Institutional Investor's Alpha Magazine - October 2007 - (Page 42)

>>>> Ultra Luxury Real Estate Report Spire will probably be worth twice in New York and thrice in London,” says Grace. “So it’s an extraordinarily good buy.” Chicago’s soon-to-rise ultra luxury condominiums offer one-of-a-kind designs, finishes and amenities. The Trump Tower, scheduled for completion in 2008, has a full view of the Chicago skyline, the lakefront and the Chicago River. Its interiors come with Brazilian hardwood floors and Italian wood kitchen cabinets. The Waterview Tower, Mandarin Oriental Tower and the Elysian Condo Hotel, all aiming for a 2009 opening, offer five-star services, including valet, concierge, maid, catering and dry cleaning. Canyon Ranch and XO Condominiums are scheduled for completion in 2010. Both projects will provide lavish health and fitness centers for residents. “Chicago’s time has come,” says Grace. “People are now beginning to see the great potential of the city. It is very accessible – an international gateway – and has a diverse economy.” No mortgage, no worries? According to the 2007 World Wealth Report compiled by Merrill Lynch and Cap Gemini, high-net-worth individuals increased their investments last year in second and vacation homes. The interest rate was less of a factor in the purchase of these homes, which typically were not financed through mortgage debt. “I have personally not had a mortgage contingency over the past year in contracts over $7 million,” says Dennis McCormack, president of Prominent Properties, a real estate brokerage firm specializing in luxury residential properties throughout Bergen County in New Jersey. Last August, he sold a $14.9 million home in Saddle River, about 29 miles from New York City. McCormack is currently marketing a traditional colonial home in Alpine, NJ, for $52 million, the most expensive piece of real estate on his list. The property, which is on approximately 20 acres of land, includes a guesthouse, swan pavilion, pool and pond. Alpine is about five miles north of Manhattan and the George Washington Bridge. Fifty percent of McCormack’s ultra luxury home transactions have involved overseas buyers, who perhaps have to do business in Manhattan but are attracted to the bucolic charm of a top-quality suburban community. “Foreigners are looking for quality residences,” he says. “They tend to gravitate toward brick or stone houses with slate roofs and elevators.” But while foreigners are unaffected by the subprime mortgage crisis, some wealthy Americans seem to be taking a step back. Dolly Lenz, who is vice chairman of the brokerage firm Prudential Douglas Elliman in New York and who specializes in homes costing at least $25 million, is seeing a standoff in her market. “The whole subprime mess really caught a lot of people by surprise,” she says. “Today, the game is all Dominic Grace about who is going to Savills blink first.” A seller of a $25 million home, for instance, may not be willing to sell for $20 million, and the buyer is not confident enough in the existing market to pay the asking price. “A lot of people bought real estate in the last two years, and now they’re content just holding on to see what happens in pricing,” says Trump. “They don’t have the advantage that foreigners have of buying at an effective nominal discount because of the currency.” According to a recent survey by the American Affluence Research Center, a marketing research firm in Aventura, Florida, respondents are cautiously optimistic in their outlook for the economy and conservative in their future spending plans. In the Spring 2007 Affluent Market Tracking Study, 46 percent of respondents expressed no plans for major expenditures in the next 12 months. “This is interesting given that the affluent have a somewhat positive future outlook,” the report said. Nikki Field But as Trump puts Sotheby’s Intl. Realty it, whether the economy is good or bad, there will always be people making a lot more money than the rest of the pack – be it locals or foreigners. Multimillion-dollar homes will eventually sell because “someone who is doing very well would ultimately want to buy the best of the best,” he says. “And that allows ultra luxury real estate to weather the cyclical nature of the market.” ■ The Chicago Spire, designed by renowned Spanish architect Santiago Calatrava The 46-story Trump SoHo: Condo-hotel units now at $3,000 per square foot $7.8 million palatial manor home on a gated 2-acre property in Saddle River, NJ Trump International Hotel and Tower in Chicago, scheduled for completion in 2008 4 • 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

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.