Institutional Investor's Alpha Magazine - October 2007 - (Page 39)

>>>> Ultra Luxury Real Estate Report Foreigners Buy Up Multimillion-Dollar Homes Thanks to a weak dollar, buyers from all over the world have been scooping up high-end real estate in the US. Subprime mortgage crisis? Not a problem in all-cash deals. • By Marilen Cawad • View from 100 11th Avenue by Jean Nouvel, overlooking Manhattan's Hudson River t the end of June, while the rest of the real estate world was reporting foreclosures and layoffs in mortgage companies, a cosmetics tycoon from Istanbul made an offer for an apartment in New York City. The two-bedroom unit, on the 15th floor of the Plaza, the historic building at the foot of Central Park, was purchased for $7.2 million. The contract was executed without the buyer coming to the US. Nikki Field, senior vice president at Sotheby’s International Realty, represented the Turkish businessman in the transaction. She is convinced that sales of ultra luxury homes, particularly in Manhattan, are unaffected by the slowdown in the overall real estate market. “Foreign buyers have been taking advantage of the weakness in the US dollar, buying homes over the phone and online,” says Field. These types of deals are not uncommon, she adds, especially in properties where the developer has a very good track record. “My clients are not buying blindly. They do their research and then buy when they realize it’s a very good investment.” The term “ultra luxury home” generally refers to a residential property that is priced at $5 million or more. In some markets, it could mean nothing lower than $10 million. Some brokers in Manhattan would not even call a property “ultra luxury” unless it has a minimum asking price of $20 million. According to market research firm Data Quick, sales of homes A priced at $5 million and above jumped from a total of 571 homes in 2005 to 675 in 2006. Sales in the first quarter of 2007 also jumped to 201 homes compared with 154 in the first quarter of 2006. At the top of the list are ultra luxury homes sold in California, New York and Connecticut. “We have a very strong market, and it’s ultra luxury leading the way,” says Pamela Liebman, CEO at the Corcoran Group, a real estate brokerage firm in New York City. “I don’t see it stopping.” As long as the property has the right address, she says, there will always be takers. Most recently, these takers have come from overseas. Donald Trump Jr., executive vice president for development and acquisitions at the Trump Organization, confirms that properties carrying the Trump name have sold mostly to foreigners. “People from overseas understand and appreciate the brand, and are willing to pay more for it than the locals,” he says. Europeans & Asians leading the way Nearly one in five American real estate agents has sold a home to a foreign buyer in the past year, according to a new study by the National Association of Realtors (NAR). Buyers are coming from different parts of the world, but the biggest proportion, about a third, is from Europe and about a quarter come from Asia. Corcoran’s Liebman observes that Koreans are in a buying frenzy. October 2007 • This Sponsored Report was prepared by the Special Projects Department of Alpha.

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - October 2007

Institutional Investor's Alpha Magazine - October 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Applied Knowledge The Good Guys: Autism Advocate Interview: Nerves of Steel Cover Story: Ivy League Education Alpha Awards: Top Service Providers: Trying Times Strategies: Passage to India Profile: The Oracle of Irvine Alpha Bytes: Futurama Research Center: Funds of Funds 50 Unhedged: Commentary: Crisis? What Crisis?

Institutional Investor's Alpha Magazine - October 2007

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