Luxury Real Estate

Courtesy of Scott Cutter of 2CostaRica Real Estate

The past 12 months in the real estate world here in Costa Rica has been quite a interesting time for professionals, buyers and sellers in the marketplace.

Perhaps the most challenging task that we have faced as real estate professionals has been the job of re-educating sellers as to the market conditions, values and expectations that they can expect if they would like to sell their property within a reasonable amount of time.

In a market void of an MLS, comprehensive comparable stats on true sales values, volumes, etc., there is a constant battle to keep sellers realistic about values while battling the proverbial: "But 'so-and-so' has his property down the road listed at $2,000,000 and our house is much nicer".

As a father of two, I have now come to fully realize how blind we can all be in our self analysis and that of our own properties, and have learned to deal with this point with our sellers with great care, but that is the subject of an entirely different article and story...

Back to values... In addition to the lack of comprehensive hard data other than our years of experience to share with clients, another obstacle is the fact that most buyers in Costa Rica, especially in the coastal areas, paid cash for their properties and in a country with such low property tax and holding costs, many sellers are content to wait for better times in which to sell.

This is a critical point for Foreign investors to understand. The market adjustments which you see in the USA which tend to move the market up and down in unison as since the VAST majority of real estate there is purchased through leveraged financing, changes in interest, values, absorption, etc. can drive the market in either direction and virtually everything for sale follows that trend.

Here in Costa Rica, you will find a house listed at $1,500,000 right next to one that is every bit as nice, listed at $700,000 and it can be confusing to anyone without the experience to understand the fundamental differences in the market place. The reality is that despite the economic times we find ourselves in, there is a great deal of new movement and sales taking place in the market.

Careful about getting too excited sellers... as this movement is virtually ALL due to the fact that despite the low holding costs, more and more sellers are coming to terms that an imminent boom like the one we enjoyed for nearly a decade is not returning any time soon and adjusting prices to invite buyers to the table.

All economists talk about the huge pool of money on the sidelines right now, with investors just not sure where to go with their funds. Costa Rica remains a fantastic lifestyle and investment destination and buyers are here, looking and snatching up well priced opportunities in virtually every part of the country.

While 4 years ago, we spent all of our time educating Buyers about how even though it seemed expensive to purchase here in relation to the infrastructure, etc. that it was worth it as this was the future destination of much of the world. Now, my team, and my bet is most Realtors who are true professionals, spend most of their time working with Sellers to create realistic expectations of pricing and sales timelines.

For those that "we will sell if we get our price" those timelines can mean years.

We are also helping Sellers realize that taking a much lower price than what they hoped in this market, also has some advantages. The largest of which is that Sellers who move properties now get liquidity to become Buyers in what is arguably the most favorable buyers market around the globe in the past two decades.

Whatever losses or reduced profit margins are absorbed now can normally be regained by becoming a buyer and is something more and more sellers should and are considering.

For Costa Rica real estate buyers... There has never been a better time to be sourcing deals in Costa Rica.

For Costa Rica real estate sellers... Either arm yourself with patience or, we must collectively work towards recognizing that the discerning buyers who actually have money to spend, are not paying the premiums of the pre-crisis days in today's market. Those who can come to terms with this are selling, those who aren't.. are now and most likely will be waiting for quite some time.

By Michael Marquette of Marquette Turner Luxury Homes

Lies, lies and more lies – it seems to be the way many agents and brokers “trick” their way into listing property. Promise the arrival of the “cashed up” international buyer who will overpay for your home and the listing is yours!

So who can actually buy property in Australia and who decides? The Foreign Investment Review Board (FIRB) is the body with the power to decide who can and who cannot purchase homes in Australia. The rules are vague and difficult to understand but I will summarize their view.

Foreign investment in Australia is desirable only if it does not put upward pressure on property prices. In fact it states just this on their website. So when the next real estate agent promises to find an international buyer who will pay well over the odds you know that he or she isn’t familiar with what the Australian Government will and will not allow.

Australian and New Zealand citizens, permanent resident visa holders and temporary resident visa holders awaiting permanent residency are allowed to purchase property in Australia without approval from the FIRB. Outside of that very small, narrow group of people approval is required in almost every case with the exception of:

1. A vacant block of land to build a house

2. A vacant block of land to build multiple dwellings

3. A new dwelling (less than 12 months old)

4. A redevelopment site

5. An established (second hand) property which is for Australian based employees for companies already operating in Australia.

So if you have digested that you might be thinking about selling your existing home (more than 12 months old) to an international buyer as a holiday house, weekender or to use when they are in Australia as their residence. If you are thinking this you have one big problem – they will require approval from the FIRB which in all likelihood they will not receive.

So in summary if you are looking to sell your home and it is older than 12 months old you need to be cautious about claims that international buyers are in abundance. The FIRB can take up to 30 days to approve an application from an international buyer which is longer than most Auction programs. There are plenty of hoops to jump through for any prospective purchaser and there is no guarantee that approval will be granted.

If you are a property developer and selling new product (less than 12 months old) you are in the box seat and can avoid issues with FIRB approval. I hope this helps to make international buying in Australia a little easier to understand. I also hope it assists vendors in sifting through fact from fiction when dealing with agents and brokers. Marquette Turner Luxury Homes specialize in the marketing and sale of property to an international audience. International selling is an extremely specialized field and to ensure you have are dealing with experts be sure to contact either myself or any other member of the team who will be delighted to work with you on the sale of your home.

