What are the hottest luxury real estate trends? Where are the new epicenters for million-dollar sales? Will Brexit impact global housing? Are Chinese high-net-worth buyers still targeting their wealth overseas?
For a look at the current state of the luxury landscape, we brought together two visible leaders from Coldwell Banker Real Estate LLC® — Charlie Young, president and CEO, and Craig Hogan, vice president of luxury — at the Four Seasons Miami during the Asian Real Estate Association of America (AREAA) 2017 Global Luxury Summit. Their insights were thought provoking, eye opening and even a little sunny (they were in Miami, after all!) as they sought to identify the exciting developments happening in the high-end.
Coldwell Banker Global Luxury In one word, how would you sum up the U.S. luxury housing market currently?
Charlie Young Positive. As we look at 2017, we are optimistic that it is going to be a solid year for luxury sales. We find a lot of optimism in the 2016 WealthEngine Perspective Study, which predicted that spending among the 400,000 wealthiest Americans is going to increase by 10% this year. We think that spending has to go somewhere. Why not housing?
Craig Hogan I would say “strong.” I think people can read a lot into news stories about the high-end real estate market in certain cities right now, but the overall fundamentals are strong.
Coldwell Banker Global Luxury Has anything surprised you this year so far?
Charlie Young 
Coldwell Banker Global Luxury Why is that an encouraging sign?
Charlie Young Because we’re seeing the diversification of markets. If luxury real estate activity is concentrated in just a few cities, you’re more susceptible to supply and demand constraints in those markets.
Craig Hogan When you see cities like Dallas, Houston and Seattle creeping up in the top 20 and the top 15 markets for luxury real estate, it shows that there is more stability. Sentiment remains strong. We have seen a number of landmark sales and listings this year. For example, we have a neighborhood in Chicago — The Loop — that just posted the second-highest sale for an apartment ever. In terms of what we’re seeing company-wide, we currently have a $90 million listing in Brookline, a $75 million listing in Malibu and a $48 million listing on the Palos Verdes Peninsula in California. Those can be strong indicators for people, too.
Coldwell Banker Global Luxury Are there any other positive indicators that you’re seeing in the luxury home market right now?
Craig Hogan I continue to be struck by the number of cranes that are in the sky in many major U.S. cities. I think Chicago has 46 cranes in the sky right now, in virtually every corner of the city. To see this many cranes up in a city like Miami — a buyer’s market now — shows that builders must be feeling strong about their prospects. They believe that these homes are going to get sold.
Coldwell Banker Global Luxury You mentioned Miami being a buyer’s market now. Is this a market you’re watching closely?
Charlie Young What makes the luxury real estate market unique is that affluent consumers are very savvy — whether it’s on the buy or sell side. They really understand value. And they will react quickly from that perspective. In a case like Miami, when you see what buyers would consider to be a good value, you are going to see them coming into the market.
Coldwell Banker Global Luxury What are the hottest luxury real estate trends to watch for?
Charlie Young One trend I noted in my opening speech is the “lock and leave lifestyle.” The large, high-maintenance property is beginning to fall out of favor, while mobile-enabling products — luxury condominiums, full-service communities and townhouse products that have full-service amenities at their disposal, easy access to culture, shopping and restaurants — are now in favor among affluent consumers. Walkability is becoming an important quality in luxury housing, as well.
Craig Hogan We are seeing this march toward excellence in building today. The cookie-cutter, middle-of-the-road housing product is out. All finishes are excellent, unlike anything we’ve ever seen before. The low-end builder is, by and large, gone — even in the low-end of the luxury market.
Charlie Young Also, there has been this trend toward globalization and mobility. The luxury homeowner now has the ability to be highly mobile and travel throughout the world, and has the ability to go from place to place with ease. These affluent homeowners often own multiple homes — and they have the ability to manage those homes from market to market as they are globetrotting.
Craig Hogan And consumer reporting fully supports this trend. For the last few years, the luxury report released by the Coldwell Banker brand has found that “location, location, location” was not the first priority for the 45 to 55 age group; it was lifestyle.
Coldwell Banker Global Luxury Do you think this shift toward lifestyle is driving the development of more luxury-branded residences?
Craig Hogan That is a trend. Agents affiliated with the Coldwell Banker brand have listed the Four Seasons Residences in Napa, California, and Bangalore, India — as just two examples. We recently listed the Ritz-Carlton Residences in the Bahamas. I would say this is the first time we’re marketing that many branded hotel-residences.
Coldwell Banker Global Luxury Foreign buyers now account for more than $100 billion of U.S. sales. How has this shift from local to global changed the way Coldwell Banker does business in the luxury space?
Craig Hogan There is no doubt about it — luxury real estate sales are no longer limited to local enclaves. Finding a high-net-worth buyer for a luxury property is now a global affair, and it requires targeted marketing that crosses continents. We took these changes to heart this year by revamping our luxury real estate marketing platform for the first time ever. Now known as the Coldwell Banker Global Luxury℠ program, it maintains a real estate pedigree and 80-year tradition of catering to a high-net-worth audience — but it also emphasizes our global relationships across the Coldwell Banker network.
