Underlying reasoning for the ups and downs in the luxury real estate market

There seems to be a lot of ups and downs in the luxury real estate market this week, and if any one is wondering why that may be, this chart should clear things up nicely.

Two brothers in Montreal are embroiled in what appears to be a gangster-related murder attempt after the failure of the luxury condominium project, “One Avenue du Port.” As little as 8 years ago, the brothers Magi were riding high on the crest of the luxury real estate boom, now one of them lies in a hospital bed fighting for his life after being shot by a professional hit man while his car waited at a traffic light and the other faces extradition to the US and a lengthy prison term if he is convicted of charges filed in a Los Angeles court alleging he was part of a large-scale Montreal-based fraudulent telemarketing operation that targeted elderly people.

While the attempted killing of Tony Magi came only months after the U.S. indictment was filed against his brother, police investigators interviewed by The Gazette see nothing that links the two events. But the events highlight a number of problems the brothers have experienced in recent years, despite once appearing to be on successful paths as real estate developers. Full story.

The India Times reports that one sector in the Indian real estate market is still strong - the luxury property sector. Of course, announcing projects and selling them are two entirely different animals.

Even in the midst of low sentiments haunting the real estate sector, there is one segment that is totally unfazed by it all. Luxury homes continue to dazzle in the face of robust demand and keen investor interest in the segment. Full story.

Knight Frank’s latest report suggest that London luxury homes worth over £10 million have become “completely detached” from the property slow down in the UK, with “super prime” London real estate climbing nearly 3% in price during August alone, in the face of falling prices in the rest of the city (and country.)

There are now signs that the gap between this sector and the rest of the market is growing. Liam Bailey, Knight Frank, residential research. Full story.

Bloomberg reports that Los Angeles and San Diego luxury real estate prices fell the most in more than ten years in the second quarter of 2008, but San Francisco is hanging on.

The average price of a luxury home in Los Angeles dropped 3.8 percent in the quarter from a year earlier, the most since 1996, according to a survey by First Republic Bank, a unit of Merrill Lynch & Co. Luxury homes were defined as those costing more than $1 million with up to 6,000 square feet (557 square meters), six bedrooms and six bathrooms. Prices fell 7.8 percent in San Diego, the most since 1997, while San Francisco prices rose 0.2 percent. Full story.

Nine luxury model homes come up for auction in Waddell/Surprise, Buckeye, and Gilbert, Arizona following Trend Homes Chapter 11 reorganization. The homes will be sold alongside 21 other model homes with starting prices at 50% of the original sales prices.

If you’re the first, last and only bidder at $90,000, you get the property. Rhett Winchell, president of Kennedy Wilson Auction Group

The auction will be  September 14th - Auctioneers site with full details.

What is happening in the world of luxury?

According to Luxury Clues, the one room in a house associated with extreme wealth is……. A library, implying that the leaders are also the readers. Hard to argue with their reasoning, and a few disturbing statistics about how few people choose either to buy a book, or read.
 

In low income families, you may find a copy of a Bible and the National Enquirer. In middle income family, there may be some books by the toilet. In high income families, there will be a library. In the United States, 85 percent of the population did not buy even one non-fiction book in the last year. Of those who did purchase non-fiction books, 95 percent did not read them.

The full post is here

The International Herald Tribune recently ran a headline, “Lean times for providers of luxury,” in which they suggest that sales of champagne and vodka have dropped 25% this year in a nightclub that caters to Wall street bankers. Not only that, but Bear Sterns recent collapse caused a few upsets in the luxury interior design world.

Less than 48 hours after news broke that Bear Stearns would be bought for a fire-sale price, the wives of two of the firm’s senior investment bankers called their high-end interior designer to cancel their contracts.

It is yet another sign that some American bankers are slashing spending on luxury items as they fear for their jobs and the value of their firms’ shares.

This is not all bad news – apparently, it is now far easier to get a table at any of the high-end restaurants. At least, midweek. And some florists report an upturn in business because of the amount of people sending flowers to the Bear Sterns office to “Cheer them up.” If I had just lost a $2 million a year job, I am not so sure a bunch of flowers would cheer me up much. But there you go….

Full story here.

At the other end of the spend-o-meter, the most exclusive exhibition of automobiles in the world, Top Marques, kicked off in Monaco yesterday, with Damon Hill doing the opening ceremony honors. Luxury, speed and rarity are all on show, with exhibitions from Bugatti, Aston martin and a wide range of other luxury car manufacturers. Tickets are almost as rare as the The SPADA TS “CODATRONCA”, a sports car designed by the Italian studio Spadaconcept which is on display. It combines racing and ‘tourism’ characteristics and represents the latest interpretation of the functional concept of ‘truncated tail.’ As far as I can tell, there seems to be no drop in spending power in Monaco. And it is as hard as usual to get a table in the top restaurants.  This particular blogger will be paying them a visit on Sunday to spend the afternoon looking at cars he can’t afford. According to their press release:

Redefining luxury was not the original objective of Top Marques Monaco when it premiered in 2004. Needless to say the luxury industries already had a long historic of their products’ definition, and we were proud to present them to the public in one of the planet’s great luxury settings, the Principality of Monaco.

Top Marques website.