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Posts Tagged ‘Dottie Herman’

Luxury Real Estate as the New Global Currency

November 18, 2012 | 5:46 pm | | Articles |


[click to read article]

Over the summer Camilla Papale, Douglas Elliman’s CMO asked me if I would present something about the state of luxury real estate for their Elliman Magazine (and iPad app!). The finished result contained 3 parts:

  • I wrote a brief piece about the influx of international demand as high end consumers were seeking a safe haven from the world’s economic problems. I called the piece: “LUXURY REAL ESTATE AS THE WORLD’S NEW CURRENCY” This post’s title was my working title which I also liked.
  • Plus I did a little research on housing prices across the globe using Knight Frank’s resources and
  • I moderated a discussion on the subject with Dottie Herman, President & CEO of Douglas Elliman, Patrick Dring, Head of International Residential at Knight Frank, and Liam Bailey, Head of Residential Research at Knight Frank. They all provided great insights to the subject.

Here’s the full piece in Elliman Magazine . I’ve inserted a portion of the presentation below in 2 parts:

LUXURY REAL ESTATE AS THE WORLD’S NEW CURRENCY

Since the beginning of the global credit crunch in 2008, luxury real estate has morphed into a new world currency that provides investors with both a tangible asset and a cachet that cannot be found within the financial markets. It’s as if these emboldened investors zoomed out of their local Google Earth view to discover the wider global perspective on luxury real estate.

HOW DID WE GET HERE? The US dollar has weakened in the years following the collapse of Lehman Brothers in the onset of the global credit crisis. The S&P downgrade of US debt in August 2011 from its benchmark AAA rating brought a flood of investors into US financial securities. That meant that our currency allowed us to buy less abroad, and the strength of other currencies provided international buyers with large discounts when purchasing property in US dollars. But it went further than that.

THE RISE OF LUXURY REAL ESTATE AS A “SAFE HAVEN.” The volatility of global financial markets and the resulting political fallout shook investor confidence, which in turn spurred a rise in foreign buyers seeking a safe haven to protect their assets. A wave of international buyers from Europe, South America, and Asia entered the US housing market, helping set record prices and revive luxury markets including New York, The Hamptons, and Miami.

SUPPLY-DRIVEN DEMAND. The luxury real estate market has become defined by the supply of available properties. While demand has remained constant and elevated, inventory has become a critical variable, particularly at the very top of the market, where surging international demand for one-of-a-kind properties has surpassed the limited supply. The resultant record-breaking sales of “trophy” properties have enticed more owners of luxury homes to make them available for sale.

THE RISE OF THE “TROPHY PROPERTY.” The trophy property has become a new market category that does not follow the rules and dynamics of the overall marketplace. One stratospheric price record is being set after another, and it is not only the list prices that are defining these record sales; the rarity of location, expanse of the views, quality of amenities, and the sheer size of these unique homes have all played an important part in attracting the interest of foreign buyers.

WHERE DO WE GO FROM HERE? Driven by the global credit crunch and political instability, the two factors that are expected to remain unchanged for the next several years, the US luxury housing market is expected to remain a “safe haven” for foreign investors for quite some time.

A CONVERSATION ABOUT THE COMMERCE OF GLOBAL LUXURY REAL ESTATE

I sat down with Dottie Herman and our friends across the pond, Patrick Dring, Head of International Residential, and Liam Bailey, Head of Residential Research at Knight Frank, to chat about the state of real estate in the prime markets across the globe and the rise of a foreign investment phenomenon.

JONATHAN MILLER: Douglas Elliman has a broad coverage area that includes some of the most affluent housing markets in the US. Are you seeing any short-term issues that may influence luxury investor decisions over the coming year?

DOTTIE HERMAN: At the end of this year, we may see a repeat of the consumer behavior we saw at the end of 2010 when US capital gains tax rates were expected to rise. Ultimately, the rates did not increase, but many consumers in the luxury market took preventative action before the potential tax increase and raced to close their sales by the end of 2010. Despite the ups and downs in the quarters that followed, the luxury housing market was not adversely impacted in the long-term.

