Three Overlapping Market Opportunities:The International, 2nd Home/Investor, and Luxury Market Segments: Three Overlapping Market Opportunities: The International, 2nd Home/Investor, and Luxury Market Segments Presented By Laurie Moore-Moore The Institute for Luxury Home Marketing


Slide4: 2nd Home & Investor Luxury International Segment Overlap = Opportunity


Common factors driving the 3 segments: Common factors driving the 3 segments


What’s driving the International, 2nd Home/Investor and Luxury segments?: What’s driving the International, 2nd Home/Investor and Luxury segments? 1. Demographics: Growing Wealth: Number of wealthy households is increasing The rich are getting richer


Slide7: World Wealth Report says there are 2,270,000 high net worth individuals in the US with a million or more in financial assets (excluding primary residence) There are more than 8 million world wide! Source: Merrill Lynch / CapGemini research www.ml.com


World Wealth Report: World Wealth Report Households with $1m in financial assets Fastest growing… Location Growth Rate Hong Kong 30% India 22% Spain 18% Korea 18% United States 14% (Has the most rich households) Canada 11%


A look at world wealth(in US dollars): A look at world wealth (in US dollars) Merely rich, $1-$5 million: 7,445,800 Very rich, $5-$30 million: 744,800 Super rich, $30+ million: 77,500


Slide10: “The Wealth Effect” Investing in homes has been paying off more for consumers than investing in the capital markets… The desire to diversify and hedge against inflation 13% of portfolios of the wealthy -- in real estate, direct & indirect. Brazil- -50% Money coming out of the financial markets and into real estate


US $ Million+ market is booming!: US $ Million+ market is booming! 1999 10,000 homes sold at $1 million + 2004 51,000 homes sold at $1 million + 2005 109,000 homes sold at $1 million+ Source: DataQuick


$1 million+ sales in 2005, 2004: $1 million+ sales in 2005, 2004 2005 2004 California 48,666 33,107 Florida 14,567 4,698 New York 6,784* 2,180* Maryland 3,323 915 Massachusetts 3,292 1,067 Arizona 3,175 995 Illinois 3,082 1,336 Virginia 2,799 <659 Washington 2,404 696 Connecticut 2,401 795 Nevada 1,898 659


High priced property sales: High priced property sales $42.5 million apartment condo in NYC’s Time Warner Center at One Columbus Circle -- 12,600 square ft. of “raw space on 76th floor -- International Buyer: David Martinez a Mexican-born, London-based financier -- Closing costs $2.5 million. Monthly fees $30,000 Price = $3,541 per sq. ft. unfinished


High priced property sales: High priced property sales World record: $128 million London home near Kensington Palace (2004) International Buyer Lakshmi Mittal Forbes #3 Billionaire


A new US luxury record on the horizon?: A new US luxury record on the horizon? “The Donald” thinks so… $125 million dollar TRUMP home on the market in Palm Beach International buyer?


What’s driving the International, 2nd Home/Investor and Luxury segments?: What’s driving the International, 2nd Home/Investor and Luxury segments? 2. Changing Demographics: Boomers Peak earning years Thinking retirement Inheriting $$$


What’s driving the International, 2nd Home/Investor and Luxury segments?: What’s driving the International, 2nd Home/Investor and Luxury segments? Changing psychographics (attitudes, tastes & preferences) Mounting levels of education, taste, mobility and desire for “experiences” The increasing economic, buying, and decision-making power of women


What’s driving the International, 2nd Home/Investor and Luxury segments?: What’s driving the International, 2nd Home/Investor and Luxury segments? 3. Changing psychographics (attitudes, tastes & preferences) The emotional pressure of modern life, which makes people feel the need, and gives them the permission to spend “I’ve earned it!” mentality


US Second Home Market, 2005: US Second Home Market, 2005 In 2005, 4 out of 10 residential sales were investor or “vacation” home transactions 27.7% investment 12.2% “vacation”


US Second Home Market, 2005: US Second Home Market, 2005 Median income of second home buyer is $82,800 Median value of home $204,100 Median age of buyer is 52 (Boomer) Equity from stocks and bonds used by 16% of those who bought between 2000-2004.