Charlie Young I think it’s clear that the luxury sector is a global sector today, and for us, we need to approach it as such. What we know is that consumers all over the world recognize the Coldwell Banker brand, and they associate it as a high-quality brand. So, the introduction of the Coldwell Banker Global Luxury program simply made sense.
Coldwell Banker Global Luxury You must be excited to launch the new identity to the AREAA audience this weekend.
Craig Hogan It’s perfect timing. This is an audience that travels around the world, specifically for real estate investment and finance. We have them all here in one room, all 700 of them, and they all witnessed the unveiling of the new program. We’re thrilled to be here. It’s a big moment for us.
Coldwell Banker Global Luxury Looking to Asia, China currently has 1.34 million high-net-worth individuals, and the Hurun Report has just identified that there are 800,000 individuals who want to buy property overseas over the next three years. Where do you see areas of opportunity for the brand and your luxury real estate agents to capitalize on the influx of Asian high-net-worth investment expected to come into the United States?
Charlie Young With respect to Chinese buyers in the United States, one area of opportunity we see is the university market. Many Chinese consumers are purchasing properties in markets where they are sending their children to school. They also like a luxury product.
Craig Hogan I would add that they have typically gravitated toward a single-family detached product as opposed to an attached product.
Charlie Young Right. So, the higher-end properties and developments in and around university complexes are particularly attractive to them. And that ties back into the “lock and leave lifestyle” I mentioned earlier, too, because they often want maintenance-free properties. So we are watching university markets closely with respect to this key luxury buyer demographic.
Craig Hogan I also know that some of our luxury real estate agents are beginning to look at ways to connect Chinese buyers with new construction developments in university markets. As a brand, we’re always looking for new ways to make our luxury real estate agents “borderless,” as I like to call it. For example, our luxury listings now enjoy global syndication through over 100 portals across the world, including China. Our new global website, www.coldwellbankerluxury.com, is available in multiple language translations and has a currency converter, allowing our agents to better serve their Chinese clients. The site also gives us the ability to link all our agents together around the world in real time on the back end — so they are all looking at the same properties and opportunities on one space.
Coldwell Banker Global Luxury How much of a role are international buyers expected to play in the high-end real estate market this year?
Charlie Young I think what we’re starting to hear from some of our agents who work in the high-end sector in the United States, whether in California or Florida, is that the American buyer is coming back. That’s not to say that the international buyer is retreating significantly. But the mix is changing. The political and global uncertainty is sort of a double-edged sword. On the one hand, it causes people to be more cautious. On the other hand, many international investors still see U.S. housing as a safe haven for their wealth.
Coldwell Banker Global Luxury Why do you think Americans are coming back?
Charlie Young The high-end buyer is very savvy and understands value and the concepts of supply and demand. Those buyers have made a decision that there is value to be found right now. The value equation makes sense for them, and you know, the value equation is always getting reset. If they think it’s too hot, they might back off.
Coldwell Banker Global Luxury Beyond what’s happening politically or economically here in the United States, which circumstances happening overseas are you keeping a close eye on this year?
Craig Hogan We’re in 49 countries and territories, so we pay attention to everything. We have listings all over the world, including many in Europe. For example, our affiliate in Great Britain just listed The Corniche, a new landmark mixed-use development in central London’s Albert Embankment of the River Thames that averages about $3.7 million per unit — so we have tremendous interest in what’s happening in Europe right now.
Charlie Young From a U.S. perspective, we’re watching spending initiatives. Tax cuts are generally good for housing, but if they restrict foreign trade, that’s less good for housing. And from what we’ve heard, Brexit has actually been a positive development for European luxury housing, because Portugal, Spain and Italy have changed their tax codes to attract high-end buyers. So, they are the new players now in Europe.
Coldwell Banker Global Luxury Any last words you’d like to leave our readers with?
Craig Hogan We feel so strong about the luxury market and our place in it today. As a matter of fact, we feel so positive that we revamped our long-running luxury marketing platform that helped us achieve great success in the high-end real estate space. We’re changing the conversation. We’re here to play.
Charlie Young The global luxury buyer and seller is a very sophisticated consumer, and we play so well in this market because we provide sophisticated consumers with what they are looking for. First, our brand is recognized around the globe as a quality real estate provider. But more importantly, the Coldwell Banker network is very strong — 88,000 professionals in 3,000 offices in 49 countries and territories. No matter what market you’re in, you’re going to find a Coldwell Banker agent, and you know that you are going to be dealing with someone who is a high-quality professional, operating at a very high standard. This is what affluent buyers and sellers want.
Craig Hogan I would just like to add that our luxury real estate professionals are some of the best at what they do. They are true masters at their craft. Our philosophy as a brand has always been — and continues to be — to cultivate excellence by giving our agents the skills they need to be successful in the luxury housing landscape. Our certification program is critical to supporting this tradition of excellence. Studies have shown that affluent consumers value expertise and trust, and they put an incredible amount of trust in the real estate professionals who represent them. Whenever someone hears the new Coldwell Banker Global Luxury name, we want them to instantly associate it with excellence, experience and expertise.