JM: Paddy, according to Knight Frank’s Global Briefing blog, housing prices in central London are up sharply, but the pace of growth appears to be slowing, perhaps because of the new stamp duty (a tax on properties priced at £2M–the equivalent of $3.15M–or more). What does this mean for the luxury market?

PADDY DRING: In short, the £5M ($7.85M) market is up year-on-year. The new stamp duty on property sales above £2M seems to be having an impact only on the band just above the new £2M threshold. Foreign demand remains high and, notably, we have sold to over 62 different nationalities within the last 12 months. They are less affected by the changes in stamp duty, since the rates in London are still in line with many other European countries.

JM: Dottie, your firm has sold a large number of luxury properties this year, despite a lukewarm economy and tight credit conditions. Record sales and listing prices are becoming nearly commonplace and a significant portion of this demand for luxury real estate is coming from abroad. Do you see this developing into a long-term trend?

DH: It’s certainly been a year of records and I do think we are embarking on a period where luxury real estate has the potential to outperform the rest of the housing market. Several of the markets that we cover, Manhattan and Miami in particular, have been firmly established as highly sought-after international destinations. As much as we fret about how slowly our economy is recovering, the US has proven itself as a “safe haven” for many international investors who are concerned about the turmoil of the world economy and political stability. Luxury investors from much of Europe, Russia, Asia and South America have been buying here at the highest pace we have seen since the credit crunch began.

JM: Liam, the US is seeing a higher-than-normal influx of real estate demand from foreign investors who seem to be focusing on the upper end of the housing market. These investors are well represented from Europe, Asia and South America. Are you seeing the same phenomenon when it comes to luxury properties in the UK? What are the primary regions where this demand is coming from?

LIAM BAILEY: The focus of demand continues on London and its easily accessible suburbs. London is facing even higher global demand than New York, with the top end strongly led by Russia, Europe, Canada, and the Middle East, and demand in the new development investment market very much led by Asia.

JM: In the US, access to financing is a key challenge to domestic purchasers, including luxury investors. What are some of the key challenges facing your clients who are looking to purchase real estate outside of their own countries?

PD & LB: Financing remains a consideration for many, although mortgages are more available in many of the markets than people are led to believe. Of course, the property needs to be quality and in a core location and have a more conservative loan-to-value ratio, however, many of our clients purchase in cash, so they are more affected by market sentiment and, of course, liquidity if they need to sell unexpectedly in the future. Factors affecting market sentiment include the usual considerations, such as exchange rate, a stable political base, as well as a sound legal system that guarantees clarity of title and tax considerations. The latter of course is affecting not only the cost of acquisition (stamp duty), but also, in some countries, the cost of holding (wealth tax) and ultimately selling (capital gains tax). Access, infrastructure, and climate (if lifestyle-driven) all remain key, as do low crime rates as people become more aware of their privacy and personal safety.

JM: Since the beginning of the credit crunch, you’ve constantly stressed to your clients that the terms of a sale are just as important as the price of a sale, given the challenges of obtaining financing. How do international buyers fi t into this new world defined by tough lending standards?

DH: Despite mortgage lending in the US remaining tight, luxury markets in the areas we cover have improved quickly. I can only imagine how much stronger the US housing market would be if we saw credit ease to historically normal levels. International buyers tend to pay cash or obtain financing from their native countries, which has given them an advantage over many domestic purchasers. Combine the ability to pay in cash with both the weakness of the US dollar against many of their native currencies and a volatile global economy, and you can begin to understand why we are seeing a strong presence of international buyers in our markets. Like our friends at Knight Frank, these luxury investors are interested in our proven core markets that already have a large concentration of luxury properties. Overall, we continue to be excited about our market’s expanding presence in the global luxury housing market—there are many opportunities out there for this new international investor to explore.