2ND Home/Investor market is an international “two way street”: 2ND Home/Investor market is an international “two way street” The US buyer abroad The international buyer purchasing here


4 Million US Citizens Live Abroad: 4 Million US Citizens Live Abroad Mexico: 1,036,300 Canada: 687,000 UK: 224,000 Germany: 210,000 Italy: 168,000 Philippines: 105,000 Australia: 102,000 France: 101,000 Spain: 94,000 Israel: 94,000 All other: 1,247,705


Some new “Sweet Spots” attracting US buyers: Some new “Sweet Spots” attracting US buyers “The New Panama” Costa Rica Belize Mexico Nicaragua


Top Global Retirement Spots*: Top Global Retirement Spots* Panama (81) France (80) Malta (78) Mexico (76) Romania (75) Italy (73) Cyprus (72) Nicaragua (71) Uruguay (70) * International Living


Institute Research on owners of at least one $2.5 million home: Institute Research on owners of at least one $2.5 million home 70 % of them own more than one $2.5 million home 14% were born outside the US International buyers and wealthy immigrants 8 % owned homes abroad


2ND Home/Investor market is an international “two way street”: 2ND Home/Investor market is an international “two way street” The US buyer abroad The international buyer purchasing here


Factors keeping international demand for US residences high: Factors keeping international demand for US residences high Affluent foreign boomers Weaker dollar Home supply Fast, easy turnover Few restrictions Reliable economy Political stability Lifestyle Affordability, value & potential growth


Florida = Opportunity: Florida = Opportunity Second strongest luxury market in US (2005) Second in property appreciation (26.83% -- 2005) Nine of the top 20 highest appreciation metropolitan areas in 2005 were in Florida Fastest growing state based on population (fueled by boomers, retirees, immigrants) International market appeal


International Homebuyers in Florida*: International Homebuyers in Florida* International buyers account for 15% of total residential sales in Florida! On average the International buyer spends 52% more for a home than the median price paid by all Florida homebuyers 36% are all cash buyers, 22% spend $500,000+ Source: National Association of REALTORS®


International Homebuyers in Florida*: International Homebuyers in Florida* WHERE do they come from? (100 countries) 33% 7%


International Homebuyers in Florida*: International Homebuyers in Florida* WHY do they buy? 38% bought for vacation use 37% bought for purely investment reasons 17% spend time working in the US


International Homebuyers in Florida*: International Homebuyers in Florida* WHAT do they buy?


International Homebuyers in Florida*: International Homebuyers in Florida* WHERE do they buy?


International Homebuyers in Florida*: International Homebuyers in Florida* LOCATION preference by country of origin Buying in Miami-Ft. Lauderdale


International Homebuyers in Florida*: International Homebuyers in Florida* LOCATION preference by country of origin Buying in Orlando


International Homebuyers in Florida*: International Homebuyers in Florida* LOCATION preference by country of origin Buying in Naples, Ft. Meyers, Sarasota


International Homebuyers in Florida*: International Homebuyers in Florida* LOCATION preference by country of origin Buying in Tampa, St. Pete


Markets expected to appreciate the most between June ‘06 and June ’07: Markets expected to appreciate the most between June ‘06 and June ’07 1. Panama City (FL) 21% 2. Wenatchee (WA) 16% 3. Mt. Vernon (WA) 14% 4. El Centro (CA) 14% 5. Olympia (WA) 13% 6. Yakima (WA) 13% 7. Spokane (WA) 12% 8. Flagstaff (AZ) 12% (Source: Fiserv Lending Solutions and Moodys report)


Slide39: Myths vs. Realties of Investing in the US (agent must be prepared to educate the international client) Any US investment is a good investment “Get rich quick” expectation Foreigners don’t pay taxes


Factors which may limit international demand for US residences: Factors which may limit international demand for US residences Cultural differences Language Homeland security “Bubble” fears Natural disaster concerns A softening market


