The Asian Real Estate Association of America (AREAA) 2017 Global Luxury Summit kicked off April 21 with about 11 Coldwell Banker executives and sales associates, including Summit co-chair and closing speaker Charlie Young, president and CEO of Coldwell Banker Real Estate. It has been a banner year for the Coldwell Banker organization, as the brand recently unveiled a new identity for its luxury program called Coldwell Banker Global LuxurySM.
“I’m optimistic about the luxury real estate market,” Young told a crowd of over 700 attendees in the grand ballroom of the Four Seasons Miami during the Friday opening session. “The wealthy are spending again. I like one report from WealthEngine that stated that affluent millennial consumers are expected to increase their spending by 12% in 2017. It’s 10% for traditional luxury consumers. That money has to go somewhere. Why not real estate?”
Like any industry, the luxury real estate sector is ever-evolving. Whether you’re a dedicated follower of real estate or a curious observer waiting to act on the next opportunity, you’ll want to know what’s really happening globally with the world’s most sought-after homes and destinations. Without further ado, here are three trends we spotted at the Global Luxury Summit this year.
1. The Emergence of Second-Tier Cities and New Luxury Markets
Young identified the traditional luxury markets — such as New York, Los Angeles, San Francisco and Miami — as leading the way, but added that emerging markets such as Seattle, Dallas and Houston are becoming more dominant luxury players. Looking at the global landscape, strong growth is expected to continue in countries such as Spain, Italy, France, Thailand, the U.K., Portugal and United Arab Emirates; but India and Costa Rica are the surprises that everyone should keep a close eye on.
Jesse Ottley, president of development division for Cervera and president of the Greater Miami chapter of AREAA, built on Young’s optimism, noting “foreign buyers accounted for $102 billion in real estate sales last year. He added that 4% of those sales went to New York, 10% went to California and an impressive 22% went to Florida.
A panel on foreign investment — headed by John Wong and featuring speakers Anthony Chan, Mario Garnero, Jose Rasco and Craig Studnicky — covered everything from Brexit’s impact on global real estate investment to the luxury real estate lift off of second tier markets. Most on the panel agreed that 2017 is a year of “opportunity” in luxury real estate as some markets are entering transitional periods or “disruption,” as one panelist noted. As a result of the Brexit divorce, new financial centers in Europe may be created, such as Frankfurt. European countries such as Spain, Portugal, Italy and France are seeing an uptick in real estate interest. Second tier cities like San Diego and Tampa are gaining ground on heated luxury markets like Los Angeles and Miami as savvy international affluent investors seek out better bargains. The Chinese government may also be revisiting their laws prohibiting capital from leaving the country. “Currency is the key to keeping money flowing into the U.S.” one panelist said. “The Asian investor knows how to play the currency game very well.” The pervading belief, amongst those on the panel, is that the stability of the U.S. market is one of the main drivers of global real estate investment.
2. Lock and Leave Lifestyle
Young called out the “Lock and Leave Lifestyle” trend, first identified by Wendy Walker of Coldwell Banker Residential Brokerage in Paradise Valley on our luxury blog this past fall. The driving force behind the trend is that high net-worth individuals want less maintenance, more amenities, quality finishes and smaller square footage. They want to leave at a moment’s notice, and know that their home is safe, secure and maintained while they’re traveling the world. “They want to be mobile,” said Young.
3. Big Data Driving Luxury Sales
The Friday panel had a snappy debate on soft vs. hard data, questioning whether soft data was reliable or not as a market indicator. Young’s opening sentiments also built upon this theme, as he recounted that luxury real estate agents are now using big data in their marketing — to not only win listings, but also to better connect with their affluent sellers and explain how they are going to market their home. After all, every affluent seller wants to know: “Who is going to buy my home, and do you know how to reach them?”
Young mentioned the launch of CBx, a proprietary app that allows Coldwell Banker sales associates to visualize big data. The app offers up a profile of a listing’s potential buyer, the three target markets where buyers are most likely to currently live, and other market dynamics based on data and trend analysis. He also said Coldwell Banker sales associates are leveraging the data and information available via the brand’s partnership with Wealth Engine, which gives them direct access to the largest database of affluent consumers. All of this is being driven by the luxury agents’ need for more sophisticated and strategic marketing strategies in order to find qualified buyers for their high-end listings.