2016 will see realty growth in global financial centres of London, New York and Dubai
real estate Updated: Jan 30, 2016 19:58 IST
Fine art and fine homes proved to be a stellar combination for Christie’s, the world’s oldest art auction house that got into luxury properties in the year 1995 to satisfy the lifestyle requirements of its discerning clientele. Today, Christie’s International Real Estate (CIRE) is a global authority on marketing hi-end properties, what with the well established local connections, global network of HNI clients and expertise of seasoned brokers. CIRE’s Giles Hannah, senior vice president, talks about how the global luxury property market is likely to fare in year 2016.
The global downturn has had its impact particularly on property market. Do you expect any turnaround in global real estate in the year 2016?
Interest rates are low and it is clear that buyers are looking for secure investments. We expect in 2016 to see solid growth in global financial centres of London, New York and Dubai. The outlook is positive for residential prime property as a tangible asset.
Which markets/sectors are expected to perform well in 2016?
Today certain parts of Europe offer good value and these include the likes of Paris, Madrid and Sardinia which are expected to see house price growth for the next couple of years. We expect to see properties grow in value, particularly in prime central London with flats priced at £5 million. There is a lack of supply which is driving prices upwards.
London seems to be the obvious choice of many investors and end-users. Does it continue to reign and dominate? What is the prime reason for the city’s attractiveness?
The London market continues to dominate many potential buyers’ interest for several reasons, including its international population (more than 25% are non-English). The lifestyle that it affords is very attractive in terms of high-quality university education, a very vibrant and unparalleled cultural offering (museums, theatres, opera, popular music, art trade etc.) as well as high-end shopping and gastronomy.
Additional advantages are the liquid and transparent marketplace and strong property rights for owners. The beneficial time-zone in-between East-Asia and the Americas is enticing for professional advisory services (lawyers, accountants, private banking) along with leading private medical healthcare facilities and globally-connected airports.
In addition, as there continues to be a continuous shortfall of new construction compared to demand, and this having been the case for several decades with no indication that construction will meet demand in the foreseeable future, the market trends indicate continued capital value growth.
You have led sales and marketing campaigns on many uber luxury projects and branded developments such as One Hyde Park, The Bulgari Residences, The Lancasters, Trinity Club, St James’s House etc. From your experience what do the rich and famous in the world want in a luxury home, other than key location?
The top-end buyer usually has a blend of expectations/criteria that need to be fulfilled in addition to the location-aspect.
Being able to use the home at short-notice and at their choice is important; hence the growth in residences co-located with hotels/developments projects where there are private residences combined with a luxury hotel. Five-stars are important and have to be provided with excellence without fail as/when the user wants them.
The design/fit-out of the homes will vary depending on whether it is a primary or secondary/tertiary residence, but usually, each bedroom will have its own bathroom. In addition to drawing and dining rooms, many homes will feature a kitchen for the owner as well as a larger catering-kitchen when entertaining guests.
Separate staff accommodation (eg for nanny, butler etc.) is imperative as is ample secure parking facilities. Even if the owners will frequently use chauffeured cars, many top-end buyers will want to use and have access to their own private cars as well. The technology aspect is important and many owners will want to be able to remote-control their home or monitor their home through CCTV from the other side of the world. Personal security is important and depending on location, some luxury homebuyers will also require a safe-room for the occupiers.
How important are brand associations in luxury real estate projects?
Brand associations with the real estate brokerage network (eg Christie’s International Real Estate), the hotel-operator (if there is a hotel within the development project), the architect/interior designer company do make an important difference not only in enhancing the credibility of the development but also in providing the potential buyer with a comfort that the ownership experience and delivered product will be in accordance with expectations. For the developer, having a global network operating at the top-end of the market spectrum (ie Christie’s International Real Estate) will in addition also assist in targeting of potential buyers as well as allowing the developer to associate themselves with the luxury brand.
Having a world-renowned architect and/or interior decorator will allow the developer to charge a premium when selling the finished product and it will also allow the owner to charge a “differentiation premium” when they in turn sell in the future. Branded residences tend to trade at a 25-30% premium to un-branded residences. If there is a hotel in the development project, the expectations of the individual owners and the service delivery will be highly dependent on that brand’s ability to continuously operate at and deliver the quality that is associated with a particular brand; ergo, the brand has to deliver on a daily basis.
How difficult is it to market a luxury project? Do you have to create experiential marketing in a super luxury property?
It is significantly different from marketing a single home as there will be a not insignificant number of individual units to market and sell. The marketing will need to be tailored to location, amenities, service-packages offered (if extant) branding, timing of construction and actual delivery of the finished product, potential competing product, etc. The experiential marketing element is important and a show-suite/show-unit is imperative.
An equally important component is the actual “buying experience” all the way from the initial enquiry through how this is dealt with to the viewing of the show-unit and associated decision-making on fit-out options to the actual transaction and conclusion of the deal. A super-luxury buyer sees the acquisition in its totality – the combination of the tangible with the intangible has to be congruent and coherent and delivered with excellence throughout.