Luxury Insights

Top Luxury Realtors to hear from “The Maverick Daredevil Real Estate Artist”

(Not sure how many of you read the Press Releases, so thought I'd cross post this one here too!)

Mansion builder to share success tips at Leaders in Luxury event

August 12, 2008 -- Frank McKinney, “the Maverick Daredevil Real Estate Artist,” has been chosen as a keynote speaker for Leaders in Luxury (LIL), an invitation-only special event for 100 of the nation’s leading real estate professionals who work in the upper-tier market. Hosted by The Institute for Luxury Home Marketing (ILHM), this year’s LIL event will be held in South Beach (Miami) at the luxurious new Gansevoort South Hotel and Spa

“Frank McKinney’s personality is as big as the 60,000+ square foot mansions he builds,” said The Institute’s Founder Laurie Moore-Moore. “The story of his life is inspiring and he has many ideas to share about how to maximize one’s success, despite today’s market conditions.  If anyone understands branding, promotion, and how to succeed, McKinney does.”

At age 18, with $50 in his pocket and without the benefit of higher education, McKinney left his native Indiana for Florida in search of his profession. In his first Florida job he earned $180 a week, waking at 4:00 a.m. and digging sand traps by hand on a Deerfield Beach golf course. On May 19, 1986, at age 22, Mr. McKinney founded his first real estate investment company and bought his first $50,000 fixer-upper, selling it a few months later for a $7,000 profit.

Today, Frank McKinney is known around the globe as a real estate "artist," and the creative building force behind some of the world's unique mansions. A true maverick with a charming flair, he is a daredevil in the risky world of speculative high-end real estate. McKinney is nearing completion of "Acqua Liana," an opulent eco-friendly "green" mansion priced at $29 million and "Crystalina," a $30 million Polynesian green home. http://www.frank-mckinney.com/estates_for_sale.aspx 

Although McKinney builds new dream mansions, he lives with his family in an historic 3000 square foot home, offices in a 150 sq. ft. tree house, and is committed to his Caring House Project Foundation, a non-profit organization dedicated to creating self-sufficiency by providing housing, food, water, medical support and opportunity for the desperately poor and homeless around the world.

Another current McKinney project is a $135 million spec home, The Manalapan Residence. This three-story 67,670 square foot  home includes 14 bedrooms, 24 bathrooms, an 18 car garage, a 6,140 sq. ft. master bedroom suite, lavish Grand Rotunda room for entertaining, dual water walls, aquarium ceilings and walls, movie theatre, casino and club room with stunning aquarium wet bar, oceanfront gourmet family kitchen, catering kitchen, outdoor summer kitchen, his/her offices, 10 wet bars, two wine rooms (one for red, one for white), gymnasium with beauty salon, two swimming pools (classical lap and grotto waterfall/waterslide), shark tank, two elevators, bowling alley, tennis court with pavilion, archery range, 1/4 mile jogging/go cart track, butterfly gardens, Italian and Floridian gardens, sculpture gardens, citrus orchard, guest house, staff house, back-up generator, full home automation, and more.

“McKinney is a speaker who makes audiences smile, challenges them to be more successful and leaves them wanting more.  His presentation will add excitement and spice to the Leaders in Luxury meeting,” predicts Institute President Waco Moore. “As part of our agreement with Mr. McKinney, The Institute is also pleased to fund the construction of two houses in Haiti through his Caring House Project Foundation.”

Russian billionaire’s purchase of French villa sets new world record for most expensive home -- $750 million!

(Photo from pmo's flickr photostream)

Villa Léopolda, one of the most historic estates on the French Côte d'Azur, is now under contract by an anonymous Russian billionaire for $750 million (€500m). This three-quarters-of-a-billion dollar sales price sets a new record for the most expensive home sale in the world...
More details in our press release.

Un grand merci to Daniel Kijner for tipping us off last week to this story, well before it hit the English language media, and to Sharon Simms for links to good photos of the property like this aerial shot.

