Global Evolution: What’s Changed In Luxury Real Estate Since The 2008 Recession

In the 10 years since the recession, residential real estate, especially in the realm of higher-priced properties, has morphed into a worldwide enterprise.

“There is no question; people have more of a global mindset. They are looking for real estate in places they love,” says Stephanie Anton, president, Luxury Portfolio International, which several years ago adopted the tagline, “We’re global. We’re local.” The phrase aptly characterizes the status of luxury today.

“The saying goes that all real estate is local, but that does not mean that all buyers are,” said NAR President Elizabeth Mendenhall, CEO of RE/MAX Boone Realty in Columbia, Missouri.

Congeliano, Italy

Photo courtesy of Atlante Properties Luxury Portfolio International®

For the industry, the ramifications of globalization extend beyond merely who buys what, where. “Historically, real estate market dynamics were considered a local phenomenon. In the luxury sector, this is no longer the case, as the value drivers for prime property in one corner of the globe increasingly originate from a completely different region of the world,” explained Christie’s International Real Estate in its 2018 report Luxury Defined, noting this trend is most evident in secondary markets — second home and resort lifestyle destinations. In 2017, sales of resort and vacation homes grew by 19 percent compared to 7 percent in 2016.

Buying property outside of one’s home country is nothing new, but, until the 1980s, sales across borders were generally limited to resort enclaves or a pied à terre in Paris, London or New York, along with the occasional trophy property.

Today, rather than a specific location, high-end buyers are likely to search for a particular property type. “Buyers these days are looking in multiple markets. They’re not as geographically contained. So, if they’re looking for a ski chalet, they could be looking at a number of different countries and throughout the Rocky Mountains in the United States,” shares Laura Brady, president and founder of Concierge Auctions, who says her company initially saw indications of this trend with ranch properties, which are very unique. “Clients don’t care specifically which market they’re in; instead, they want the right property.” Founded 10 years ago, Concierge Auctions has a team in Europe and activity in 18 countries.

Perhaps it’s geography, but Americans typically first look within their own borders. On the other hand, Bob Hurwitz, founder and CEO of the Hurwitz James Company, says, “Wealthy foreign buyers are far more likely to be open minded about locations outside their country as their first choice, in my experience. It’s not difficult to understand if you travel a great deal. In many of the countries I visit on business, you will not find many Americans, but you will meet a wide variety of citizens of other countries.”

More than property and search preferences drive the shift toward a global perspective. “There are several factors contributing to the increased globalization of luxury real estate,” shares Anthony Hitt, president and CEO, Engel & Völkers Americas, who cites the rise of digital, social and mobile technologies. “Real estate is not immune to the changing patterns of consumption enabled by technology; clients have more visibility, and therefore interest, into international homes and listings.”

Experts also point to an increasingly global economy, changing work/life balance and how commonplace travel, for both work and pleasure, has become. Craig Hogan, vice president of luxury, Coldwell Banker Real Estate, plans to exchange his primary residence in Chicago for two small condos, one on Michigan Avenue and another in Puerto Vallarta. “Fifteen years ago, my partner and I never would have considered that. Today, we are mobile. Our careers take us all over the world.”

Falmouth, Massachussetts

Photo courtesy of Robert Paul Properties/Luxury Portfolio International®

“With the world that we live in now, it’s less important that you live where your business is or where you do business. So, you’ve got a lot of people just making lifestyle choices. They’re just picking the city that they enjoy the most, and they’re moving there,” shares Mike Leipart, managing partner of The Agency Development Group in Beverly Hills.

Post-Recession Roots

The foundation for today’s international dynamic lies in the early post-recession years. In 2007 and 2008, prices on average fell by approximately 17 percent across the globe. By 2009, 73 percent of the prime property locations surveyed by Knight Frank had experienced declines, and savvy buyers scoured high-end markets worldwide for bargains. At the same time, a growing uptick in wealth and wealth creation brought more buyers to the international market.

Wealth creation continues at the post recession pace, with the number of millionaires worldwide tallying at 22.3 million, according to Wealth X. Those with a net worth between $1 million and $5 million hold 40 percent of the global millionaire wealth, while the remainder is held by the ultra wealthy, those with a net worth in excess of $30 million (Knight Frank pegs the benchmark for ultra wealth at $50 million). From 2012 to 2017, Knight Frank says the number of ultra-high-net-worth (UHNW)  individuals increased by 18 percent, followed by another 10 percent gain in 2017.

Coldwell Banker Global Luxury estimates 32 million millionaires reside in the U.S. The U.S. remained the dominant nation for wealth in 2017, both among millionaires and the ultra-wealthy, according to Wealth X, although growth of this population and net worth in the U.S. was the lowest among the seven top-ranked countries. Japan was second with an 11-percent rise in the UHNW population, followed by China, Germany, the U.K. and Hong Kong.

Mexico

Photo courtesy of REMexico Real Estate/Luxury Portfolio International®

Globally, wealth in 2017 increased in all regions, with both Latin America and Europe showing a resurgence over 2016. “The confidence of foreign buyers is back,” says David Scheffler, president, Engel & Völkers France. “The Parisian luxury market has always attracted wealthy Middle Eastern buyers and continues to do so. Qatari, Kuwaiti, Saudi and Omani clients are looking for outstanding apartments and townhouses, the so called hôtel particulier. The trend to buy luxury properties in Paris is not just reserved for the ultra-wealthy, but applies instead to a wider range of affluent buyers. Some might look for a small 50- or 60-square-meter pied-à-terre, while others look for ‘representative’ apartments in the Haussmann style, up to 12 million euro.”

