Institutional Investor's Alpha Magazine - October 2007 - (Page 40)

>>>> Ultra Luxury Real Estate Report “A few years ago, it would have been very difficult for them to purchase US real estate,” she says. “Now, they are buying at a rapid rate after the overseas investment cap in their country was lifted.” South Korea had long kept restrictions on external investments, which helped the country in the wake of the 1997 Asian financial crisis. But with the strong won hurting the country’s exporters, government officials are now encouraging citizens to spend more overseas, hoping to slow the currency's appreciation. Buyers from Russia, Ireland and the UK are also finding that US luxury homes are a bargain compared with what they can buy in their own countries. According to the Global Property Guide, an online research firm, house price growth in the UK accelerated to 9.25 percent year-on-year in the first quarter of 2007, up from 5.3 percent year-on-year in the first quarter of 2006. Northern Ireland and London saw double-digit year-on-year house price increases early this year – 57.6 percent and 14.3 percent, respectively. Global Property Guide ranks London as the second most expensive location (after Monaco) to buy an apartment in Europe. “While Europeans and other foreign buyers have helped spur condominium sales in Manhattan, there still has not been one to equal the $196 million condominium sale in London’s Hyde Park area to a resident of Qatar,” says Kirk Henckels, senior vice president and director at Stribling Private Brokerage in New York. London condominiums, he adds, have an average price per square foot of $4,600 versus Manhattan’s average of less than $2,000 per square foot. At the controversial Trump SoHo, individual condo-hotel units are currently going for $3,000 per square foot. But the duplex penthouse units are another story. “This is the penultimate of luxury in downtown,” says Trump. “We’ve been turning away buyers at the price of $5,000 per square foot.” The 46-story building is currently under construction despite opposition from local residents, who say it is a condominium masquerading as a hotel (on a site that is not zoned for residential development). Completion of Trump SoHo is expected in early 2009. Other such premium developments in Manhattan as the Plaza, 15 Central Park West, 40 Mercer and 165 Charles are now nearly sold out. “It is reported that there are at least two deals over $50 million at the Plaza and 20 deals over $20 million at 15 Central Park West,” says Henckels. Few barriers to owning property It is easy for foreigners to own luxury homes in the US. Aside from having a large supply, the US does not restrict or scrutinize most property purchases by foreigners. “Except to the extent necessary to enforce US laws and regulations (including immigration and homeland security), foreign participation in US real estate is relatively free,” said an NAR report on international home buying activity. Most foreign buyers spend less than six months in their US home, as visa rules do Donald Trump Jr. not allow nonresidents Trump Organization to stay in the country for a longer period (unless they are on a student or work visa). Choosing luxury homes to purchase from overseas is also getting easier. Aside from photos and videos that can be accessed via the Web, sellers are traveling abroad to promote their properties. Michael Golden, cofounder of @properties, is overseeing sales for the Chicago Spire. He is organizing international road shows to Dublin, Moscow, Singapore and Hong Kong in early 2008. The project, which will be ready for occupancy in 2011, has already generated more than 4,000 inquiries over the last year. “We are targeting the global marketplace,” says Golden. “This is more than a residential property – it’s an iconic building.” World-renowned Spanish architect Santiago Calatrava has designed the Chicago Spire, which when complete will be the tallest building in the United States. Pamela Liebman The two-story pentCorcoran Group house on the 142nd floor is priced at $40 million. Dominic Grace, director of residential investment and development at Savills, a global real estate service provider headquartered in London, says luxury homes in Chicago are a good value, compared with what foreigners can get in other big cities. “That $40 million penthouse at the Chicago $35 million gilded age mansion on the upper east side of Manhattan $39 million prewar co-op on the East River of Manhattan 995 Fifth Avenue, directly across from the Metropolitan Museum of Art in Manhattan Guest suite at the proposed Trump SoHo Hotel Condominium in Manhattan 2 • Alpha Sponsored Report • October 2007

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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