"Untold Wealth: Rise of the Super Rich" on CNBC Tonight

Tonight at 10PM EST, CNBC is premiering their documentary, Untold Wealth: Rise of the Super Rich. (If you miss it tonight, they'll be re-airing it on Sunday, June 29th at 10 PM EST).

Here's the mini-site promoting the show, where you can watch the preview, view video clips and slide shows, and skim the fast facts, like these:

• In 1985 there were only 13 billionaires in the U.S. Today there are more than 1,000.
• The richest 1% of Americans control more than 33% of the total wealth, their wealth is now greater than the bottom 90% of Americans. (Federal Reserve Surveys of Consumer Finance.
• Who makes millions and billions? Entrepreneurs, hedge fund managers, private equity partners, real estate developers and corporate executives.
• 80 percent of the people with a net worth exceeding $30 million say they plan to spend more in 2008 than they did in 2007. (Prince Associates)

Looks like it might be worth watching.

Asian Mass Affluent Going Global

It is no secret that the "dragon" economies of East Asia have led to a growing class of affluent in the region.  What might not be so obvious is that they are becoming increasingly mobile and international too. 

Citibank released a press release yesterday, highlighting some of these trends, and of course their response to them.  Among the interesting tidbits:

• The mass affluent segment in Asia Pacific is growing about 15% on an annual basis (and Citibank already serves over 400,000 Citigold clients in Asia Pacific (ex Japan) with its wealth management group)
• A new trend of circular movement is emerging with people working in one country for a 1-2 year period and then moving on, either to another country or back home
• There is also a rapidly growing trend of Asia Pacific executives and professionals taking on additional job responsibilities that result in short- or long-term expatriate or overseas assignments
• Asia Pacific consumers today are gradually being viewed as the dominant and most powerful demographic in the travel and financial sectors

According to Ajay Kashyap, Citi Global Consumer Group Asia Pacific Head of the Affluent Segment:

"Today we live in a global village. As the world gets smaller, the needs of affluent clients get bigger. When people move from country to country, they may often get frustrated when they lose their 'home' banking relationship, their credit history, and easy access to their accounts from anywhere in the world. Citi understands that situation, which is why we developed a global 'passport" through Citigold Global Banking to address our clients needs anytime, anywhere...Our Citigold clients lead busy lives and they expect transactions, particularly cross-border financial transactions, to be faster, safer and more convenient than ever before."

In essence Citi is building a service infrastructure for its increasing mobile affluent clients, with the goal of CONSISTENTLY delivering the service they expect, regardless of where they might be.  After all, a brand is just a promise, and delivering on that promise is the first step to a happy client. 

What are the expectations of the affluent buyers and sellers you're working with, and what does YOUR brand promise? 

$232 Million - A New World Record?

Though the status of the deal is yet to be confirmed, it is being widely reported that  Lakshmi Mittal is preparing to drop £ 117 Million (USD $232 Million) on a home for his son in London's Kensington Palace Gardens neighborhood. Forbes pegs Lakshmi Mittal as the fourth richest person in the world, with an estimated personal net worth of $45 billion.  The current owner is hedge fund manager Noam Gottesman.  As one might expect, Lakshmi's son Aditya Mittal is all smiles.

If true, this would be the most expensive home ever sold in London and the world.

(Thanks to Sharon for the head's-up on this one!)

A Great Market Report

As you probably know, we are HUGE proponents of market reports. 

We believe that producing a good market report can be the single most important  thing you can do to maximize your success in the luxury market. 

Yes, we feel that strongly about it. 

Success in the luxury market comes not just from who you know, but  WHAT you know.  You must be an expert on your market and you must be able to communicate that expertise to others.  A well, produced market  report is  one of the most effective  prospecting and follow-up marketing tools available. 

Given that we're such fanatics about this, we were excited to see @Properties roll out their fantastic new 2007 @properties Market Report.  If you haven't looked at it already, do it now.  It's innovative, it's online, it's interactive, and it's a hugely powerful marketing tool.  They set out to create the BEST market report for their area and they did it.