Over the course of the last 8 to 10 years, cross-boarder buying surged, ramped back, and picked up again. In 2016, global sales of luxury properties retrenched, partially in response to Brexit, government restrictions on wealth and the transfer of money. Markets bounced back in 2017, with sales of $1 million-plus properties up substantially.

Christie’s reports an 11-percent increase in sales, the best annual increase since 2014. Luxury properties sold in 190 days, indicating more realistic pricing in some markets and lack of inventory in others. Exceptions included New York and Miami, which saw an influx of new inventory and a shift in buyer interest. In Toronto and Vancouver, newly introduced cooling measures from the government slowed sales.

“I don’t think there is any indication that they [international buyers] are NOT looking in Manhattan. The indication is that they are either interested in the properties at lower numbers or they prefer to wait the market out and hope to buy when things are at a bottom (I have seen this many times before. It never works!). Nobody is moving to Detroit because they can’t find what they want in New York City,” shares Frederick Warburg Peters, CEO of Warburg Realty. “Russians and Europeans are far scarcer than they were in 2010 or 2011.”

Still, both for high-net-worth and ultra-high-net-worth individuals, New York follows Hong Kong as the best city for prime properties.  

Nassau, Bahamas

Photo courtesy of Bahamas Realty/Luxury Portfolio International®

Toronto, Canada

Photo courtesy of Harvey Kalles/Luxury Portfolio International®

Following the recession, a growing body of research focused on wealth and global cities publish multiple rankings. A city’s position may shift slightly, depending on the research, but all reports include the same top locations for luxury properties. Hong Kong places ahead of New York in Christie’s 2017 index, with New York moving up to second, followed by London, Singapore, San Francisco, Los Angeles, Sydney, Paris, Toronto and Vancouver.

Lower prices pushed Miami just out of the top 10, but the city remains a good example of the change international activity can spark. “The international market has arguably impacted Miami as much or more than any other U.S. market. The influx of capital from Europe, South America, Russia, China and Asia has permanently changed our community. The easiest example is by simply looking at our booming skyline,” says Irving Padron, president and managing broker, Engel & Völkers, Miami.

The highest-priced sale globally was $360 million in Hong Kong, and despite government efforts to curb rising prices, there are no indications of slowing demand for luxury residences here. Also, adding to this market, according to Anton, is continued interest from mainland Chinese buyers.

Numbers Tell the Story

Rather than sales and prices, the best indication of just how global real estate has become can be seen in the expansion of major brands, affiliate groups, and even boutique firms worldwide. “All brands are connected globally,” Hogan observes, adding that even independents need some kind of a global connection. “It’s part of the dynamic,” he says.

Coldwell Banker is in 49 countries. Sotheby’s International Realty network has offices in 72 countries and territories. Luxury Portfolio International and Leading Real Estate Companies of the World lists properties in over 70 countries. Who’s Who in Luxury Real Estate’s network includes 130,000 professionals in over 70 countries. Berkshire Hathaway HomeServices recently opened franchises in Germany and in London. Bob Hurwitz had already positioned his boutique firm as an international player before the recession. Today, he has offices in Los Angeles, San Francisco, New York, London, Shanghai and Singapore.   

A global orientation can also be seen in members of the Institute for Luxury Home Marketing. There is “an increased focus and intentional approach as they target international buyers through affiliations with brands, networks and associations,” says general manager Diane Hartley. “In fact,” she says, “we have members in many countries outside of North America who are building relationships and sharing business with our members in the U.S. and Canada.”

Whistler, Canada

Photo courtesy of The Whistler Real Estate Co./Luxury Portfolio International

Firms based in Europe also continue to increase their footprint. Founded as a boutique firm in Hamburg, Germany, Engel & Völkers is now in 800 locations in Europe, Asia and the Americas, establishing its first offices in the U.S. in 2007. “We have experienced firsthand the globalization of luxury real estate,” says Hitt.

“For luxury and coastal markets, real estate has absolutely become more global,” shares Leipart. Like a growing number of independent firms, The Agency partners with an international real estate advisory company, Savills, which allows them to sell through 700 offices around the world. Still, he adds, “we are focused on international, kind of connecting the dots around the world as opposed to other cities in the U.S.”

In the luxury world, L.A.’s star continues to rise, and the city in recent years has figured into lists for top global markets. According to the National Association of Realtors, Florida, California and Texas remain the top three destinations for purchases from foreign buyers, followed by Arizona and New York. Still, just under half of all residential transactions for foreign buyers took place in other states. Among buyers, China, Canada, India, Mexico and the United Kingdom account for the most purchases.  

Also, Hogan points out, international buyers in the U.S. aren’t always in luxury markets. For example, Asians love to buy real estate close to a university. Another group looks for locations with smaller downtowns. Still others want a large home with a big yard near a lake or river, something hard to find in their home country.

As Much As Things Change

Even though foreign buying in the U.S. slowed in 2017 compared to prior years and to overall activity worldwide, international buyers still have their sights on the U.S. “It’s all about consumer confidence. As long as people feel that the U.S. economy is in good shape and it’s going in the right direction, they’ll buy real estate,” says Brian Losh, chairman of Who’s Who in Luxury Real Estate.

Connections to local markets remain essential.  “I will say a lot of it still happens in a very traditional way. People are either coming to L.A. a lot, either they have a child in school here, or they love the area and they decide to buy a home, and they do that through a local Realtor, regardless of where they come from,” observes Leipart.

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Q&A: Pushing the Boundaries of Design

Being trained originally as an architect in Germany and London and having worked with one of the most iconic architects of the 20th century, Zaha Hadid, designer Timothy Schreiber reached what he calls “the center of the universe” in terms of digital design and technology very early on in his career. Though highly driven by today’s advancements in digital technology, Schreiber discusses how his designs are actually the outcome of a wide assortment of influences, even more traditional practices such as cabinet making and woodworking.

