Luxury Real Estate

By Ole Jespersen of IRG International Realty Group

The Market Situation

Ole Jespersen, sole owner of IRG International Realty Group, says: “At every function - private or business - I am being asked about the market situation. This is not new or as a result of the present economic situation, but also happens in the good times. People like to hear about the property market as it is a topic that actually interests the majority of people. The simple fact is, the property market is the most influential factor for the private, national and the international economies. Just remember what started the ongoing situation: American sub prime lending.

IRG is in a unique situation to comment on the ongoing property financial trends and effects as we are not just a local Portuguese firm, but through our international affiliations and networks we receive constant information and updates from around the world. Within Portugal we are represented in key areas such as the Algarve, the Blue Coast, the Silver Coast and Estoril/Cascais & Sintra as well as Lisbon city. We are involved in normal brokerage (single properties mainly for private buyers) and the institutional and development market with resorts, hotels, residencies and golf courses.

We have for some years published an annual report on the Luxury Residential Tourism Market. The report has become a “reference work” within its area and is statistically based on historical factual figures. The report for this year will be published in May. The following comments are therefore based on observations and personal experiences.

Yes, the market is tough and has seen downward trends in specific sectors. Hardest hit is the low to middle market with especially off-plan, speculative apartment acquisitions. High debt financed purchases have become very scarce with banks no longer being willing lenders and this has had a severe overall effect for developers.

But still, prime locations, prime quality or landmark properties are still in demand. Yes, DEMAND. We are transacting a number of high profile properties in all key areas such as Quinta do Lago, Estoril, Cascais including Quinta da Marinha and Quinta Patino as well as some central Lisbon properties. Some deals are land, some deals are renovation properties and some are brand new, high quality villas and luxury apartments. We represent a number of high value, high quality, prime location residence projects where we are taking substantial reservations - even in this market.

Additionally we also have a number of clients waiting, waiting for THE deal or a distressed sale, but in the high end of the market there is still resilience to "vulture" price cuts. The market has stayed pretty stable which means transaction numbers have been reduced as buyers in general expect "deals". Most transactions also involve lengthy negotiations involving legal, tax and financial issues.

At IRG we are not just sitting it out. We are proactive, we are diligent and flexible and we adapt. And finally we try to create solutions for our clients - be it buyer or seller. For our institutional and development clients we are advising on new activities in the markets internationally and we are constantly working on new approaches to product, marketing and PR. We want to sell real estate as real estate is the catalyst for turning the markets.

Based on the above we will announce shortly a number of new business initiatives running alongside our main property mediation business. These initiatives will be an additional service for all our clients and will reflect our overall aim to be of service and to find solutions for our valued clients.

At IRG we are not pessimists - at the moment we are cautious optimists and we see great potential in the future. We always have to remember we are based in Portugal - the most ideal location for European short and long term holidaying, for the second home or for a change in life. Portugal has everything going for it. So let's make it happen together”.

About IRG International Realty Group

IRG International Realty Group is one of the leading international brokerage companies in Portugal and specializes in sales of Portuguese high-end and luxury residential real estate. IRG is the exclusive affiliate in Portugal of Christie’s Great Estates, a worldwide real estate network and subsidiary of the world’s oldest auction house, Christie’s. IRG’s Head Office is located in the prestigious Avenida da Liberdade in the heart of Lisbon and there are also boutique offices in Quinta do Lago in the Algarve, Estoril and in Kensington, London, United Kingdom.

www.irgportugal.com

By Robert Lockard

I am sorry to keep talking about sad things in my luxury real estate blog entries, but I just read an article in CNN entitled “Ex-bankers on pushing customers to rack up debt” and it once again brought up many familiar concerns to my mind on the topic of consumer debt. I wish that I could talk about happy topics. I would much prefer to discuss luxury properties or any other topic, including how getting adequate sleep can lead to more success, but, alas, I feel it much more pressing to focus on the problems upon us.

