MARCH ISSUE The International Luxury Buyer, What luxury home sellers should really expect in San Diego.
PREMIER BUSINESS & FINANCE: REAL ESTATE NEWS
THE INTERNATIONAL LUXURY BUYER
What luxury home sellers should really expect in San Diego.
THE FORECAST FOR LUXURY RESIDENTIAL REAL ESTATE IS ENCOURAGING. China and other Eastern nations with rapidly expanding economies continue to produce new millionaires and billionaires eager to purchase properties in the West, and the transfer of trillions of dollars in wealth to the next generation should generate substantial additional sales of high-end properties.
But what is more interesting is that the most NEW visitors to our international luxury home website (www.luxsocal.com) are coming from Brazil. Surprised?
Statistics show that the world has more than 200,000 “ultra- high- net -worth individuals” — those with $30 million or more in assets — who own nearly $3 trillion in residential properties. On average, they own 2.7 homes, and their secondary residences are typically worth 45 percent more than their primary home.
While homeowners with net worth of between $30 million and $50 million typically keep their primary residences for more than 15 years and their secondary homes for more than 10 years, billionaires buy or sell property once every three years on average.
While the U.S. can claim one-third of the world’s super-rich, statistics show that Asia is home to twice as many ultra-high net worth individuals as Latin America and the Caribbean, the Middle East, the Pacific region, and Africa combined.
It may come as no surprise that some reports identify New York, London, Hong Kong, Singapore, and Paris as the most important international hubs for real estate investments by the ultra-wealthy. American cities such as Los Angeles (sports and entertainment), San Francisco (tech entrepreneurs), Washington, D.C. (political capital of the world’s wealthiest nation), and Dallas (energy) are becoming more popular, attracting ultra-wealthy buyers from around the globe, according to several industry sources.
These U.S. markets, with the exception of Los Angeles, are more dependent on their niche attributes, making them “specialty” markets for the ultra-wealthy; which has kept prices more affordable. Los Angeles — where houses are in greater demand than the penthouses that dominate the New York, London, Hong Kong, Singapore, and Paris luxury markets — commands incredibly high prices, with one home selling for $102 million in 2014.
In San Francisco, which appeals to younger members of the ultrawealthy set (average age 56), the most expensive home sold in 2014 went for $14 million. While Washington, D.C., think tanks and charities attract the ultrawealthy and the region offers a lifestyle that is very rare in bigger U.S. cities, prices are much less expensive than New York. Dallas has more ultra- wealthy homeowners than Houston, even though more ultra -wealthy individuals live in Houston. Ultra- wealthy buyers are attracted to Dallas by its relatively lower cost of living and family friendly surroundings.
Internationally, the rise of new ultra- wealthy hubs like Hong Kong, Singapore, and Dubai signal a new wave of real estate investments. In the next 30 years, industry reports predict that the super-rich will transfer $16 trillion in wealth to their children and other heirs. Personal real estate holdings valued at $1.5 trillion will also be passed down, mostly in European and Latin-American markets.
So what does this mean for San Diego? We are not yet on the “big radar” screen of international luxury buyers. But we are certainly starting to attract attention. There were seven ultra-luxury sales over $10 million in 2014 in San Diego County, which included an off-market trade in La Jolla and an auction in Rancho Santa Fe. International buyers continue to purchase residences in San Diego because of all the things that brought us here … the exquisite coastline, world-class dining, and high-end shopping.
So, if you are considering selling your luxury home, be sure to work with a company that has a true international presence. Select a company that works with high-net-worth corporate relocation clients. You will find more buyers who are “moving up” within our community or those being transferred in executive positions.
While “international buyers” may sound good, the reality is that most of our luxury home buyers are coming from our own backyard.
Written by:
DIANA RUBOTTOM, Branch Manager, Rancho Santa Fe, Fairbanks Ranch, Del Rayo drubottom@bhhscal.com