What about this particular version of design is most attractive to you, and to others?

 

I always like a new challenge and trying something completely new that nobody has done before and I hope others will also enjoy the freshness and new-craft aspect of my work.

 

 

Where would you draw inspiration from?

 

For me personally, I can draw inspiration from any beautiful moment.

When I walk through Kyoto I might have some great ideas by looking at the beautifully dressed locals and the amazing scenery and traditional architecture.

When I see the sunset behind the Diamond Head in Hawaii while swimming in the pacific I might have some new amazing ideas for colors, moods or shapes.

While I am walking up Montmartre in Paris some great eclectic ideas might come up while I stroll a secondhand market and see a broad mix of items from different eras like Beaux Arts, Art Deco or Art Nouveau.

 

 

How do you think the presence of digital tools/technology has changed design over the past few decades? How do you use these tools in your own work?

 

Whilst in the design department of Zaha Hadid, I realized that, although the latest digital design tools might be used there, without a fundamental understanding of traditional craft it’s actually extremely difficult to achieve perfection in object or furniture design. …  I am hoping I can push the symbiosis of traditional and digital design and making process to the next level. However, the most important aspect of my work will always be the focus on traditional craft.

 

 

What do you think you try to achieve through your collection/these pieces, i.e. what is the goal when it comes to your work?

 

I am aiming to push the boundaries in terms of what is possible and in terms of what hasn’t been done before, whilst combining new and old crafts. I like to work in many different materials, metal, glass, wood, fur, etc.

Sometimes, during my travels I find interesting traditional crafts and technologies. For example while I was living in China I got introduced to traditional Chinese Glass casting. The projects that were done with this technology were mainly traditional glass statues and figurines… After a lengthy process of experiments and tests we were able to push the boundaries here and make a piece of cast glass furniture which was almost twice the size that any other object that was previously cast there.

 

 

What do you think are some key things to remember when outfitting a home?

 

God is in the details.

 

 

Does your mind focus on a specific space in a home or space when you design, or on something else?

 

I was trained in multiple disciplines, cabinet making, architecture and interior design. My first 3 years in architecture college I spent at Bauhaus University in Germany. … I like to always focus on all spaces and all aspects of the design, from concept to detail, and I equally enjoy dealing with all spaces and aspects of the current job.

All photos by KeneK Photography, courtesy of Wexler Gallery.

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Equestrian Charity Assists Veterans, Special Needs Children

Therapeutic horseback riding is changing the lives of physically and developmentally disabled children and veterans.

Appreciating the profound relationship between horse and rider, Sissy DeMaria-Koehne founded Give Back for Special Equestrians in 2013 along with Dr. Heather Kuhl and Isabel Ernst. The organization raises money to provide therapeutic horseback riding scholarships for children and veterans suffering from physical or developmental disabilities — whether it be autism, cerebral palsy or post-traumatic stress disorder (PTSD) — so they can enjoy the benefits of horsepower that heals.

“I was approaching a milestone birthday, and even though I raised three wonderful daughters, I was thinking about how else I might want to be remembered,” says DeMaria-Koehne, president of Kreps DeMaria Public Relations in New York and Miami. “I’m proud to be a good mother and grateful to have enjoyed success in business, but I believe we’re called upon to do more to pay forward our blessings.” When DeMaria-Koehne, whose love of horses began at an early age, saw how individuals with physical or developmental disabilities responded to therapeutic riding, she knew she wanted to play a role.

DeMaria-Koehne, who reports equestrian therapy dates back to the ancient Greeks, originally named the organization “Give a Buck for Special Equestrians,” because her initial fundraising effort encouraged equestrians to give as little as a dollar every time they paid their boarding fees.

Give Back for Special Equestrians currently provides funding for therapeutic facilities including Good Hope Equestrian Center, Stable Place and Special Equestrians of the Treasure Coast in Florida, and Gallop NYC in Queens. DeMaria-Koehne hopes to eventually expand her organization nationally.

These remarkable facilities offer extraordinary services for special needs equestrians, but often do not have the resources for effective fundraising. DeMaria-Koehne’s organization holds regular galas in the Hamptons, as well as at the Winter Equestrian Festival outside Palm Beach, Florida each year. With influential board members like Georgina Bloomberg (world-class equestrian and daughter of former New York Mayor Michael Bloomberg), the organization continues to grow and attract high profile sponsors like Rolls-Royce.

Last summer, prominent real estate developer Don Peebles hosted a fundraiser at his Bridgehampton, New York estate that raised $50,000 for Give Back for Special Equestrians. Inspired by his daughter Chloe’s love of horses, Peebles reports, “She helped us learn about the compassion, strength and courage of horses and how horses having these qualities can heal humans and bring joy to their lives.” He adds, “Hosting a fundraiser for an effort with such beneficial outcomes is very rewarding!” According to DeMaria-Koehne, everybody in the organization, from graphic artist to accountant, is a volunteer. “Nobody takes a salary, and, beyond minor operating costs, all funds raised go right back to serve these special needs riders,” she says.

Some riders are children who are totally non-verbal, explains DeMaria-Koehne, but recounts moments shared by Dr. Peggy Bass, executive director at Good Hope Equestrian Training Facility, who has seen the miracles of this therapy at work when young riders, previously non-verbal saying the words “giddy up” to their mounts. She further reports, “After spending their life in a wheelchair, when they get onto a horse they feel like they’re on top of the world. They’re literally walking and standing tall!” Horses selected for special needs riders are quiet, docile and patient, and tend to be older. “People with autism are often non-verbal, but so are animals, who communicate through their energy,” explains DeMaria-Koehne.