If you are still intrigued on Foreign Ownership Rules in Australia you can visit the FIRB site HERE

By Stephen Pugh of Alain Pinel Realtors

SAN FRANCISCO, (May 20, 2009) – Alain Pinel Realtors (APR) is pleased to announce its appointment by the Lembi Group for the sale of a 232-unit San Francisco apartment portfolio. The portfolio is valued at approximately $43 million and contains 12 buildings located in many prominent neighborhoods of San Francisco, including the Marina, Twin Peaks and Russian Hill. Stephen Pugh and Mark Bonn of APR’s San Francisco Investment Group will be marketing the properties.

“We are thrilled to bring this exciting investment opportunity to the market at a time when buyers are eager to acquire quality properties that generate attractive cash yields last seen more than five years ago,” said Stephen Pugh, Managing Director of APR’s Investment Group. “Buyers have been waiting for an apartment property offering of this kind that’s value-priced relative to current and future income potential.”

The properties will be marketed on a coordinated basis, but will be sold to either individual buyers or one buyer. Many of the properties are fully occupied, yet offer significant upside potential. “San Francisco remains one of the strongest rental markets in the Bay Area and it offers significant future growth potential as economic conditions improve,” said Mark Bonn, Senior Director of APR’s Investment Group. “The properties are located in supply constrained areas of San Francisco that will not be overly impacted by new development, contains dedicated parking stalls and offer financeable value.”

Tim Murray, APR’s Vice President and Regional Manager of San Francisco and the North Bay said, “We are proud to be entrusted with this important sales assignment and I expect to see a very good response from potential buyers that will more than satisfy our client’s expectations.” In addition to Pugh and Bonn, the sales team includes senior sales associates Mirella Webb and James Murphy.

About Alain Pinel Realtors

Alain Pinel Realtors is the largest privately-owned and independent residential real estate company in California. The firm had a sales volume of $5.7 billion in 2008 ($1.1 million per transaction) and has been consistently ranked in the Top 10 firms in the United States. It was founded in 1990 by Paul Hulme, current Chairman and CEO, and is based in Saratoga, Calif. Alain Pinel Realtors served 5,300+ clients in 2008 through its 30 offices in Santa Clara, San Mateo, San Francisco, Marin, Sonoma, Alameda, Contra Costa, Napa, Monterey and Santa Cruz counties. Alain Pinel Realtors is a founding member of Luxury Portfolio, an operating unit of The Leading Real Estate Companies of the World. The firm also has a joint venture partnership in the mortgage lending institution Private Mortgage Advisors, which is an affiliate of Wells Fargo Bank, N.A. For a complete listing of Alain Pinel Realtors offices, services and agents, please visit our website at apr.com.

By Brian Langhorst

According the Forbes Magazine, Seattle is the #1 market for real estate to rebound and grow. Forbes Magazine along with the Urban Land Institute polled hundreds of real estate professionals asking them the best and worst markets to invest in for commercial real estate. Seattle came out ahead of all other cities in the United States as the best market to invest in. The residential real estate market closely follows the commercial real estate market as jobs and economic growth are tied in to the commercial real estate market. Seattle does not have an over supply of space or projects upcoming creating a strong investment market for commercial investors and residential buyers as well.

Rounding out the top 5 cities for real estate improvement were San Francisco, Washington D.C., New York and Los Angeles. These are all great areas to invest in Warren Buffet, Ben Stein, and many other notable financial experts all recommend that the time to invest in the residential real estate is now. There are wonderful investment opportunities in many markets around the United States and Internationally for buyers. Please feel free to contact any of the members of Who’s Who in Luxury Real Estate to speak about opportunities around the world!

For the full article from Forbes Magazine written by Dorothy Pomerantz click here.

By Scott Rudolph

According to a Merrill Lynch Economic Report in mid-January, U.S. real-estate prices have increased 60 percent since 2000. Real estate is one of the few investments that can be purchased using leverage. For instance, you put 20 percent down, yet your return is based on the full market value of your home. If prices do depreciate, real-estate investors that have owned since 2000 are still way ahead.

Let’s compare this to the Stock Market. Since 1999, the S&P market index has had an annual total return of about 1 percent per year! Most people think in the short-term by noting that American Stocks doubled from October 2002 to the end of 2007 but a look at the market since 1999 shows that stocks were crushed by Treasuries, Foreign Markets and cash. Lastly, real estate is a tangible asset that is often enjoyed, unlike stocks and bonds, where there is no use benefit. Remember, it’s a great time to minimize your risk and maximize your wealth by getting back into real estate at a remarkable price.

Despite continued news of a looming recession, 80.3 percent of the "Super Rich" (consumers with net worth of $30 million+) say they will increase their spending on luxury goods and services. This is according to the Elite Traveler/Prince & Associates 2008 Affluent Consumer Spending Survey conducted January 10-18, 2008. Eighty-four percent of the Super Rich said the current economic environment represents an investment opportunity, and they will continue to spend more on luxury products and services and increase donations to charitable organizations more than ever before.

Does cost matter? As expected, the Super Rich are not price-sensitive, as only 7.4 percent report an increase in the cost of luxury products as playing a role in their purchasing decisions.


Editor’s Note:
Scott Rudolph is the Director of Business Development for LuxuryRealEstate.com. He works with companies in a variety of luxury industries to expand the LuxuryRealEstate.com influence. As Scott noted, real estate, and especially luxury real estate, is almost always an excellent investment. Homes easily outperform the stock market in terms of rate of return on investment, and they provide tangible benefits. As I noted in an earlier blog entry, entitled “Why you shouldn’t fear drops in home prices,” people are wise to think of their homes as where they live first, and their investment second. Having that perspective should help people prioritize and avoid unnecessary risks for the sake of speculation. The fact that where you live appreciates in value is simply a pleasant side-effect.