With that in mind, we spoke with Matthew Dollinger, one of the creative technology geniuses (he made me say that!) behind the @properties Market Report for insight into their thinking and experiences in creating the report.   Here's what he said...

When does Data become Information?  Data…  It’s there.  We use it.  Consumers want it.  But how does a real estate company position itself to bridge the gap and convert this coveted data into information that is both useful and user-friendly?

Data are plain facts. The word "data" is plural for "datum." When data are processed, organized, structured or presented in a given context so as to make them useful, they are called Information.

It is not enough to have data (such as statistics on the economy). Data themselves are fairly useless. But when these data are interpreted and processed to determine its true meaning, they become useful and can be called Information. (source)

Welcome to the crossroad we faced 7 months ago when announcing the creation of a market report that would differentiate from all market reports in our Chicago area.  We had researched competitor reports and others across the U.S., but noticed common shortcomings each time. 

• Most reports give you overall statistics of a given market
• The data presented generally doesn’t take into consideration neighborhood parameters
• Amenities as beds, baths, and price point are not offered as search criteria and result in aggregated data (i.e. all condos = x, all single families = x)
• Most often, this data is presented in one of two ways:
• In analytical format with no insight or speculation from the industry, and therefore not useful to the consumer.
• In a “consumer-friendly” format that is so general and sophomoric that it loses any true meaning or insight.

Some of the common pitfalls of presenting data as information without exploring the smaller things of neighborhoods and amenities have been (mis)represented in reports such as the Standard and Poor’s Case Schiller Report, which was quoted on Inman recently with the headline, "Case-Shiller: Home prices drop in 19 of 20 metros"  When you dig a little deeper, and explore the FAQ on how they calculate their numbers, you find the following:

What types of homes are included in the index calculations?
To be eligible to be included in the indices, a house must be a single-family dwelling. Condominiums and co-ops are specifically excluded. Houses included in the indices must also have two or more recorded arms-length sale transactions. As a result, new construction is excluded.

Is this TRUE information?  Does this really represent what is happening in these major metropolitan marketplaces?  Is this DATA or true, honest, well presented INFORMATION? 

Our goal when developing our report was to create the most informative, useful, and honest report on Chicago Market statistics with INFORMATION for both consumers, and agents.  What we came up with was our fledgling @Report - A Local Look at the Performance of 21 Chicago Neighborhoods. This report, in comparison to others in our area and across the country, was born with the idea in mind that real estate is local… very local.

As quoted in a recent Chicago Magazine article, Chicago real estate guru and reporter Dennis Rodkin states:

“It’s like talking to an agent who works the neighborhood: You will find specifics on how prices have changed in the neighborhood at various price tiers, and what are the hottest-selling sections or developments within the neighborhood.”

Our plan was to integrate neighborhood data compiled over the last few years and present it with a consumer focus, and consumer understanding. Where the report is still in its first release stage our intention is to integrate advanced charting and even geo-coding of neighborhoods down the road.  It seems from the feedback, positive media exposure (say what???), and 35,000 hits to date, that we have hit our mark of appealing to the consumer and delivering it in a format that they want. (How’s that for listening to the masses?)

What we did that made our report special?
(Or… What to include in your own market report)

• Make sure you use accurate data from your local board or MLS
• We purposefully didn’t pull our data until a month after the end of the year since transaction closing dates are sometimes contested.
• Make sure that you’re willing to pull ALL the data
• This includes (for our market) multiple sets for different amenities including beds, baths, Attached, Detached and Price Point.
• Make the data searchable to the consumer
• We found that a simple drop down that aggregated the data was sufficient, but hope to incorporate radio buttons and graphing functions.
• Give professionally written insight into the information you provide… not just data and numbers
• We worked with both a professional PR firm as well as local neighborhood experts in our office to develop insight and copy for the consumer.
• Draw insightful trends and reasons (where available) for why certain numbers have performed the way they have.
• By analyzing the numbers, we concluded that certain areas underperformed not because of price decline, but simply because of fewer high-end properties coming onto the market.

