Luxury Moore

Beyond Expectations: 

Beyond Expectations The Practice of Luxury Home Sales Annual Real Estate Congress, 2007 RAMB Laurie Moore-Moore The Institute for Luxury Home Marketing

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2nd Home & Investor Luxury International Segment Overlap = Opportunity

Success in the Luxury Market is a result of what you know, not whom you know: 

Success in the Luxury Market is a result of what you know, not whom you know An important first step is understanding the International home buyer Service expectations are HIGH!

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A Quick Overview of the Luxury Home Market

US Housing Market Overall: 

US Housing Market Overall Existing home sales declined in 2006* Single Family, condo and co-op sales nationally Number of sales dropped 10.8% Not seasonally adjusted Inventory up 33.3%

Most recent data from NAR: 

Most recent data from NAR April 2007 compared to April 2006 # Home sales down 8.2% Months of Inventory: 8.4 up 37.7% (4,200,000 listings on the market) Price down .8% in April

Activity in the Luxury Market is the Good News!: 

Activity in the Luxury Market is the Good News! USA: Properties priced at $5 million+ were up 11% in 2006 over 2005 World–wide: Prices for the most expensive global property rose on average more than 14% in 2006 (compared to a 9% increase in the mainstream market)* * Source: “The Annual Wealth Report,” Knight Frank & Citi Private Bank, London

You know the international luxury market is: 

You know the international luxury market is when…

A 77 square foot London closet sells for more than $4,300 a square foot: 

A 77 square foot London closet sells for more than $4,300 a square foot Amenities include two hotplates, a small sink and a fire escape. Walk to Harrods! There were 3 offers, so the property went to auction. Estate Agent Andrew Scott said, “$59,000 will make it habitable.”

The USA finally sets a $100 million + sales record: 

The USA finally sets a $100 million + sales record $103 million sale of a lot in New York’s Hamptons

World property record…: 

World property record… World record: $128 million London home near Kensington Palace. (2004) Lakshmi Mittal Forbes Billionaire

Record may be broken soon??: 

Record may be broken soon?? $155 million new home in The Yellowstone Club in Big Sky, Montana $139 million estate in England $135 million resale in Aspen Three other $100 million+ properties for sale in the US (Palm Beach, LA, and Lake Tahoe)

Creativity rises to new heights in luxury development: 

Creativity rises to new heights in luxury development The Palm, Dubai

Targeting the Luxury Marketis a smart strategy!: 

Targeting the Luxury Market is a smart strategy! It’s a growing segment (number of sales) It’s a growing segment (rising prices)

What’s driving the growth in the luxury residential market?: 

What’s driving the growth in the luxury residential market? Increasing numbers of rich in the world The rich are getting richer

Number ofHigh Net Worth Individualsin the World = 8.7 million: 

Number of High Net Worth Individuals in the World = 8.7 million $1 m - $5 m (Rich) 7,445,800 $ 5 m - $30 m (Very Rich) 744,800 $30 m plus (Uber Rich) 85,400 Forbes Billionaires 946 *Based on net assets, excluding primary residence Source: Merrill Lynch--Cap Gemni’s World Wealth Report, 2006 New 2007 report out later this month!

Where are HNWI ?: 

Where are HNWI ?

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■ 8.7 million people globally hold more than $1 million in financial assets (US $) -- an increase of 6.5% over 2004 ■ HNWI wealth totals $33.3 trillion – a gain of 8.5% since 2004 ■ The Ultra-HNWI group grew by 10% to 85,400 worldwide

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■ Wealth creation in regions such as Latin America, Eastern Europe and Asia-Pacific was strong last year ■ South Korea, India, Russia and South Africa witnessed the highest percentage growth in HNWI populations ■ HNWI financial wealth is expected to grow globally at an annual rate of 6.0% thru 2010

Primary source of wealth by region: 

Primary source of wealth by region North America: 32% from income flow Europe: 50% from business ownership Latin America: 48% from business ownership Asia: 35% from business ownership Middle East: 32% from inheritance Globally: Primary source was business ownership Earned wealth grew faster than inherited wealth.

Wealth growth is a global event!: 

Wealth growth is a global event!

What’s driving the growth in the luxury residential market?: 

What’s driving the growth in the luxury residential market? Increasing numbers of rich in the world The rich are getting richer New focus on global lifestyle and investments The search for exclusivity and unique experiences

Global Lifestyle:The wealthy are citizens of the world: 

Global Lifestyle: The wealthy are citizens of the world More open to investment in diverse locations Residential RE share of portfolios is growing 30% of HNWI own homes outside their primary country of residence -- 80% of those from Middle East -- 46% of those from Europe

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Residential property will grow as an asset class. Today real estate represents about 15% of the portfolios of the HNWI , excluding primary residence.

Wealthy are searching for exclusivity and experiences: 

Wealthy are searching for exclusivity and experiences The desire to escape the “mass luxury” group will drive demand for unique, exclusive, off-beat locations. Demand will increase for private islands, locations reachable only by private jet, private club developments, and exotic locales.

Unique, elite, exclusive, “different” locationsare in demand: 

Unique, elite, exclusive, “different” locations are in demand

Wealthy are searching for exclusivity and experiences: 

Wealthy are searching for exclusivity and experiences Real estate will see the parallel with luxe products and services… Exclusivity: $42,000.00 Louis Vuitton limited edition handbag!