I am absolutely disgusted by the state of our financial markets. It seems to me that dishonesty is rampant and the very people who are responsible for this mess are asking for a great deal of money to supposedly solve the problem. But I care about people much more than institutions. And, based upon the testimony of the two honest women in the CNN article, who both have good consciences, I see little difference between the practices of certain banks and lenders and the practices of drug pushers. Many lenders trick people into taking more money than they need, they strive to get young people addicted and they keep people in a state of dependency for extended periods of time. All of that adds up to trouble.

Debt is a plague that, when handled unwisely, can lead to all sorts of problems that I think are even worse than the horrible effects of drug abuse. People can at least stop taking drugs and eventually go through a process of withdrawal and recovery. But with debt, even if a person stops going into more debt, they still have interest building up on the money they owe and they face all sorts of roadblocks on the way to recovery.

The very institutions that have pushed so many people to get addicted to debt are now suffering from a major withdrawal (pardon the banking pun) and seem on the verge of collapse… wait a minute – collapse? How is this possible? It starts with how good people are treated. We have not been treated fairly and now those who have been engaging in dishonest practices are reaping the bitter fruit. We have become a nation of debtors, instead of a nation of wealth.

Perhaps our financial market, as it currently stands, should not be saved. Perhaps we must soon create an entirely new and honest way of working with our money. Whatever we choose, we cannot keep doing what we have been doing.

I feel like I’ve been ending every blog entry with an apology for being so negative. I just don’t want to leave my readers with a sense of anger or hopelessness. I think that there is much to hope about. There are plenty of good people in this world and in our wonderful nation, the United States. I am confident we will make it through this sad time. I just want to make sure this never happens again.


Editor’s Note:
Robert Lockard is the Public Relations & Media Specialist with LuxuryRealEstate.com. I am Robert. I create all of Luxury Real Estate's newsletters, write the editorials in LuxuryRealEstate.com Magazine and much more. The photo of the parrot biting a credit card is from www.flickr.com/photos/djkbird214/2695122732 and it is the copyright of dj-squared.

By Jim Walberg
From his blog: Caribbean Real Estate: U.S. Financial Crisis Has Created Great Fear Throughout The Islands!!!

In the midst of the biggest financial meltdown since the 1930s some hard questions are being asked of Jim Walberg this week.

My email box is overflowing and the phone has been ringing off the hook. The people who have an interest in the Caribbean real estate markets are afraid. They are asking some very hard questions that need to be immediately addressed by our Federal government as to how a further financial collapse can be averted. You may recall my past article about the mantra of a sailor as he sets off on a voyage – Do Not Be Fearful! Well, it is a challenge to get to that place when the walls or the U.S. financial structure seem to crumbling down before our very eyes. There is no getting around the fact it is a historic financial mess. My focus is to always get to “what is” as fast as possible, and start making lemonade out of the truck load of lemons that has just been dumped on our front porch.

When I want some well-thought-out ideas on National financial issues I call my REALTOR® friend in Naples, Florida. His name is Mike Lissack. He is one of the smartest financial minds that I know. He came to real estate from a long and successful career on Wall Street where he was named by Worth Magazine as one of “Wall Street’s 25 Smartest Players”, and is one of the top 100 Americans who have influenced “how we think about money.” Before he retired from money management he directed more than $25 billion of investments, supervised their financial reporting, and assisted in the design of their risk management and investment operations.

So we have been corresponding about the financial meltdown that is surrounding all of us. He has some pretty interesting ideas as to what he would do if he was in charge of the direction our Nation takes next, regarding making sure these events never happen again. I felt it was important for you to also review what he has been proposing to me. Here are his latest thoughts, given the events of the last few days. Mike’s view on the financial solutions of our current crisis is we need someone in our government to take proactive action NOW! Here are some more of his suggestions for your consideration, and those of my Caribbean friends asking some very hard questions:

Now that all of Americans again “own” another financial institution because a bailout was required – AIG – and the Feds have stepped in and are claiming they will finally fix the financial mess that our country finds itself in, there are further urgent steps that are needed now:

1) Remove the FDIC cap or raise it to $250k (we do not need any runs on the bank)

2) Nationalize the rating agencies – they do not do their assigned task – they rated junk bonds “AAA”, and then their reversals of these ratings led to the present financial meltdown. Ratings are a utility that needs to be performed by competitive institutions who answer to investors – not issuers and NOT bankers.

