Beyond Expectations

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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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Segment Overlap Opportunity
International
Luxury
2nd Home Investor
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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
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US Housing Market Overall

• Existing home sales declined in 2006Single
  Family, condo and co-op sales nationally
  
• Number of sales dropped 10.8
• Not seasonally adjusted
• Inventory up 33.3

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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

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Activity in the Luxury Market is the Good News!

• USA Properties priced at 5 million were up
  11 in 2006 over 2005
  
• Worldwide 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

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You know the international luxury market is
when
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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 auc
tion. Estate Agent Andrew Scott said, 59,000
will make it habitable.
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The USA finally sets a 100 million sales
record

• 103 million sale
• of a lot in New Yorks Hamptons

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World property record

• World record
• 128 million
• London home
• near Kensington Palace. (2004)
• Lakshmi Mittal
• Forbes Billionaire

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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)

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Creativity rises to new heights in luxury
development
The Palm, Dubai
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Targeting the Luxury Marketis a smart strategy!

• Its a growing segment (number of sales)
• Its a growing segment (rising prices)

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Whats driving the growth in the luxury
residential market?

• Increasing numbers of rich in the world
• The rich are getting richer

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Number ofHigh Net Worth Individualsin 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 Gemnis World Wealth
  Report, 2006
  
• New 2007 report out later this month!

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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
  

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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.

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Wealth growth is a global event!
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Whats 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

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Global LifestyleThe 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.

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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.

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Unique, elite, exclusive, different
locationsare in demand
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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!

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Adventure Travel
Unique lifestyle experiences
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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!

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7 TRENDS The International Luxury Home Market

• Uber Homes Developers will push the envelope
  with regard to price, amenities and quality.
  Uber Yachts, too!
  

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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!
  

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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
  

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7 TRENDS The International Luxury Home Market

• Search for tax havens
• Monaco, Channel Islands.

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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.

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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.
  

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Top Retirement Areas

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

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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!

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Resources!

• NARs 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.

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Resources!

• WorldProperties.coms 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
  

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Resources!

• ICREAs 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.

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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. Youll find brief information on
  currency and metric conversions, language issues,
  international tax ID numbers, Asian and Mexican
  business practices, and more.

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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.

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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
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• 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 dont 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
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For the richThe 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
salespersonbeing 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

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