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Wednesday, November 21, 2012

The New Bullion for High Net Worth International Investors: Luxury Real Estate

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
 
For more information on these and other magnificent luxury homes in South Florida, please contact me.