Adventure Travel: 

Adventure Travel Unique lifestyle experiences

Exclusive: The most expensive city residential markets: 

Exclusive: The most expensive city residential markets London Monaco NYC Hong Kong Tokyo Cannes 7. St. Tropez 8. Sydney 9. Paris 10. Rome 11. Moscow USA is a bargain!

7 TRENDS: The International Luxury Home Market: 

7 TRENDS: The International Luxury Home Market Uber Homes – Developers will “push the envelope” with regard to price, amenities and quality. Uber Yachts, too!

7 TRENDS: The International Luxury Home Market: 

7 TRENDS: The International Luxury Home Market Residences “packaged” with unique lifestyle experiences will be in demand. Olive groves Pineapple plantation Floating condo ships Montesoro in So. California desert has “adventure advisors” on staff!

7 TRENDS: The International Luxury Home Market: 

7 TRENDS: The International Luxury Home Market Increasing focus on “green issues” and self-sustainable development --Dockside Green in Victoria, BC (Canada) 1.3 million square feet of mixed use development. First community to target LEED Platinum certification for builders

7 TRENDS: The International Luxury Home Market: 

7 TRENDS: The International Luxury Home Market Search for tax havens Monaco, Channel Islands….

7 TRENDS: The International Luxury Home Market: 

7 TRENDS: The International Luxury Home Market 5. With rising wealth and increasing real estate investment, the number of service providers who will try to “follow-the money” will grow! Expect increasing competition in this segment.

7 TRENDS: The International Luxury Home Market: 

7 TRENDS: The International Luxury Home Market New Players: --Growth in emerging markets… Russia, China, India have rapidly growing wealthy class --Heirs: Generational “wealth hand-off” now involves the younger generation who are tech savvy and sophisticated.

Top Retirement Areas: 

Top Retirement Areas International Living Global Retirement Index Ranking Panama Malta New Zealand Uruguay Mexico

7 TRENDS: The International Luxury Home Market: 

7 TRENDS: The International Luxury Home Market 7. Expanding resources and opportunities for real estate professionals to work across borders, refer business, and have an international clientele!

Resources!: 

Resources! NAR’s Certified International Property Specialist designation (CIPS) The International Consortium of Real Estate Associations (ICREA) Created to help develop international business standards, help brokers do business effectively and profitably in international market, and create an international referral system.

Resources!: 

Resources! WorldProperties.com’s Distinctive Properties Advertising Service (free with Enhanced Listing program at Realtor.com) ICREA ‘s Transnational Referral System provides a standardized referral agreement and a dispute resolution service for international referrals

Resources!: 

Resources! ICREA’s referral training is available in five languages, in Online and classroom formats. Successful completion of the program results in being Transnational Referral Certified (TRC). Global New Homes Resort portal contains high quality new developments offered by builders worldwide. The portal allows anyone to search featured properties and view detailed information. The portal allows ICREA brokers to earn referral fees.

Resources!: 

Resources! The Power Tools for International Practitioners Blog which is an Online resource with a wide range of timely global marketing information. Access it through the NAR Library at Realtor.org. Pre-packaged Presentations -- Although these are designed as sales meeting presentations, these short training modules are great self-study courses. You’ll find brief information on currency and metric conversions, language issues, international tax ID numbers, Asian and Mexican business practices, and more.

Resources!: 

Resources! Real Estate Federation (FIABCI) is a 50+ year old organization based in France with offices in The U.S. FIABCI offers collaboration and networking opportunities to real estate professionals in 57 countries.

Top concerns: 

Top concerns 1. Inflation and rising interest rates 2. Geopolitical instability 3. Terrorist acts 4. Taxes

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The Rich (in general) -- Online -- Seeking experiences -- Bi-modal buyers -- Early adopters -- Want to be connoisseurs -- Choose professionals based on competency, integrity, and authenticity

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The “Very Rich” ($10 million +) New Money with middle class roots Business owners and self-employed professionals (mostly men) Workaholics Prefer to be “Under the radar” Live complicated lives Isolated: Pay to join peer groups like “Tiger 21” May not feel really secure financially

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The “Uber Rich” (Average of $28 million*) 72% From middle class or poor backgrounds 81% Gained wealth in the last 15 years 73% Still work, 42% in own businesses Many don’t like to be recognized as wealthy How long they have had money determines spending patterns (they have to learn to spend) Allocate more of their assets to real estate *Worth Harrison Taylor study, 2006

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Target your prospects

For the rich…”The Most important characteristic in property buying is the quality of the property, the degree that it fits the taste and aesthetic of the buyer, and the knowledge of the salesperson…being their friend is not important.”Worth Magazine/ Harrison Taylor Study, 2006: 

For the rich…”The Most important characteristic in property buying is the quality of the property, the degree that it fits the taste and aesthetic of the buyer, and the knowledge of the salesperson… being their friend is not important.” Worth Magazine/ Harrison Taylor Study, 2006

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For information on our training and designation: www.LuxuryHomeMarketing.com

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Questions? Questions?

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The Institute for Luxury Home Marketing