“I still get excited about helping our clients succeed,” states DeMaria-Koehne about her highly successful career as a public relations executive, but says of her nonprofit work, “This is different … this speaks to my soul.”

Photos courtesy of Give Back for Special Equestrians. 

This story was previously featured in the Winter 2019 edition of Unique Homes Magazine.

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Florida’s First Zero-Energy Community

Partnering with sonnen, a worldwide leader in smart solar technology, residential development firm Pearl Homes announced its plans for a zero-energy community in the small fishing village of Cortez, Florida.

Hunters Point Pearl Homes & Marina will include 86 performance homes, 62 lodges, and 47 boat slips. Comprised of a network of solar-powered smart homes, each smart home in the innovative community will share excess renewable energy with its neighbors and to a larger grid, which creates a virtual power plant that produces clean electricity.

Construction on the fully furnished green homes will begin in late 2019. Hunters Point is the first residential community established to help decarbonize southwest Florida, and also makes history as the first time an energy storage system will use Google Home to intelligently maximize renewable energy in each household.

“We have an opportunity and responsibility to improve our impact on the environment, and this is our chance. Hunters Point is about luxury living and sustainability, but also about the larger picture — creating a world that is better for our kids and grandchildren,” said Marshall Gobuty, president and founder of Pearl Homes.

In addition to a 600 square foot open-air entertainment space, 600 square feet of interior living space, and a 1,200-square-foot garage that doubles as a basement, each home uses sonnen’s energy management technology to control rooftop solar panels, a smart Nest thermostat, and an electric vehicle charger, ensuring that the home is powered by the cleanest possible energy source.

Photos courtesy of Hunters Point Pearl Homes & Marina.

This story previously appeared in the Winter 2019 edition of Unique Homes Magazine.

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Discovering Mystical India

Traveling the world typically leads to atypical adventures, and the guides and experts behind the tours of Architectural Adventures are masters at giving adventure seekers unique experiences. One of its more “mystifying” adventures that showcases some of the most intriguing architectural wonders is the company’s “Discovering Mystical India” tour.

Photo courtesy AdobeStock 9468600

Tour travelers will get the chance to see what makes India mystical and spiritual while traveling through the classic Golden Triangle of cities: Delhi, Agra, and Jaipur. The important sights of both Old and New Delhi are sprinkled throughout the journey, which can be enjoyed via a rickshaw ride through colorful Chandni Chowk market. One can explore Hawa Mahal, the elaborately carved “Palace of the Winds,” whose pink sandstone façade allowed the ladies of the court to view the streets of the city from behind its 953 small windows. Take in a drive through Ranthambore National Park, with its picturesque ruins of forts and palaces, in search of elusive Bengal tigers and other wildlife. Speaking of forts, historical adventure seekers can take in Shahpura Haveli, a 300-year-old Rajput fort and palace complex with extensive courtyards, staircases, and arches that typify Indo-Saracenic architecture. Similar to the nature of the region, however, there is more to this tour than meets the eye.

Bahai Lotus Temple, New Delhi. Photo courtesy @diegograndi

Hawa Mahal, the Palace of Winds. Photo courtesy ©jura_taranik

“India is always known to be mysterious, charming and captivating,” notes tour leader Nitin Jain. “I think our guests are going to find India and their experience even more incredible than what they would have envisioned!” As the architectural expert on the tour, it is Jain’s hope to showcase both the rich historical and modern aspects of India that make it like almost no other place in the world. While he says no trip to India is complete without visiting Agra and Jaipu, Jain is especially intrigued to highlight the modern architectural marvels on the tour’s excursion to Le Corbusier’s Chandigarh.

 

Other architectural highlights include seeing India’s largest mosque, the red sandstone and marble Jama Masjid, exploring the Taj Mahal, and visiting Birla Mandir, the Hindu template made of pure white marble.

 

Being an architect who spent his formative years in India as well as someone who bridges the gap between an Indian as well as being an American, Jain affirms that he is perfectly, and uniquely, positioned to offer such a diverse perspective to guests. “My hope is to provide an enriching and fulfilling experience by showcasing India’s past, present and future as seen through its’ architecture and culture,” he says.

Photo courtesy ©Curioso Photography

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Nuances: The 2019 Luxury Outlook

Usually, it’s possible to sum up the outlook with a pithy phrase, but this year the luxury landscape is nuanced. Some markets sizzle; others simmer. Dynamic outside forces are at play and will potentially exert even more influence in 2019. In the background, the words recession and bubble are whispered, but most experts don’t see either in the cards, particularly for residential real estate in 2019.

“In most markets, I think it’s a case of ‘from great to good,’” says Stephanie Anton, president of Luxury Portfolio International.

“We’ve left a crazy market, and we’re moving into a more normal market,” shares John Brian Losh, chairman of Who’s Who in Luxury Real Estate. “We are beginning to see a more normalized market where supply is more equal to demand. Even in the luxury market, there are fewer bidding situations.”

According to Redfin, the number of competitive offers fell from 45 percent to 32 percent in 2018. Still, some ZIP codes in busy markets such as Boston, Washington, D.C., and the Bay Area remain hotbeds of competition, with the number of multi-bid scenarios increasing in the third quarter.

© istockphoto.com/JZHUK

Concerns about potential bubbles continue to percolate, but economists and other experts caution that fundamentals are strong and for real estate the next downturn will be different. “The recent tax reform and increased government spending have been a shot in the arm of the U.S. economy,” Tim Wang, head of investment research at Clarion Partners, explained to journalists at the Urban Land Institute’s fall conference. Wang and other experts expect the current expansion of the economy to continue through 2019, tapering to 2.5 percent next year.  

