For Many High-End Buyers, Furnished Homes Are Best

To entice buyers, especially ones at the top of the market, developers increasingly are turning to high-end designers to build out and furnish the homes they’re trying to sell. Even the artwork on the walls is sometimes part of the sales deal.

These so-called turnkey homes are selling big-time in second-home markets like Miami and Mexico—and doing well in New York City, too, experts say.

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"Turnkey makes all the difference in the luxury market now," said Dora Puig, principal broker and owner of Luxe Living Realty and the director of sales and marketing for the new Palazzo Del Sol condo tower on the exclusive Fisher Island in Miami. "It’s very big in Miami Beach."

"I’m seeing turnkey more and more in single-family homes," she said, citing two fully furnished houses in Miami Beach that just sold for $34 million and $28.5 million. "I’m totally bullish on it. I encourage all of the developers to do it."

At the 43-unit Palazzo del Sol, three new ultra-high-end model apartments—priced from $8.2 million to $19.7 million—are helping to propel sales. The developer enticed three big names in design to create the units: Henge, Artefacto and Antrobus + Ramirez.

Paulo Bacchi, CEO of Artefacto, the high-end Brazilian furnishings brand, said that the company now outfits about 50 model homes a year that are fully turnkey, including many in Miami.

Cost for furnished homes are sometimes wrapped into the listing price

The price difference between a turnkey property and a non-furnished home varies greatly based on the property.

"Some costs are wrapped into the cost of the home and some come at an additional cost to tack on. There’s a contemporary home on 4555 Pine Tree Drive (in Miami Beach) on the market for $34 million that we outfitted. If the future buyer would like the furnishings to be included, it would be [an extra] $1.3 million," Mr. Bacchi said.

"All of these buyers want the comfort of having everything done for them before they enter their new home," he said. The demographics, he explained, are mixed. "It is a combination of internationals looking for a second home as well as domestic buyers."

Buyers are gravitating toward homes "that not only have luxury-driven features, but also to have it designer-ready before they enter the residence," he said. 

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In Los Cabos, Mexico, Ohana Real Estate Investors is developing Twin Dolphin, a master-planned community that includes the private residential community Maravilla Los Cabos (already open and operational) and the under-development Montage Residences Los Cabos.

Of the 230 residences within Maravilla, 50 are single-family homes, and 180 are homes built by the developer. These include condos, townhomes and casitas. "Seventy percent of the built product will be sold turnkey," said Neil Johnson, director of residential real estate for Ohana.

"We call it effortless ownership," Mr. Johnson said. "You just need to show up with your suitcase. We can stock it with groceries, we can have a butler on hand to cook you breakfast the next day."

"We’ve seen a tremendous uptick of activity since the model was completed," Mr. Johnson said. "People want to look, touch, feel everything, get a sense of the cabinets, the materials."

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First-time, second-home buyers and more

Being outside of the United States ups the turnkey appeal for buyers. "If they don’t select a turnkey property, it’s a four- to six-month process of selecting everything, ordering it and getting it all through customs," Mr. Johnson said.

Sometimes more local second-home buyers go this route, too. After spending five long years designing and building their primary home in a Chicago suburb, Kari Galassi, 44, and her husband, Nick, decided that turnkey was the way to go when they began looking at second-home options.

After renting a unit at Ohana’s Montage Residences Deer Valley in Park City, Utah, for three years, they bought a fully turnkey three-bedroom unit two years ago. "It was turnkey down to the spoons and forks—everything was in the unit," Ms. Galassi said. "We loved the services, the amenities."

Then after spending a spring-break week at Ohana’s Maravilla Los Cabos last year, they bought a furnished fully turnkey four-bedroom condo there. "We loved the way it was furnished," Ms. Galassi. "I could tell they used very high-quality furniture."

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"For me, most of the appeal of turnkey is the ease, especially after going through the process of building," she said. "The fact that it was turnkey helped us get more excited about the property. I don’t know if we would have bought it if we hadn’t had turnkey available."

Along with second-home shoppers with money to spare, turnkey buyers are often moving from out of state or from another country. They also include first-time home buyers (with very good jobs) who don’t want the hassle or expense of shopping for new furnishings.

Turnkey fits in with the overall real estate market in Miami, Ms. Puig said. "It’s very big right now because it’s mainly an end-user market," meaning that the buyer will likely actually live in the unit instead of buying it to flip or as an investment. "They’re going to use it, for their family to enjoy the South Florida lifestyle, so it’s important that they get it right."

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Turning a new development into a home

Part of the reason turnkey homes and model apartments have been so successful is that they encourage would-be buyers to imagine themselves living in the lushly turned-out spaces.

"They help prospective purchasers understand the floor plans," Ms. Puig explains. "Ninety percent of people can’t visualize empty spaces."

Stephen Kliegerman, president of Halstead Property Development Marketing in New York City, agreed. "Buyers–even the most creative of buyers–need to stand in the space to see how it could be furnished."

That’s particularly true in buildings with unusual features and spaces, such as the Inkwell on West 45th Street in Manhattan, he said. It’s a former school building with "very high ceilings that trick your eye."

But as soon as the developers furnished and staged an apartment in the Inkwell, the five units in that line sold out in 45 days, he said.

"Every time we stage a model apartment, that apartment sells," Mr. Kliegerman said. "We highly recommend that our sellers or developers stage these units."

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At 200 Water in the Dumbo section of Brooklyn, a fully decorated three-bedroom, three-bath unit sold in a week in early December for $4.2 million, Mr. Kliegerman said.

A similar sell-off is happening at the Aurum, a new 115-unit condo development in Harlem, after the developer furnished three model apartments, he said. The building is now 89% sold, and buyers can pick and choose from what they saw in the model.

"We offer furniture packages that people can buy based on what’s in the model," Mr. Kliegerman said. "We get decorator prices," so the furniture is usually offered at a discount.