Existing home sales are droppingSame month previous year comparisons, seasonally adjustedSingle Family, condo and co-op sales nationally: Existing home sales are dropping Same month previous year comparisons, seasonally adjusted Single Family, condo and co-op sales nationally April 06 - 5.7% March 06 - .7% February 06 - .3% January 06 - 5.2% December 05 - 3.1% November 05 - .1% Source: National Association of Realtors April median price up 4.2%


US Market Conditions Sales of existing homes/condos/co-ops, comparing same month 2006 to 2005: US Market Conditions Sales of existing homes/condos/co-ops, comparing same month 2006 to 2005 April 06 number of sales* US - 5.6% NE - 2.5% MW - 3.1% S - 3.7% W - 13.0% Months’ supply: 6 months Inventory up to 3.38 million resale homes


“Unless the broader (US) economy stumbles and job losses mount, home sales and construction activity will dip only modestly…“House price appreciation should remain positive in most markets…“Over the longer term, the outlook for housing is favorable.”: “Unless the broader (US) economy stumbles and job losses mount, home sales and construction activity will dip only modestly… “House price appreciation should remain positive in most markets… “Over the longer term, the outlook for housing is favorable.” --Harvard State of the Housing Market Report, released yesterday! The Good News


Slide44: 10 Ideas to develop your International business Earn CIPS designation Discover ICREA www.WorldProperties.com Join FIABCI


Slide45: 10 Ideas to develop your International business 4. Become an expert --Learn customs, business practices and terms “Alien licenses, concessions and completions”


Slide46: 10 Ideas to develop your International business Join International Chambers of Commerce, trade groups and get involved! Travel on Trade Missions consistently


Slide47: 10 Ideas to develop your International business 7. Give your website an International twist


Slide48: 10 Ideas to develop your International business 8. Network with other agents (locally and abroad) Create a network of service providers (CPAs, Bankers, Attorneys)


Use the available resources!: Use the available resources!


Resources: Resources www.xe.com Currency conversions RAMB Reference Book for the International Marketplace www.WorldProperties.com (ICREA)


Slide51: Foreign language list!


More resources: More resources --www.GetCustoms.com Cultural sensitivity test and information on working with different cultures (test on the website) --ExecutivePlanet.com Information on business practices


Slide54: Test your cultural IQ www.GetCustoms.com


Slide55: 2nd Home & Investor Luxury International Segment Overlap = Opportunity


Presented by Laurie Moore-Moore: Presented by Laurie Moore-Moore Founder and President


Pending Sales (Contracts signed in March 2006): Pending Sales (Contracts signed in March 2006) Number Pending Sales Compared to same month last year US - 6.0% NE - 1.1% MW - 9.3% S - 1.6% W - 13.3% Source: NAR Pending sales report


Slide58: Target your prospects


Tips for TARGETINGInformation gatheringabout the affluent: Tips for TARGETING Information gathering about the affluent


Slide60: New research by The Institute for Luxury Home Marketing in conjunction with Unique Homes magazine on owners of at least one $2.5 million dollar home


Owners of $2.5+ million homesMajority…: Owners of $2.5+ million homes Majority… Married Age 55 or younger Made own money Play golf Are Online Earn $1 million yr. Use private schools 14% born outside US CEO, self-employed professional, business owner 70% own more than one $2.5+ million home 8% own homes abroad


50% Purchased a home 500 miles or more away from their closest other residence!: 50% Purchased a home 500 miles or more away from their closest other residence!


“Important” or “Very Important” Resources for Buyers of $2.5 Million+ Homes: “Important” or “Very Important” Resources for Buyers of $2.5 Million+ Homes Property Brochures (60%) Friends or acquaintances (48%) Internet listings with photos (42%) Internet listings with Virtual Tours (36%) Newspaper display ads (36%) Free local real estate magazines (33%)


Slide64: Affluent are early adopters of technology


Slide65: Internet exposure is important


What the super rich buy: What the super rich buy


What the super rich buy! : What the super rich buy! Single Family (89%) > 4 bedrooms (78%) Home office (84%) > 4 bathrooms (92%) Internet connections (95%) Home theatre (34%) Separate guest house (19%) Staff quarters (19%) Pool (54%) Pool house (30%) Outdoor kitchens (38%) Catering kitchens (11%) Bedroom kitchen (11%) Home gym (59%) Waterfront/view (58%) New construction (26%) Historic (8%) Gated community (18%) Golf community (5%)


Understand your client…and their motivations: Understand your client… and their motivations


7 Decision Drivers: 7 Decision Drivers 1. They want to be respected for their success


7 Decision Drivers: 7 Decision Drivers 2. They are successful because of their professionalism and competence … and they expect no less from YOU.