“The housing market is following the trend in the overall economy, which needs to be noted because housing led the last downturn,” comments Marci Rossell, chief economist for Leading Real Estate Companies of the World, citing politics and global uncertainty as factors affecting real estate. This time, she says, “the casualties will be a little bit different, and because of that I don’t anticipate a meltdown.”

A cooling period is how Craig Hogan, vice president of luxury at Coldwell Banker Real Estate, characterizes the luxury climate, particularly in the second half of 2018. It’s a change Coldwell Banker has anticipated. “For any of us to think it was always going to be incredible is a little naive. The market is always going to fluctuate.” Hogan says it’s important not to interpret cooling as a market decline. “Cooling is a normal fluctuation, while a decline happens when the value of homes begins dipping.”

“There hasn’t been any great price suppression. Houses are staying on the market a little longer, but demand is still healthy,” says Losh.

“I think we’re still going to have a very strong year overall. I do believe we’re seeing price adjustments, and that’s okay. I think the key is watching how long properties are staying on the market and watching the size of the price adjustments,” observes Lesli Akers, president of Keller Williams Luxury International.

The average sales price for Sotheby’s transactions is up year over year. “From a luxury point of view, many of our companies are having a record year,” says Philip White, president and CEO of Sotheby’s International Realty. “Revenues are up, and in some cases pretty significantly,” he shares, noting that this number also reflects significant recruiting and/or acquisitions by some companies.

Recent stats show prices for upscale properties still increasing, but at a slower pace than past years. The number of sales in many places has dipped, but that differs by location, and in more than a few instances sales still exceed 2017.

Data from the Institute for Luxury Home Marketing (ILHM) shows median prices for single family luxury homes climbing 8.5 percent in November over October, while the number of sales fell 11.7 percent. For attached luxury properties, sales rose 2.6 percent with a 2.3 percent hike in prices.  

Putting the current market for real estate overall into perspective, Lawrence Yun, chief economist for the National Association of Realtors, said, “2017 was the best year for home sales in 10 years, and 2018 is only down 1.5 percent year to date. Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we’ve been experiencing over the past few years.” Yun and other housing economists are quick to point out that new construction still hasn’t caught up with demand and foreclosure levels are at historic lows, factors which make the current climate different than the run up to the recession. NAR’s forecast calls for an overall price increase of about 3 percent in 2019 while the number of sales flattens or edges up very slightly.

Tale of Two Markets

Luxury’s story is a little different. “This year the luxury market has been a tale of two markets, for sure. Some areas are struggling, but most have been stronger than many realize, particularly in the first half of the year. As median prices have been slowing (and getting lots of media attention), the top 5 percent of many major metro markets nationally have been growing, with sales over $1 million up over 5 percent year over year and prices breaking records, in some cases by double digits. In the majority of markets, inventory has been selling faster. This is happening simply because of the health of the affluent,” observes Anton.

What sets this year’s outlook apart is that some places are having a strong, dynamic market, while others are seeing a softening, often only in specific price brackets. “The slowdown that started on the East Coast is having some effect on the West Coast. But it’s not a typical slowdown,” says Mike Leipart, managing partner of new development at The Agency. “Good product that has relative value is continuing to transact.”

The top three sales nationally in the third quarter, each over $30 million, occurred in Laguna, and seven out of the top 10 were in Southern California.

Rather than a general market malaise, Leipart characterizes the slowdown as more of a spec home problem. “It’s just too much has been built too fast, and not all of it is very good. The people who thought they could build a house for $15 million and sell it for $30 million are struggling.”

The higher price points in L.A. may see an even stronger downturn in the near future, suggests Bob Hurtwitz, owner of Hurwitz James Company, who typically works in the very high end. “There is a lot of inventory on the higher end, and luxury home buyers are usually in a position to wait and see. The drops in price are a lot more dramatic on property at $15 million and above, and buyers are aware of the benefit in waiting to see how it plays out. At the ultra-high end of $100 million or more, you are going to see and already are seeing huge reductions in price.” What’s hot in L.A.? Luxury penthouses in full 24-hour security buildings in prime areas, according to Hurwitz. “High-end penthouses will continue to be in-demand from foreign buyers purchasing as a part time home or for housing for their children.” Other price brackets, notably the $1.5-million to $3.5-million range, are busy, and, Hurwitz says, his agents are doing a lot of deals.

Perceptions of prices in Manhattan can be skewed, since recent closings are often for new construction for which contracts (and prices) were written a couple of years prior. Even though stats show sales decreasing, Ellie Johnson, president of Berkshire Hathaway HomeServices New York Properties, says, “There is still a healthy but steady group of buyers that are still out there in the high-end luxury landscape.” Additionally, New York is particularly keyed to Wall Street, and volatility in the stock market often means more money gets transferred into brick and mortar. “We’ve seen an uptick that we didn’t have at the beginning of the fall season,” Johnson observes. Despite a less than stellar real estate market at year end, New York remains a global gateway and the top city for global wealth.

Manhattan

© istockphoto.com/CreativeImages1900

Los Angeles

© istockphoto.com/SeanPavonePhoto

St. Petersburg

© istockphoto.com/SeanPavonePhoto

In other locations, particularly those with lower prices for upscale properties compared to California, Florida or New York, reports show strong interest and price growth. An acre in one of Atlanta’s prime addresses in Buckhead can demand as much as $1 million. It’s just one indication that luxury here continues to reach new price levels with considerable demand coming from outside the region, including buyers from California and Florida. Some relocate simply because they want a home in the city; others follow corporate moves. The city has also become a favorite for the film industry, which has become a $4 million industry. “It’s changing everything about this city,” says Debra Johnston with Berkshire Hathaway HomeServices Georgia Properties. Luxury really doesn’t begin until the $5 million threshold, says Johnston, but prices compared to Florida and California are reasonable.