Luxury Real Estate as the World’s New Currency [Miller Samuel (pdf)]
Luxury Real Estate as the World’s New Currency [Douglas Elliman]
Elliman iPad App [iTunes]

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[Eye on Real Estate] WOR NewsTalk Radio 710 June 19, 2010

June 21, 2010 | 12:37 am | | Public |

For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “The BlogCast” where I discuss several housing related (sometimes a stretch) posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.

Saturday’s BlogCast covered the following blog posts:

[The Real Estate Bloggers] The Watergate Hotel Sold To European Investment Group For many of us, the term Watergate brings back bad memories of politicians gone bad. We forget that the scandal is named after the Watergate Complex, a group of 5 buildings near the John F. Kennedy Center for the Performing Arts. The hotel that was attached to the complex failed in 2007 but was purchased yesterday by a European real estate management company. They plan on returning the hotel to it’s former glory while keeping the option of turning some of the rooms into condos if the market will accept it.

[Straight Talk About Mortgages] Lending Rule #101 – Don’t Loan Money to People Who Can’t Pay It Back… Duh, it’s all about common sense. People who can’t pay it back shouldn’t get the loan in the first place…

[ST Paul Real Estate] Should I take the fridge? I got a call last week from a woman who is being foreclosed upon and there isn’t anything she can do about it at this point…She wanted to know if she had to leave her appliances behind when she left her home. She told me that they are fairly new and that she would like to keep them.


If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.

Listen to the most recent Eye on Real Estate podcast.

Subscribe to the free weekly Eye on Real Estate podcast.

Become a fan on Facebook.

Or visit the Eye on Real Estate Website.


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[Eye on Real Estate] WOR NewsTalk Radio 710 June 12, 2010

June 14, 2010 | 10:40 am | | Public |

For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “The BlogCast” where I discuss several housing related (sometimes a stretch) posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.

Saturday’s BlogCast covered the following blog posts:

[City Room/NYT] Life Costs More Here, Unless You’re Hiring In both Boston and the San Francisco Bay area, the average worker receives more in wages and benefits than does the typical worker in the New York metropolitan area, according to figures released this week by the federal Bureau of Labor Statistics. Boston and San Francisco are also the only big American cities where the cost of providing health care, year-end bonuses and other benefits is higher than it is in New York, the numbers show…

[Naked Capitalism] RealtyTrac: Most foreclosures have positive equity Of all of the foreclosures in the RealtyTrac online database, less than 50% have mortgages worth less than what is owed, said Rick Sharga, senior vice president at RealtyTrac, during a session at REO Expo, which concludes in Dallas Wednesday…

[Sienna Research Institute] 4.7% of New Yorkers Want To Buy, Most Since Lehman Tipping Point Ok, so this isn’t really a blog, but it pertains to the listening area and I covered it here on Matrix. 4.7% of consumers in the state plan to buy a home this year, compared with just 3.4% in April and 3% in May 2009. As good as it is, the latest reading is still far shy of the three-year high set in June 2007, when 5.6% of New Yorkers said they wanted to buy. Conversely, in January 2009, at the lowest ebb in the last three years, a mere 2.2% said they would buy a home.


If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.

Listen to the most recent Eye on Real Estate podcast.

Subscribe to the free weekly Eye on Real Estate podcast.

Become a fan on Facebook.

Or visit the Eye on Real Estate Website.


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[Eye on Real Estate] WOR NewsTalk Radio 710 June 5, 2010

June 5, 2010 | 9:59 pm | | Public |

For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “The BlogCast” where I discuss several housing related (sometimes a stretch) posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.

Saturday’s BlogCast covered the following blog posts:

[Ezra Klein/WaPo] On jobs, watch the trend A lot of us have the tendency to look at each new month as a wholly separate slice of data and celebrate if it looks good and fret if it looks bad…So far this year, we have averaged about 100,000 new jobs each month with that rising to nearly 140,000 over the past three months. That is what many of us had expected when we talked about modest to moderate job growth this year.” In other words, “the trend is your friend.”

