Wealthy buyers are snapping up trophy homes at a record pace -- and now, they're looking beyond the sunny states
By Janie Ho
Imagine this: You're bored with the pristine white terrace of your New York loft and flee to a historic villa on the French Riviera. Or maybe you've got your heart set on a glass-enclosed penthouse in Australia -- or a waterfront mansion in Barbados. Can't decide? Such is the enviable plight of many people around the world: They can't decide which luxury home to buy.
"There's an extraordinary amount of wealth out there," says Corcoran Group CEO Pamela Leibman. According to Liebman, there's "no limit on what people will spend on trophy real estate."
Imagine this: You're bored with the pristine white terrace of your New York loft and flee to a historic villa on the French Riviera. Or maybe you've got your heart set on a glass-enclosed penthouse in Australia -- or a waterfront mansion in Barbados. Can't decide? Such is the enviable plight of many people around the world: They can't decide which luxury home to buy.
"There's an extraordinary amount of wealth out there," says Corcoran Group CEO Pamela Leibman. According to Liebman, there's "no limit on what people will spend on trophy real estate."
She should know. Corcoran Group is a powerhouse in selling luxury properties in New York City. So by trophy real estate, she means more than just a million-dollar address. She's talking about a lifestyle trend. Buyers want to know what else a property has to offer, whether it be concierge service, roof decks, or wine rooms.
SKY HIGH. Coldwell Banker CEO Jim Gillespie notes this same trend of getting "the whole package." He recently told BusinessWeek Online that while "warm weather and the water remain primary draws golf and ski resorts, cultural centers, shopping destinations, and other areas are seeing an influx of luxury homes." The gold rush is apparently sweeping not only California and perennial hot spot Florida, but Massachusetts, New Jersey, Illinois, Connecticut, Arizona, and New York as well.
Can you guess the prices of these fabulous properties around the world?
Each of these states racked up more than $1 billion in sales for Coldwell Banker luxury homes last year. In fact, Coldwell reported record luxury-home sales in the U.S., surging up to $55.9 billion in 2005 -- a 24% increase from the $45.2 billion record set in 2004.
However, some say that appreciation of luxury houses in the $1 million to $2.5 million range will be flat in 2006, and may even decline in years to come. Baby-boomers may opt to downsize to a condominium or to age-restricted housing in 2006. Some may see the equities in their retirement funds and 401(k) plans erode, while others may devote more of their assets to a retirement home.
MUSEUM QUALITY. One recent study of the luxury market in New Jersey found that while the market is softening for houses in the $1 million to $2.5 million range, the market for houses above $2.5 million is stronger because of their uniqueness.
Distinctiveness is the driving force that Liebman also credits for her own lucrative sales. She says, "These buildings are like exquisite works of art. Buying into these buildings is like buying into New York history." Corcoran Group had a recent surge in luxury-home sales, which Liebman attributes to a record-setting year for bonus and hedge-fund money on Wall Street.
Coldwell's Gillespie, on the other hand, sees the luxury market as being defined by baby boomers. "Many affluent baby boomers are buying second homes, many within 300 miles of their primary residence," he says. "These luxury properties are good investments and are likely great for retirement living when the time comes."
Regardless of what's fueling this surge in buying hedonism, one thing's for sure: When looking for a luxury home nowadays, you can have your loft and maisonette, too.
Ho is a contributor to BusinessWeek Online in New York
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SKY HIGH. Coldwell Banker CEO Jim Gillespie notes this same trend of getting "the whole package." He recently told BusinessWeek Online that while "warm weather and the water remain primary draws golf and ski resorts, cultural centers, shopping destinations, and other areas are seeing an influx of luxury homes." The gold rush is apparently sweeping not only California and perennial hot spot Florida, but Massachusetts, New Jersey, Illinois, Connecticut, Arizona, and New York as well.
Can you guess the prices of these fabulous properties around the world?
Each of these states racked up more than $1 billion in sales for Coldwell Banker luxury homes last year. In fact, Coldwell reported record luxury-home sales in the U.S., surging up to $55.9 billion in 2005 -- a 24% increase from the $45.2 billion record set in 2004.
However, some say that appreciation of luxury houses in the $1 million to $2.5 million range will be flat in 2006, and may even decline in years to come. Baby-boomers may opt to downsize to a condominium or to age-restricted housing in 2006. Some may see the equities in their retirement funds and 401(k) plans erode, while others may devote more of their assets to a retirement home.
MUSEUM QUALITY. One recent study of the luxury market in New Jersey found that while the market is softening for houses in the $1 million to $2.5 million range, the market for houses above $2.5 million is stronger because of their uniqueness.
Distinctiveness is the driving force that Liebman also credits for her own lucrative sales. She says, "These buildings are like exquisite works of art. Buying into these buildings is like buying into New York history." Corcoran Group had a recent surge in luxury-home sales, which Liebman attributes to a record-setting year for bonus and hedge-fund money on Wall Street.
Coldwell's Gillespie, on the other hand, sees the luxury market as being defined by baby boomers. "Many affluent baby boomers are buying second homes, many within 300 miles of their primary residence," he says. "These luxury properties are good investments and are likely great for retirement living when the time comes."
Regardless of what's fueling this surge in buying hedonism, one thing's for sure: When looking for a luxury home nowadays, you can have your loft and maisonette, too.
Ho is a contributor to BusinessWeek Online in New York
- More on Financing and Mortgages