At one time, it was thought it might take more than 20 years for Florida real estate to recoup from the recession. In October, the state tracked 82 consecutive months of price hikes for both single-family and condo-townhouse properties, with many cities showing double-digit increases in the number of sales. “The overall market in Florida, particularly higher-end areas such as Sarasota, Naples and Palm Beach, is definitely strong and stable. Maybe not as robust as say 2013 and 2014, but we haven’t had any major slide — except the economists talking about the market slowing down,” says Pam Charron with Berkshire Hathaway HomeServices Florida Realty in Sarasota.

“The St. Petersburg market seems to be performing differently than other Florida markets and other national trends,” observes Tami Simms with Coastal Properties Group, noting November sales skyrocketed over the prior year. “We have developed into a year-round market with luxury downtown condominiums in high steady demand.” Another sign of consumer confidence is lack of defaults on pre-construction sales. “When we experienced the crash, those buildings that had been sold out prior to completion experienced a significant number of defaults. We see none of that in this instance.”

Florida is one of several states including Texas and Nevada benefiting from changes in tax law. Tax changes not only force some to reevaluate where they live, but they also impact the margins of price brackets. “While it doesn’t mean people wholesale leave New York or San Francisco, marginal changes tickle up and trickle down to the next closest price level,” and it will take several years for that to be felt, says Rossell.

The New Market

“So many trends have taken place they are no longer trends, they are the new market,” observes Hogan, using new construction as one example. “It doesn’t matter where you go or who you talk to, new construction is part of the conversation.”

Global demographics will have a long-term impact. “What luxury is adjusting to is a different demographic worldwide. Those aging baby boomers are kind of done with big homes and the following demographic is 50-percent smaller,” Rossell says.

Changing demographics affect location and property type. “I think we’ll see increased demand for primary residences in traditional second home and resort markets. We are seeing this trend in select markets, as individuals who have the freedom to work remotely are opting to live in places where they feel their quality of life will be the best,” observes Anthony Hitt, president and CEO, Engel & Völkers Americas.

Summer 2019 will mark the most prolonged economic recovery since World War II, but wild cards including interest rates, a trade war and further instability could easily derail this expectation. However, there is a silver lining to the current market. Increasing inventories will bring some buyers back to the market and create more demand. “I think it’s going to a be a great opportunity. People will buy things that they haven’t considered, and they’re going to buy more of them. I think that’s been a big challenge. We’ve not had the inventory, and a lot of buyers kind of just fell out of the market because they didn’t feel like there really was one,” explains Akers.

ILHM President Diane Hartley believes 2019 will be a year of opportunity for both buyers and sellers provided they remain agile, innovative and adaptable to their local market influence.

This story originally appeared in the Winter 2019 edition of Unique Homes Magazine. 

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Markets to Watch in 2019

Every year we select locations to highlight as Markets to Watch. This year change is underway and we take a look at some top performers, others that are beginning to transition, and a handful of under-the-radar locations that are emerging.

Austin, Texas

On track for another record with sales up more than 3 percent, Austin’s luxury patina shines ever brighter. In October, the medium home value in Barton Creek increased to $1.02 million, making it the city’s first million-dollar neighborhood. Austin’s charms include no income tax to win over newcomers, but music and tech might be tops.

Bozeman, Montana

Bozeman might seem like a sleeper on this list, but with ranches, the Yellowstone Club and Big Sky country it’s an under-the-radar hangout for demi-billionaires and billionaires.

Brooklyn, New York

No longer second best! Buyers are making Brooklyn a first choice. Median prices in the most expensive neighborhoods hit the $1 million mark. Israelis, Chinese and Western Europeans also gravitate here. It’s no surprise this New York City borough is No. 2 on Urban Land Institute’s Markets to Watch. 

©istockphoto.com/Auseklis

 

 

Chicago, Illinois

By August, the Chicago area recorded as many luxury sales as in all of 2016 or 2017. Sales of $1 million-and-up properties set a record in the third quarter with a 19-percent increase over 2017. According to RE/MAX, luxury is booming in the west loop area. Upscale suburbs trail the city. Lots of new condos and stunning new buildings open doors to more urban opportunities in a market that hangs in the balance.

Dallas, Texas

Few cities have charted a post-recession course as strong as Dallas and the city remains Urban Land Institute’s No. 1 location for overall real estate prospects in 2019. But the dramatic post-recession price increases are over, say economists. Moderating prices and adjusting inventories are positive indicators that that a move back to a normal market is underway.

© istockphoto.com/Kanonsky

Denver, Colorado

Real estate’s Rocky Mountain high isn’t over yet. Denver continues to rank in the top group on many lists. In the upscale bracket, a shift toward balance is underway with the inventory of $1 million-plus homes at about seven months. Year-over-year prices are up on average 9.29 percent. Boulder remains a sweet spot for luxury, ranking 10th among cities and towns with at least 10 neighborhoods considered million-dollar.

Las Vegas, Nevada

Projections call for appreciation as high as 10 percent this year. Nevada was the fastest growing state, with new platinum communities; forward-looking, innovative architecture; and spectacular views capturing the attention of buyers looking for lifestyle and tax relief.

Hilton Head, South Carolina

Coastal South Carolina and Georgia are ground zero for demographic shifts and the growing ability among the affluent to live wherever they want — a trend just taking off. New developments including Palmetto Bluff add to demand for the Hilton Head region.

Minneapolis, Minnesota

Moving toward balance. A long-awaited uptick in homes on the market is one of several hints of a market shift. Median prices reached a record high this fall, and homes still sell quickly. Still the inventory of homes for sale is one of the lowest in the country. Upper tier and move-up brackets are less competitive.

