1

The Flight to Safety

large_refinanceweb

According to the 2009 World Wealth Report—a revealing new study commissioned by Capgemini and Merrill Lynch Wealth Management—the calamitous global economic meltdown of the past year has reduced the worldwide head count of high net worth individuals by almost 15%.  Nevertheless, 85% of these high net worth individuals—though admittedly having lost a fifth of their combined net worth—are still comfortably awash in disposable income.

High net worth individuals, according to the study, are defined as those having investable assets totaling $1 million or more—excluding primary residence, collectibles, consumables and consumer durables.  Included in this number are ultra-high net-worth individuals, or those with at least $30 million in investable assets; and mid-tier millionaires having between $5 and $30 million.

Although understandably guarded about where they plan to park their assets going forward, these enormously well-to-do individuals are clearly hopping “a flight to safety,” which means they’re backing away from all but the most secure investment opportunities.    The categories they now deem the least risky include gold and precious gems, fine art, and real estate—tangible items with a proven record of gaining in value over the long term.  They don’t suddenly turn toxic overnight.

This should come as great news to clients who sell their residential and commercial properties through Michael Saunders & Company.   For not only do these high net worth individuals have an above-average interest in purchasing prime residential properties in major U.S. markets, but are shopping for first-rate commercial opportunities as well.

Yes, it’s a fact.  In spite of our nation’s scariest economic contraction since the Great Depression, international buyers still view the U.S as one of the world’s most desirable, profitable and secure places to purchase property.  Perhaps even more so now that many U.S. markets—including ours—are at or near the bottoms of their cycles, with the weakened U.S. dollar adding extra impetus to hurry up and buy.

And they’re not squandering the opportunity.  In the past year, foreign buyers have been active in every state and the District of Columbia.  By far, however, the most popular place to buy U.S. real estate is in Florida—which accounted for 23.0 percent of all foreign purchases in the past year. (Source: 2009 Profile of International Home Buying; National Association of REALTORS®.) Within Florida, Sarasota-Bradenton ranks second only to Miami in top destinations preferred by international buyers.  That gap is expected to close, at least temporarily, as Miami continues to struggle with a huge and troublesome inventory of unsold condominiums and their declining values.

At Michael Saunders & Company we’re not only enormously proud of our market’s inherent desirability among international buyers but also of the worldwide luxury affiliations that systematically help attract this clientele to our sellers’ listings and ultimately to the closing table.  Carefully forged over more than 33 years of selective networking, no other company in Southwest Florida offers its clients and customers anything approaching the depth of international connectivity that Michael Saunders & Company is now linked into.  In most cases, the top luxury brokers from around the world are longstanding business acquaintances, referral partners and personal friends of Michael Saunders.  That’s an important consideration, because new opportunities in international real estate circles tend to gel based on trust, familiarity, shared values and a track record of success.

Today wherever new pockets of wealth and purchasing power are forming, especially in the Asia-Pacific region, our worldwide brokerage affiliates are expanding their grass-roots relationships to capture the most new buyers and refer them to their network partners.

The extent of our global brokerage affiliations is unmatched in this region.  For the most luxurious of all properties, they include the only worldwide luxury broker that is wholly-owned and operated by an internationally renowned fine-art auction house—Christie’s Great Estates. Globally nine out of ten buyers begin their search on the web. For this reason all Michael Saunders & Company listings priced from $1 million and up are featured on the Christie’s Great Estates web site, which is frequently linked back to by visitors to the Christie’s Fine Art Auction House web site.  Additionally, their main headquarters in New York City just premiered a highly visible ground-floor gallery of fine properties in Rockefeller Center.

Not every foreign buyer in our market fits the definition of a high net worth individual.  Many are well capitalized, but of more modest means, and simply want to purchase their place in the sun while the time is right.   For this reason, we have maintained worldwide brokerage affiliations that cater to buyers in virtually every price range.  These include Leading Real Estate Companies of the World, its luxury offshoot, Luxury Portfolio; the European Real Estate Networkof which Michael Saunders & Company is one of only two U.S. real estate companies invited to participate in their pan-European network—Mayfair International Realty, with offices across the U.K., and LuxuryRealEstate.com.

Just back from the Christie’s Great Estates 2009 Global Annual Conference in Boston, Michael, joined brokers from around the world in hearing a hopeful and upbeat assessment of the U.S. economy by someone from outside our borders.  That assessment—put forth by Ko Iwahori, Group General Manager of Mitsubishi Real Estate Service in Tokyo (also a Christie’s Great Estates affiliate)—suggests that the U.S. economy will recover faster than it thinks; and certainly much faster than Japan did after its real estate and stock market bubbles burst in the 1990’s.  It took more than ten years for the Japanese economy to recover from its “lost decade;” and what the U.S. learned by studying Japan’s mistakes is already hastening our own recovery. Iwahori also stressed that recovery in real estate happens when buyers perceive real value at every price level.  High net worth individuals are no different.  In fact, because they have the wherewithal to buy wherever they please, they are among the world’s toughest negotiators. As a result, these international buyers are eyeing U.S. real estate markets as never before.  If current trends hold true, about one in four of their “flights to safety” will land in Florida.

* Photo Courtesy of condo.com

  • User Gravatar Ingrid
    October 26th, 2009

    Thanks, always interesting. Did you get my piece regarding Art Uptown?

Share your thoughts, leave a comment!



Google Profile