one might ask, “Does homeowner’s insurance cover thefts of valuables in the home?” After all, many luxury homes are full of expensive items – most of which are portable and can walk off with a burglar or be subject to fire, water damage, or other threats.

Since we believe it’s useful for a luxury home expert to know the answer to this question, we decided to turn to an expert in specialized insurance for the very successful, Carrie Ousley of HUB Insurance.

Here are Carrie’s answers to our questions:

Q. Is there a difference in homeowner’s insurance for high-end homes as compared to insurance for average priced residences?
A. A big difference. When it comes to homeowners insurance, there are two categories of loss -- partial or total. Standard companies will repair or rebuild the home based on “like kind and quality.” The insurance companies which offer insurance for high net worth clients include “Guaranteed Replacement Cost” coverage in their policies. Even if it costs thousands more to rebuild the home, they will rebuild back to the original “custom” built features.

Q. So, for example, if a home has an antique Venetian crystal chandelier , the insurance company will seek out an antique Venetian chandelier instead of using a high quality new chandelier?
A. Exactly.

Q. How much more expensive is it?
A. It is actually less expensive, in many cases! Based on a luxury property priced at $1 million or more, the insurance cost is most always less than coverage from a standard insurance company. I’ve saved many clients anywhere from $1,000 to $8,000 annually on insurance coverage for homes over a million dollars in value. It’s a win-win. The client gets much broader coverage at a lower rate.

Q. Do all insurance companies offer special high-end overage?
A. No. Not all companies have special high end policies. In the U.S. there are five companies that specialize in insuring expensive homes. They don't work with homeowners directly, but homeowners can go through an independent insurance broker like myself. We gather the information and can provide quotes from multiple providers for a homeowner to compare and choose from. That’s a real time saver for busy successful people.

Q. Thinking about the Houston closet heist, what home contents are covered by insurance?
A. Personal belongings, such as clothes, purses, furniture, electronics, etc. are included as “Personal Property” and are covered in a homeowners policy. For instance, if one has a million dollar property, the personal property is usually covered at anywhere from 40% - 60% of the dwelling value ($400-$600K). However, if there is a deductible of 1% for “All Other Perils;” then a $10,000 deductible would apply. However, there is limited coverage for jewelry on a standard homeowner’s policy. Jewelry theft coverage of $5,000 would not be uncommon; however, the $10K deductible applies. We always suggest our clients schedule their jewelry. There is a charge for scheduling jewelry, but there are many benefits to doing this. And, there is no deductible, if there is a Jewelry loss. A nice feature that the high net worth companies are doing is offering to “blanket” jewelry and fine arts coverage. This is nice because the clients no longer have to give us full descriptions of all of the items and/or provide appraisals. Only if an individual item is valued at $50K do these companies require appraisals. And, I recommend my clients get their items appraised every 3-5 years, so that they know what the current value is.

Q. What is an umbrella policy?
A. An Umbrella policy is an extra layer of liability coverage that “sits over” one’s homeowners and automobile primary liability policies. It will also “sit over” any other properties, such as vacation homes, rental properties, vacant properties and acreage as well as over watercraft, ATVs, etc. It is a much needed policy for everyone to have and especially those who have a significant amount of assets and risk.
The average cost of a one million dollar umbrella liability policy for a client with one home & two autos is about $500. We always say that you don’t have to be a millionaire to be sued like one.
A nice feature with most umbrella liability coverage is that legal defense costs are also included over and above the limit of liability coverage a client chooses.

Q. How could a homeowner get a quote for specialized luxury insurance to compare to a current policy?
A. It’s simple. A homeowner should provide the independent agent with copies of their current policies so that quotes will be apple- to-apples and then we have to send out one e-mail with a few additional questions. Once we receive this final information, we approach our companies for quotes. We include a side by side comparison for our clients. We include a summary reflecting their current coverage compared to our quotes (coverage and pricing) from multiple carriers.

Q. Why should a Realtor be knowledgeable about the differences between luxury home coverage and regular homeowners’ insurance?
A. The differences are in the coverage, the service, the specialty products and claims experience. We buy insurance with the hopes that we will never need it, but if we do, you WILL notice the difference. For instance, our affluent Chubb clients have very expensive vehicles. A bumper could cost $20,000 or more. Have a talk with a high end auto dealer, as I have, and they say that Chubb just writes the check. I’ve seen this with my clients’ claims. 

If I were a Realtor I would like to think that my client is getting the type of high-end coverage for his upscale property that he deserves. Specialty high-end coverage is much broader, one of the many coverage differences is the “Guaranteed Replacement Cost Coverage.” A client can also add special coverage for domestic employees, add kidnap & ransom coverage if they are worldwide travelers, and have an exceptional claims experience -- all of this at a lower premium cost than non-high end coverage. Why would a real estate professional not want his or her clients to experience this?

Q. Final thoughts on high end insurance?
A. So many of my clients have been with a standard insurance company since college and have never ventured out to even see what else is out there for them. They move from their first $300,000 home up to a $800,000 and then up and up and now they are in a $2,000,000 property and they have no idea that there is a much better insurance option in the market. A real estate professional who points them to high-end insurance can be a hero. I don’t know the insurance situation around the Houston closet heist, but I hope the homeowner had high-end insurance coverage with a schedule for jewelry.

Sorry, We're Out-of-Stock


Many markets are seeing very tight hosing inventory right now.  According to NAR, the nationwide median days-on-market is just 78 days.  Generally speaking, prices are up, but year-over-year sales are down, in part due to the lack of available inventory.  

Here are the ten markets with the shortest days-on-market:


Read the full NAR release: Recovery Broadens as More Markets See Price Increases

FAA notice makes skies not so friendly for REALTOR drones


The Federal Aviation Administration (FAA) has begun its crackdown on real estate professionals and photographers who are using drones to capture property photographs for use in marketing. Drones are small flying devices (think sophisticated model airplanes) and in this case, have photographic capability.

After announcing-- in a notice clarifying the special rule governing model aircraft -- that drones may not be used for commercial purposes, the FAA started issuing subpoenas to Realtors demanding information on how they are using drone technology. A number of the initial subpoenas were issued in New York City and the Hamptons.

The FAA notice states that “a Realtor using a model aircraft to photograph a property that he is trying to sell and using the photos in the property’s real estate listing” is not engaged in a hobby or recreation. Nor is “a person photographing a property or event and selling the photos to someone else.” No, this doesn’t mean that if you are not a Realtor you can use drone photography in your marketing – the Realtor language is just part of a specific example of the type of commercial use which the FAA says their regulations preclude.

Real estate professionals, photographers, and other commercial drone operators are, “subject to all existing FAA regulations, as well as future rule-making action,” the FAA said. The net result of this is that if you or your photographer are using drone photography in any way in your business, you may be slapped with an FAA subpoena and perhaps ultimately a fine. If you continue to use drone photography in your business, be sure you have a good liability insurance policy (in case of a mishap) and the name of a good attorney.

For more information:
How FAA is responding to drone users
FAA special drone rule interpretation
Myths about the FAA and drones