Northern Virginia

D.C. continues to be in the top group on watch lists but Amazon’s recent announcement makes real estate in Northern Virginia much more interesting. What the prospect portends for current homeowners is uncertain, but sure to make this a market to watch in 2019.

Park City, Utah

No longer just a ski hangout, this Salt Lake neighbor is luxury’s newest player. The most desirable neighborhoods see a shortfall of inventory. Land prices increased by 25 percent with the highest number of sales occurring at Promontory. Opportunities abound: new projects at The Canyons, a large expansion of Deer Valley, a $4 billion renovation of the Salt Lake airport and a bid for the 2030 Olympics.

Wikimedia Commons / Don Lavange

Portland, Maine

Beaches and skiing, does it get any better than that? Hipsters meet old money here. Ranked among the top 20 for entrepreneurs, the city has a growing tech industry and one of the best foodie scenes in the Northeast. Look for more new construction. Prices will continue to ease upward as more people discover this hidden gem.

© istockphoto.com/DougLemke

Santa Barbara, California

Opportunities for buyers in many California locales continue to increase as markets shift. Median prices in Santa Barbara in November were down more than 25 percent, which is good news for buyers. The area remains a prized luxury refuge and lower prices open the door for newcomers to enjoy one of the most unique locations in the U.S.

Sarasota, Florida

The city’s iconic waterfront is being reimagined with a vision to increase cultural programming and urban amenities. Median prices have been increasing steadily, up 25 percent since 2014. New construction means more inventory with more on the horizon. Agents report steady and growing interest in individuals from high tax states.

© istockphoto.com/KarolinaBorowski

Seattle, Washington

Happier times are ahead for buyers in Seattle with active listings up by 41 percent. Even though inventories are still slim, it’s a good indication the frenzy is over. Closed sales in November were down 28 percent. Homes continue to appreciate but the increase has slowed to 5 percent. For buyers and sellers this is definitely a market to watch. The city still is in top groups in many rankings, but the frenzy is over.

Wikimedia Commons / Jeff Gunn

Toronto, Canada

Canadian Baby Boomers and Millennials came together and turned up the heat on the luxury condos in 2018; single-family home sales decreased by as much as 44 percent. While the foreign buyers tax has reduced sales to overseas buyers, it’s also opening new opportunities for locals. Local buyers will continue to drive demand for condos here.

Resort Markets

Luxury’s top performers in 2018. Not only are residences in demand, but new resorts are raising the bar for luxury and reinvigorating current markets. New developments in Turks and Caicos, including the ultra-indulgent Gansevoort Villas, turn up the heat on interest in the Caribbean. Easy reach from the U.S. and private enclaves generate new interest in the Bahamas. Cabo San Lucas, Mexico is seeing new resorts and other regions along the Sea of Cortez are seeing new development. Mandarina in Nyarit is the site of One & Only’s first collection of private homes. Owning a private island continues to be an ultimate purchase and the Bahamas is ground zero.

Thanks to:

Austin Board of Realtors

Michael Saunders, Founder and CEO Michael Saunders & Company

Anthony Hitt, President and CEO, Engel & Völkers Americas

Aleksandra Scepanovic, Co-Founder and Managing Director of Ideal Properties Group

National Association of Realtors

Northwest Multiple Listing Service, Kirkland, Washington

RE/MAX  Canada

Trulia

Zillow

This story originally appeared in the Winter 2019 issue of Unique Homes Magazine. 

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Redefining the Luxury Smart Home

Devices like the Amazon Alexa and Google Home have become common in the modern home. Though they were once considered futuristic, and even alarming, without thinking twice homeowners now have daily interactions with smart technology gadgets that save unprecedented amounts of time and eliminate the need for an alarm clock, radio, kitchen timer, newspaper, or light switch. Now that these devices have become so easily accessible to even the most minimalist homeowners, the bar for what is considered luxury smart technology is set higher.

Celebrities and techies alike are investing in smart technology not only for convenience — many luxury listings boast having lights, heating, and cooling controlled at the touch of the button — but for security, as smart technology has made it possible for homeowners to unlock their doors through an app, view footage of their doorstep in real time and receive notifications about their smoke or carbon monoxide alarms remotely.

Many new luxury apartment towers are attracting tenants by highlighting the building’s built-in smart technology. In addition to amenities like keyless entry, hands-free control of lights, temperature, security systems and pet feeders, some luxury apartment owners will soon have their cars robotically parked. While this technology is still in development, researchers are hopeful that artificial intelligence will be able to precisely park cars much closer together and in a more uniform fashion than human drivers would, eliminating the need for large parking garages, according to The Independent. Drivers would simply wait a few minutes for a robot to retrieve their car, and then when they return home, a robot would park their car back in its place, approximately four inches from its neighbor.

This five-bed, five-bath luxury listing in Chicago is equipped with technology by Control4: Home Automation and Smart Home Systems. Control4 allows homeowners to have voice control throughout the entire home, smart lighting, and intelligent security among other amenities.

Photos courtesy of d’aprile properties.

Photo courtesy of Douglas Elliman Real Estate.

This five-bed, six-bath Los Angeles listing is also equipped with Control4 for both security and entertainment purposes — light, sound, locks and screens can be adjusted with a simple swipe.

While the average homeowner may not have a heated driveway or plant watering system that they control from their smartphone like Oprah Winfrey, the increasing accessibility of smart home technology makes the possibilities for a luxury home endless.

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Go West (To Relax)

These U.S. West Coast resorts are lauded for their outstanding views, stellar dining options, and luxurious vacation packages and amenities.

 

POST RANCH INN, BIG SUR, CALIFORNIA

 

A serene retreat along the California coastline, the Post Ranch Inn offers both beautiful ocean and mountain views. None of the rooms include televisions or alarm clocks, so a vacation here really is one for relaxation and retreat. Available to all guests are nature walks, stargazing, infinity pool spas, and spa packages.