[Extraordinary Observations] Where the Smart People Live It’s becoming increasingly accepted that there is real economic value to bringing a lot of smart and entrepreneurial people together in the same place…The theory that there is economic value to having smart people together rests on the assumption that smart people collaborate with each other. Conclusion: smarter people live in areas with higher cost housing – but it sounds dumb, no?

[Curbed] New Identities Pitched for Troublesome Hudson Square Manhattan is famous for Manhattan neighborhood acronyms. SOHO, NOHO, TRIBECA, NOMAD, FIDI and MEPA How do you solve a problem like West Soho? Or is it the Lower West Side? Or Hudson Square? Whichever neighborhood name you choose, one thing’s clear: None are catchy enough to stick in the minds of tourists. Suggestions include North of the Holland Tunnel: “NoHoTu” and my favorite suggestion was Holland Tunnel Approach: “HoTunA”.


If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.

Listen to the most recent Eye on Real Estate podcast.

Subscribe to the free weekly Eye on Real Estate podcast.

Become a fan on Facebook.

Or visit the Eye on Real Estate Website.


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[Eye on Real Estate] WOR NewsTalk Radio 710 May 29, 2010

May 31, 2010 | 9:21 pm | | Public |

For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “The BlogCast” where I discuss several housing related (sometimes a stretch) posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.

Last Saturday’s BlogCast covered the following blog posts:

[Gothamist] Where’s The City’s Worst Cell Service? The best cell phone service can be found in the Lincoln Tunnel, which sees the fewest dropped calls. The worst spots include the Cross Bronx Expressway, along the river on the West Side Highway, Long Island City and Sunnyside in Queens, as well as part of the Upper East Side between 87th and 94th streets…

[Brick Underground] Hold that hotdog! 4 ways to rat-proof your patio before the other guests arrive A friend of ours lucky enough to live in a Chelsea apartment with a rear patio noticed she had company this spring: A gypsy contingent of rats was using her rear wall as a superhighway to the restaurant next door, occasionally detouring to her place for a refueling stop… This topic was timely given the weekend’s NYT/Real estate article on outdoor space.

[Credit Slips] How to Find the Owner of Your Mortgage Concerns continue about parties filing foreclosures when they do not own the note. Florida recently enacted a rules requiring plaintiffs in foreclosure to verify ownership of the note…


If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.

Listen to the most recent Eye on Real Estate podcast.

Subscribe to the free weekly Eye on Real Estate podcast.

Become a fan on Facebook.

Or visit the Eye on Real Estate Website.


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[The Housing Helix Podcast] Dottie Herman, President and CEO, Prudential Douglas Elliman Real Estate

May 31, 2010 | 8:49 pm | | Podcasts |

I sat down with Dottie Herman, President and CEO of Prudential Douglas Elliman Real Estate to talk about her journey from certified financial planner to one of the most successful real estate brokers in the United States.  Dottie leads an organization of 3,800 real estate professionals and 675 employees in more than 60 offices.  Its a candid and insightful conversation, and of course, fun and energetic.

We spoke right after our live weekly radio show “Eye on Real Estate” on WOR710 that Dottie hosts on Saturdays from 10am to noon along with her team of experts (including moi).

Check out the podcast.

The Housing Helix Podcast Interview List

You can subscribe on iTunes or simply listen to the podcast on my other blog The Housing Helix.


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[Interview] Dottie Herman, President and CEO, Prudential Douglas Elliman Real Estate

May 31, 2010 | 8:40 pm | | Podcasts |

Read More

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[Eye on Real Estate] WOR NewsTalk Radio 710 May 22, 2010

May 24, 2010 | 10:03 pm | | Public |

For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “Jonathan Miller’s BlogCast” where I discuss several housing related posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.

