Last week, I had the good fortune to read Jonathan Miller’s
recent blog piece entitled, “Luxury Real Estate as the New Global Currency” (http://www.millersamuel.com/blog/luxury-real-estate-as-the-new-global-currency/27217
). Mr. Miller’s Manhattan firm, Miller
Samuel Inc., is one of the preeminent real estate appraisal and consulting
firms in the NY Metropolitan area, providing world class expertise and guidance
to global investors. The firm performs
valuation assignments including mortgage origination, relocation, foreclosure,
workouts, fractional and partial interests, easements, stigma, environmental,
litigation, bankruptcy, asset valuation, insurance, share allocation, common area,
divorce/matrimonial, equitable distribution, trust and estate matters,
mediation and court testimony.
He also authors what is widely regarded as the “Report of
Record” for the New York Metropolitan, South Florida, and Las Vegas
markets. Here is the link to the most
recent report for the Miami area: http://www.millersamuel.com/files/2012/10/Miami_Q3_2012.pdf.
As is Mr. Miller’s regular practice, Mr. Miller draws insights
from well established and highly respected industry experts for his articles,
blog pieces and podcasts, and this was no exception. Dottie
Herman, President & CEO of Douglas Elliman, Patrick Dring, Head of
International Residential at Knight Frank, and Liam Bailey, Head of Residential
Research at Knight Frank all offered their professional knowledge and perspective
to the piece.
To summarize the dialogue, US luxury real estate
(particularly in the NY Metro, Hamptons and Miami markets) have experienced an
enormous surge in sales and value increases of their respective luxury markets
due to a fusion of contributing macro and microeconomic factors, enumerated as
follows:
1.
August 2011 downgrade by S&P of US Debt from
AAA to AA+ resulted in the dilution of the value of the dollar, and
strengthened foreign currencies by contrast.
Therefore, foreign investment in US securities poured into the country’s
economy.
2.
Luxury real estate became a safe haven as a
result of the volatility in the US securities markets and political
uncertainty.
3.
Diminishing supply amidst steady demand for “trophy”
homes at the top of the luxury market has brought record-setting prices due to
fierce competition for these “one of a kind” residences.
4.
Foreign buyers have developed a seemingly
unquenchable thirst for the “trophy” home.
The singular nature of the locations, expanse of views, imperial class
features, quality of amenities and sheer magnitude of these homes have inspired
an insatiable attraction on the part of the global well to do.
What is the outlook for the future? According to these highly qualified experts, US
luxury real estate will remain strong and vibrant in this environment of
stringent access to credit and political instability for years to come.
My thanks go out to Jonathan Miller, Miller Samuel Inc., and
all those who contributed to this piece.
And now, it gives me great pleasure to share some of Coral
Gables and Coconut Grove’s local treasure with you.
Java Head Estate - 200 Edgewater Dr. Coral Gables, FL
3467 N Moorings Way Coconut Grove, FL
24 Tahiti Beach Island Rd. Coral Gables, FL