3) Establish a “swaps” clearinghouse and prohibit implicit leverage on “swaps” by legislating that no position can be swapped or hedged more than once without a prior trade being offset.

4) Prohibit “third order and higher” derivatives. There is an underlying transaction, it spans derivatives. Then there are derivatives which rearrange the first set of derivatives. At that point, enough is enough!!! The system cannot deal adequately with the complexities of continuing to dilute and issue more derivatives using the same bundle of “AAA bonds” that are actually junk.

5) Write down 90 percent of current appraised value guarantee on Fannie and Freddie mortgages.

6) Announce a national shared equity appreciation fund into which the excess of the 90 percent of current appraised value loans can be dumped.

This is a summary of his second round of suggestions for me to consider. His first email addressed the Fannie Mae and Freddie Mac mess. Let me know your thoughts. Also, if you want to contact him directly, go to www.Lissack.com. We will always figure out a way to make lemonade out of lemons with this financial mess. Do you know why? BECAUSE WE DON’T HAVE A CHOICE! Until next time… fair winds to you in the midst of a BIG storm!!!


Editor’s Note:
Jim Walberg is the co-Broker/Owner of The Bay Area Team, the most-successful team at Keller Williams Realty-Danville. He is also a member of the global Luxury Real Estate network. Jim is an exceptional blogger, as you can see by visiting his blogs, East Bay Real Estate and Caribbean Islands Realty, and reading his great blog entries like the one above. He is the master of fractionals and other luxury homes in the Bay Area and the Caribbean, and he always has a lot of great opportunities to share. This whole situation makes me sick. The fear is practically palpable and we are right on the edge of crumbling… why? Are there fewer workers, fewer skills, reduced demand or anything like that? No. The big problem is greed and pride. Honestly, it’s very hard for me to find anything positive in this current situation. Dishonesty has become so rampant that the truth is becoming harder to find. Why should we fall? My heart is filled with sorrow and disgust. I am not a negative person, but it seems to me that the foolishness of a few people has led to the destruction of much that good people have built up. How can we let this stand?

By Robert Lockard

As promised in my last luxury real estate blog entry, here is my discussion of some meaty topics I’ve wanted to talk about for a little while. The past few weeks have been pretty thrilling, wouldn’t you say? Wall Street dropped an incredible 504 points on Monday and 449 points on Wednesday. Fannie Mae and Freddie Mac, organizations designed to create stability, have failed. Other financial institutions, once seemingly healthy and sound, are facing bankruptcy and other troubles. Think that’s bad enough? Russia’s stock market is doing considerably worse.

Okay, that’s the bad news. Now let’s take a step back and switch gears a little. I am an optimist. I believe that good wins in the end. I think that right now many bad companies and practices are facing the fact that they have built upon a sandy foundation and they are in danger of falling. All of the companies that are failing are doing so because of their own greed and recklessness. Home loans were turned into investment packages and many other bad ideas were allowed to come about because of greed.

If these companies had built upon solid foundations and principles that were put into place to safeguard the country after the Great Depression, we would probably be all right. It comes back to greed and pride. There is safety in old wisdom.

I cannot say a hundredth part of what I desire to say right now because this might not be the most appropriate forum to share the most treasured things in my heart. However, I can say that we need not fear what people can do or what problems may arise if we can see how temporary they are. We should be patient, long-suffering, forgiving and kind, especially when times are tough. Anyone who knows me knows that I definitely try to practice what I preach, so I hope you won’t think that I’m giving this advice lightly.

Let these organizations tremble because of their fear of falling. We will not fall if we are firmly planted on truth and honesty.


Editor’s Note:
Robert Lockard is the Public Relations & Media Specialist with Luxury Real Estate. I am Robert. I create all of Luxury Real Estate's newsletters, write the editorials in LuxuryRealEstate.com Magazine and much more. Stribling & Associates is a member of the Board of Regents, an exclusive group of brokers that leads the Luxury Real Estate network. The photo of the Grand Canyon is from www.flickr.com/photos/raindog/2838872767 and it is the copyright of raindog.