By taking the time to create a report that not only provides accurate data, honest insight, and presenting it in a way for your consumers to understand, your Market Report becomes not only an informative tool, but a PR piece, company marketing tool, and valuable information for your agents.  Stand out, turn on, and embrace your You Factor.

You can reach Matthew here:

Matthew Dollinger
Performance Coach (a.k.a. "Creative Technology Genius")
@properties
212 East Ohio
Chicago, IL 60611
O:  312.506.0236
mattdollinger@atproperties.com

Here's a video of Thad Wong, Co-owner of @properties in an exclusive TV interview (love the temperature analogy!):

@properties Market Report

Recession and the Wealthy

Nightline had a piece on the uber-wealthy this evening.  If you missed it, you can find it on the ABC News website:  Super Rich: 'It's Not About Necessity. 

The subtitle say it all: Economic Downturn Has Little Impact on Wealthy Americans Who Specialize in Spending.

The article notes that the top 1% of Americans control about 33% of the wealth ($17 trillion), and as the now ubiquitous Robert Frank puts it, ""Even I underestimated the degree to which the wealthy are almost oblivious to the fact that we are in a recession. The super rich are unaffected."

Yesterday the Washington Post ran an article on Luxury Foreclosures  (thanks to Scott at Altos for the head's up on this one) which looks at the other end of the "rich" spectrum, the end that in many cases is over-extended and is feeling the pinch.  According to the article, from 2006-2007 foreclosures of homes worth $500k-$1M were up 88% and foreclosures of homes worth $1M+ were up 50%.

The good news, as we noted in our recent report Understanding Today's Real Estate Market (members only), is that recent research suggests that many of those earning $500k or more a year see the current market conditions as an opportunity and are planning to buy homes (typically second or third homes) in the next 12 months, and the weak dollar is enticing many wealthy, foreign buyers.  Interesting times, these...

Luxury Diva: Does Wealth equal Happiness?

What's the price of living well? 
Do wealth and happiness go together?

Luxury Diva: Wealth & Happiness

Understanding Today’s Real Estate Market

"How could this happen?"

It's a good question.  One we're asked frequently. 

"How did the real estate market end up in this mess?" or "What caused today's market conditions."  Your buyers and sellers may be asking the same question of you.  Since part of our training is to encourage you to become a market expert, we thought you'd appreciate having an answer.  So, we've created a short, three page White Paper "Understanding Today’s Real Estate Market"  for you.  It's our  view of what led to the current real estate slowdown and credit crunch. The good news in the White Paper is that the luxury market continues to outperform the market overall.   

You can quote from this report or use it in your newsletters, Market Update Reports, and other presentations.  Post it on your website if you want.  Just be sure to give The Institute credit as the source.  You can download it here (members only - login required).

If you're a member and haven't yet visited the updated website, remember that your email address is your username and you create your own password.

Wealthiest consumers see down market as "opportunity"

"The Annual Survey of Affluence and Wealth in America," produced for American Express by The Harrison Group, reports good news for those of us who work in the luxury housing market.  While the average American may look gloomily at the nation's bleak housing statistics, the wealthy consumer sees opportunity.  Seventy nine percent of those who earn more than $100,000 annually believe that the U.S. is in a recession, but 88% believe that property values will rebound. 

What's even more significant is that those earning $500,000 or more believe that real estate is a "real opportunity" right now and 40% say they plan to purchase a home in the next 12 months.  Of this wealthy group, 33% say their purchase would be a second home, 25%  would be buying home number three. 

This desire to purchase is consistent with Merrill Lynch and CapGemini's research showing that the world's very wealthy have been shifting more of their money into residential real estate.   Last years'  "World Wealth Report" showed that money millionaires (those with a million or more in investable asssets) had 12% of their total investment portfolios in residential real estate.  For this group, purchasing another residence may be as much an investment portfolio strategy as a recreation/lifestyle decision.  In any case, it bodes well for the luxury real estate market.