Not so long ago, 50- or 60-something CEOs who had worked their way up the corporate ranks were the ones buying luxury residential properties—big houses that were good investments, above all else. Today, that’s no longer the case, as "a new breed of buyer" has entered the scene, said Dolly Lenz, the founder of Dolly Lenz Real Estate, a luxury real estate consulting, sales and marketing firm in New York City.
Forget about the starter home. This new buyer is young, tech savvy, well-informed and often purchasing their first piece of real estate, which just happens to be worth millions of dollars. Their number one goal is simple: achieving and maintaining a lifestyle for themselves that is comfortable and convenient.
Because this buyer—most likely a millennial tech entrepreneur, or if not, someone in music, entertainment, sports or heading up an already successful family business—has different needs than the CEO of years’ past, agents have had to adjust how they do business. They’re interacting with these clients on Instagram, WhatsApp and other types of social media, rather than more traditional communication channels, and advising these often first-time buyers on how to get what they want and also make a good investment.
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So what do they want? First off, location, agents say. In Manhattan, that’s often Tribeca, the West Village, Greenwich Village or the Upper East Side, Ms. Lenz said, and a property that is within walking distance of the cafes, restaurants and bars that they frequent.
In Los Angeles, that means of-the-moment areas that boast stunning views, perfect for indoor/outdoor entertaining, like the Hollywood Hills or the fashionable Bird Streets neighborhood in Beverly Hills, said Connie Blankenship, the director of luxury estates with Douglas Elliman.
Exciting stateside cities that young, tech entrepreneurs are increasingly flocking to include Portland, Ore.; Jackson Hole, Wyo.; and Atlanta, according to Christie’s International Real Estate’s "Luxury Defined 2016" report.
Regardless of the location, something that all of these young buyers are looking for is the ability to work remotely from wherever they are. "The younger generations are workaholics," said Edward de Mallet Morgan, a partner on Knight Frank’s international residential team, who recently worked with a client in his late-30s who was looking to purchase a private island in the Caribbean, but not to unwind and disconnect. "He said wherever he bought a house, he had to have an office that he could work out of," Mr. de Mallet Morgan said. "Access and technology play a major role in all of this."
Young buyers are also keen to have a connected, contemporary home with high ceilings and a big volume of space where they can showcase their modern art collections, said Ms. Lenz, who’s been in the real estate business for more than 25 years.
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In townhouses, she’s also seen more young buyers adding in what’s called a "morning kitchen," or a small kitchen off the master bedroom where they can make themselves a coffee or pour champagne or wine for guests they’re entertaining on a top-floor terrace rather than go down two or three flights of stairs to the actual kitchen to do so. "I haven’t seen this feature for at least 10 or maybe 20 years," Ms. Lenz said, but these young buyers "know what they want and how they want to live," she said, and see the value in making their lives more comfortable with this type of amenity.
While many young buyers find that high-end condominium buildings is the best way to get luxury and convenience in their city of choice, both Ms. Lenz and Mr. de Mallet Morgan have seen a recent shift, in which young buyers are willing to take on major renovations if necessary to get what they want. "The younger generations have the energy, appetite and flexibility to do the work," said Mr. de Mallet Morgan.
Ms. Lenz, who said she previously only saw young clients who wanted turn-key properties—and even fully furnished homes—said it’s now common for them to want something in their own image, even if that means more heavy lifting. "The instant gratification of old is no longer the thing," she said. "Now, it’s the instant gratification of acquiring a property, but they may have to wait three years to actually move into it."