 

Courtesy of Kodiak Greenwood

 

THE RITZ-CARLTON, HALF MOON BAY, CALIFORNIA

 

Escape the hustle of San Francisco and Silicon Valley and retreat to this resort, just 30 minutes from both. The Ritz-Carlton offers secluded cliff-top views of the Pacific and an opportunity to enjoy the California woods. With a luxury spa, tennis and other amenities, this resort proves Half Moon Bay is not to be overlooked.

 

Photo by Veronica Werhane

 

AMANGIRI, UTAH

 

The 5-star Amangiri is smack in the middle of the Colorado Plateau, offering unbeatable views of Canyon Point, Utah’s geological masterpieces. With an emphasis on wellness, this resort will rejuvenate guests with opportunities for hiking, climbing, and relaxing at the spa. Explore the canyons by hot air balloon or kayak Lake Powell; the expeditions are endless.

 

Courtesy of Aman

 

BOULDERS RESORT AND SPA, ARIZONA

 

Travel + Leisure voted Boulders Resort and Spa the Best Hotel in Arizona, and with good reason. For the most luxurious and private getaway this resort has to offer, choose the Villa Retreat. This package includes two expansive villas, complete with a private infinity pool, Japanese soaking tub, barbecue pit and kitchens, and large master bedroom overlooking massive rock formations.

 

Courtesy of Boulders Resort and Spa

 

This originally appeared in Unique Homes Fall ’18

Click here to view the digitial edition.

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Creating Timeless Interiors

Whether it’s designer fashion from Paris, colorful fabrics throughout India or architecture in The Hamptons, interior designer Birgit (“Bee”) Klein is constantly drawing inspiration from destinations across the globe. From an elegant estate on the East Coast to an old world-style apartment in Paris, Klein brings a unique perspective to the design world with Birgit Klein Interiors. The Beverly Hills, East Hampton and London-based interior design firm is driven by Klein’s European roots as well as her unwavering dedication to beautiful design.

When did you first discover your passion for interior design?

I started out working for a large corporation looking after major international corporations and managing portfolios worldwide. After many years of traveling and managing these portfolios, I was so run down. I starting helping my boyfriend at the time who was a property developer in London, and I loved it so much that I decided to give up my work and go back to the drawing board. I began to study interior design at the KLC School of Design in London. That was the best decision I’ve ever made. After studying, I started working for a few well-established interior designers. In 2005, I decided that I wanted to start my own company. As hard and daunting as it was at the beginning, I’ve never looked back.

What makes Birgit Klein Interiors and its designs stand out from other firms?

I often get hired because of my European roots, and due to the fact that my interiors are “less American.” I still have a lot of contacts in Europe — particularly in London and the U.K. to purchase furniture or antiques — and I continue to bring the European style across in my designs.

“The key to this space is the high-gloss lacquer built-ins that create a focal point. But everything is seamlessly integrated into one unit, so it doesn’t feel overpowering,” Klein explains.

How have your travels inspired your work?

During my travels, I am always so inspired — whether it’s walking through a department store, strolling through the city streets, looking at how the locals are dressed, or admiring architecture, hotels and exhibitions. I think traveling is so important for all interior designers because that is where we get a lot of inspiration.

I am inspired by design styles, materials and colors that are used in different countries. I find flower shops particularly interesting because Mother Nature has given us so many beautiful color combinations that I would not have necessarily thought about. Then, when I get projects — whether it is on the East Coast, West Coast or in Europe — I am always thinking about the things I’ve seen.

Designed to reflect a growing family, this cozy breakfast nook allows for relaxed and easy living.

What are some of your favorite regions in which to design?

I love designing homes in The Hamptons. There is just something special about the light. I also love the nature and the architecture there. I love everything about The Hamptons. I always want a reason to visit. I also really love designing homes in Montecito and London.

How do you get to know your clients, and how do you ensure they are represented in your designs?

It really depends on the client, and how well they know their style. If I have a client that knows what they want, I usually ask about inspirational images and I have a conversation with them to get a better understanding of what they like about these images. I try to understand how they would live in the home as a family. If I have a client that does not really know what they like, it is a bit more challenging. In these cases, I sometimes feel like a detective…. We will spend weeks gathering inspirational images and see where it takes us.

I want my client’s personality to be visible in the space, but, at the same time, I try to push them to be open to new ideas. It is really important that you have a client that gives you direction, but allows you to take it somewhere.

“The key to this space is the high-gloss lacquer built-ins that create a focal point. But everything is seamlessly integrated into one unit, so it doesn’t feel overpowering,” Klein explains.

You follow three key design principles — ensuring that spaces flow well together, considering the home’s geographic location, and creating timeless interiors — can you talk more about this?

When talking about flow, I always look at the house as a whole. The rooms need to flow and there needs to be a common theme throughout the house, especially as open-plan living has become so popular in recent years.When talking about flow, I always look at the house as a whole. The rooms need to flow and there needs to be a common theme throughout the house, especially as open-plan living has become so popular in recent years.

A home’s geographic location also makes a big difference in how we design it. A house that is located next to the ocean is going to be designed very different than an apartment in Paris or a townhome in New York City. You have to think about the privacy, lights, colors and what the house will be used for.

Creating timeless interiors is probably the most important out of the three principles. I have many clients who tell me how much they still love our designs eight or 10 years later. I like designing homes that feel comfortable, but elegant and luxurious at the same time. There is nothing worse to me than not being able to sit on a piece of furniture, or for the home to feel like a museum. It is really important that the spaces we design feel good to live in.

Photos courtesy of Brigit Klein Interiors.

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