7 Decision Drivers: 7 Decision Drivers 3. Try to deceive or manipulate them and they’ll go elsewhere, FAST!


7 Decision Drivers: 7 Decision Drivers 4. They will do their research, trust their own judgment to define value, and make a value decision whether choosing a real estate agent or a property…(at least they THINK they will!)


MILLIONAIRES’“Guidelines for homebuying”: MILLIONAIRES’ “Guidelines for homebuying” Take the time to be thorough Negotiate price Be willing to walk away from the deal Research prices Watch for good deals


7 Decision Drivers: 7 Decision Drivers Today’s affluent aren’t keeping up with the Jones, they want to be DIFFERENT. And, they want to be connoisseurs Their homes are important opportunities for self expression and they want the top amenities


7 Decision Drivers: 7 Decision Drivers 6. They already deal with high levels of stress and want to be free from it when dealing with you. They want you to make buying/selling as simple and seamless as possible.


7 Decision Drivers: 7 Decision Drivers 7. With regard to service, they can afford and are willing to pay for the best information, highest level of competence, and best professional service available. But, you must demonstrate VALUE for the dollar Source: The Art of Selling to the Affluent, Matt Oechsli


You must…: You must… Be totally authoritative and expert in your business Dissect, understand, and add value to their buying/selling experience Understand the cultural differences…how people do business and how they live in a home


You must…: You must… Never underestimate your clients ’ intelligence, emotional touch points, and potential to become a “brand apostle” for you. Deliver a flawless experience.


To Succeed...: To Succeed... The tasks are not different… 1. Look and act successful 2. Demonstrate professionalism and competence 3. Be unintimidated by money, power, and fame 4. Do business with style 5. Have quality tools 6. Be ethical Network with upper-tier agents and other purveyors of luxury products and services


One final thought…: One final thought… If you are selling to the affluent, be prepared for just about anything!


Define the upper-tier buyer and seller...: Define the upper-tier buyer and seller... Two types of wealth OLD money vs. NEW money


Don’t forget other type of upper-end player:: Don’t forget other type of upper-end player: Ultra-Consumers who S-T-R-E-T-C-H to lead a wealthy lifestyle (Find these folks at bottom of upper-tier)


Old Money: Old Money


New Money: New Money


Differences: Differences Old money may be cash poor Old money may request more discretion Old money may be more conservative Old money may be less likely to look wealthy New money may be all cash buyers New money may like publicity New money may want more “flash” (Recognize these are generalizations)


Top 10 Agent Selection Criteria : Top 10 Agent Selection Criteria Luxury home market expertise Process expertise Previous experience with agent Product (inventory) knowledge Ability to be discreet (Privacy is important!) Has a luxury designation Best marketing plan Best listing presentation Ability to use Internet as a resource and communicate via email Referred by friend or family


No one ranked ‘Someone who lives the same lifestyle”or“Someone who is a friend”as a very importantcharacteristicin the choice of a real estate agent. : No one ranked ‘Someone who lives the same lifestyle” or “Someone who is a friend” as a very important characteristic in the choice of a real estate agent.


Sellers’ Marketing Plan Expectations: Sellers’ Marketing Plan Expectations MLS listing (89%) Full color brochure (86%) Agent “open house” (81%) Internet listing with Virtual tours (61%) Internet listing with multiple photos (53%) Luxury Home Magazine ads (53%) Special VIP targeted event (44%)


Slide89: Color Brochures


Condo market: Condo market Median price as of end of 2003: $174,700 Higher than SF price: $171,600 898,000 condo sales in 2003 Sales prices grew 15.2% in 2003 Luxury condo market is strong Does not include new condos or others not listed in MLS.