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Here is a look at other news from around the world compiled by Mansion Global:
Private Investors are Bullish on European Real Estate
At a U.S. hedge fund conference last week, two major private fund managers touted European real estate as currently offering "the biggest spread anywhere in the world" for investors, thanks to banks that are offloading "property-related nonperforming loans" and banks that are generally cautious on risky real estate and commercial loans. According to the fund managers, this creates an opportunity for private lenders to purchase non-performing loans at a steep discount from these banks, and then to directly manage the properties involved, collecting rental income from the current commercial tenants. [Business Times]
These are The U.S. Markets That Have Bounced Back the Strongest Post-Recession
While the U.S. housing market has seen overall growth since the 2008 housing crash, certain areas have seen particularly dramatic comebacks. Among these success stories is Las Vegas, where rents dropped 19.6% from their pre-recession highs during the crash, but have since increased by 16.3%, and are climbing at an annual pace of 6.4%, per data from research firm Reis Inc. Other comeback kids include Atlanta, Phoenix, and Orlando. [National Real Estate Investor]
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NYC Townhouse Owners Opt for Cutting Edge Security Systems
As more New York townhouses are being converted into luxurious single-family residences, demand is increasing for ultra high-tech security extras. Options these days run the gamut, and include smartphone-monitored front door cameras, air filtration and compression systems (the better to prevent against chemical attacks and bioterrorism), safe rooms, encrypted video monitors, and more. "Yes, New York may be safer, but there are a lot more people living here every day," says the president of one NYC security firm. "And whenever you get a lot more people, you get more fear of crime." [Luxury Listings NYC]
A Home in a London Castle Is on the Market for £2.75 Million
A four-bedroom, two-bedroom home is up for grabs in Vanbrugh Castle, an 18th-century castle that sits on 2.5 acres of grounds minutes from Central London and was divided up into four wings back in the 1970s. The castle was built by architect John Vanbrugh in 1719, who later lived in the home himself. It has views of the London skyline and Canary Wharf. The asking price is a surprisingly reasonable £2.75 million (US$3.64 million). [Business Insider]
Developers "Panicking" Over New Bill That Would Discourage Foreign Investors
The American real estate development community is waiting with bated breath to see what happens with a new bill proposing sweeping changes to EB-5, the visa program that allows foreign investors to acquire a green card if they invest a certain amount of money and create a certain number of jobs in the U.S. economy. EB-5 has been key for wrangling foreign investors in real estate development projects, and the new bill would not only raise the threshold of investment from $500,000 to $800,000, but require current investors to retroactively pay the difference, which could lead to investors pulling out of projects that are already in the works. "Everybody is panicking about it here," said one EB-5 immigration attorney based in Shanghai. However, insiders suspect that the bill—aimed at preventing corrupt use of the program—will not pass in its current form, and that the current harsh provisions are more of a negotiating tactic. [The Real Deal]
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Top Economist Warns China To Take Steps Against its Real Estate Bubble
The chief economist of China’s central bank has warned against rising debt levels in the nation’s economy, taking particular aim at the property market, where he suggests measures to stem the flow of "cheap money" into investments that may not pay off. "We should take a lot of measures to curb excessive bubbles in the real estate sector, curb the flow of excessive financial resources into the real estate sector," he said in an interview with China Business News. [Reuters]
Charting The ‘Wild Ride’ of San Francisco Real Estate as Prices Cool Off
San Francisco has anecdotally become the poster child for the post-recession boom—and in some cases, over-inflation—of urban U.S. housing markets, and the numbers paint an even more dramatic picture. "Home prices in San Francisco have been on a wild ride, witnessing double-digit home price appreciation for several years during the bubble only to be reversed with a steep drop in the recession and then followed by another period of strong gains," wrote Bank of America Merrill Lynch’s Michelle Meyer in a note to clients that accompanied a chart showing the city’s price growth alongside growth rates of personal income. The good news for buyers is that salaries are rising in the city, too, meaning that the gap between prices and income isn’t as large as it has been in the past, and there are signs that the city’s rapid price increases on housing are starting to ease up. [Business Insider]
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More Details Announced About Vancouver's Empty Home Tax
Vancouver is looking to tax owners of empty homes as much as 2% of their value, in an effort to encourage them to put their properties up for rent rather than keep them idle. That's because Vancouver's vacancy rate has hovered near zero for years, and thousands of homes — especially condos — aren't being used. This week, Vancouver mayor Greg Robertson announced new details of the tax plan. He said that properties that are in probate, going through renovations or changing owners will be exempt. The amount of time a property needs to be vacant each year to warrant the tax hasn't yet been decided, and the public is being asked to submit suggestions. The city will enforce the tax through random and targeted audits, and accept information from the public about suspected empty homes. Self-declaration forms would be mailed out at the end of 2017, with payments beginning in 2018. [The Canadian Press via Huffington Post]