Last Saturday’s BlogCast covered the following blog posts:

[The Curious Capitalist] The hidden changes in financial reform The Senate passed its financial reform bill. Huzzah! What did the Senate wind up with after three weeks of such intense lobbying and debate?…

[Trulia Blog] Trulia RealtyTrac Survey: American Attitudes Towards Foreclosure Today, Trulia.com and RealtyTrac released the latest results of an ongoing survey tracking home buyers’ attitudes towards foreclosures. The new online survey conducted on their behalf from May 10-12, 2010 by Harris Interactive® showed a notable decrease in consumers’ willingness to buy foreclosed properties compared to one year ago…

[WSJ/Developments Blog] U.S. Mortgage Delinquencies Appear to Level Off The number of American households behind on mortgage payments appears to be leveling off at a high level, a survey showed Wednesday… I also discussed the MBA confusion over the results in a great New York Times article.


If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.

Listen to the most recent Eye on Real Estate podcast.

Subscribe to the free weekly Eye on Real Estate podcast.

Become a fan on Facebook.

Or visit the Eye on Real Estate Website.


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[In The Media] Lawline TV The Housing Market 11-19-2009

February 23, 2010 | 10:58 am | | Public |


[click to play – “The Housing Market”]

Last fall both Dottie Herman, CEO of Prudential Douglas Elliman and I were guests on Lawline TV hosted by Alan Schnurman.

The segment didn’t air until after the new year and frankly, I forgot I could see it in its final form – until a friend of mine mentioned he watched it on TV the other day. The show doesn’t run on my cable service at home.

Alan gets both Dottie and I to describe what we were seeing in the market last fall. This was my third stint on his show at his Brooklyn studio and I’ve always enjoyed Alan’s company.


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[10 Stories] 2000-2009 Manhattan Townhouse Report Available For Download

February 4, 2010 | 8:50 am | | Reports |


[click to open report]

The 2000-2009 Manhattan Townhouse Report that I author for Prudential Douglas Elliman was released today. Dottie Herman, the President/CEO of Prudential Douglas Elliman is pushing hard to make information more accessible to the public.

Approximately 2,500 Manhattan residential townhouse transactions were analyzed over this ten year period. 1, 2 and 3-5 (delivered vacant) family houses comprised the data set.

An excerpt

…The 2009 median sales price of a Manhattan townhouseÑdefined as a 1-5 family residence that can be delivered vacantÑfell 31.9% from the record set in 2008 to $3,400,000 from $4,995,000. The other price indicators showed a consistent trend over the same period with average sales price falling 32% to $5,012,736 and price per square foot falling 31.2% to $1,111. The decline in prices were not attributable to a shift to a larger mix of smaller sized sales as illustrated in the year over year consistency in square footage. The average size of a townhouse sale was 4,512 square feet in 2009, down nominally from 4,565 square feet in 2008 and was consistent with the 4,481 square foot annual average over the past decade…

Download the 2000-2009 Manhattan Townhouse Report

Download other market reports prepared by Miller Samuel


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[The PhoneBook] 2000-2009 Manhattan Market Report Available For Download

February 4, 2010 | 8:40 am | | Reports |


[click to open report]

The 2000-2009 Manhattan Market Report that I author for Prudential Douglas Elliman was released today. (I have been light on posts and podcasts in January – releasing 9 market reports in a month may have something to do with it.)

I have always referred to this report “The Phonebook” for its 61 pages of data largess. This report is downloaded more than all other quarterly studies we produce, combined.

Dottie Herman, the President/CEO of Prudential Douglas Elliman whose name adorns the report is a big believer in historical information as a companion to cutting edge data to provide a better perspective.

Approximately 92,000 co-op and condo sales transactions from more than 6,500 buildings over the last ten years were analyzed. Each of the 53 different market areas have been presented with data tables and charts as well as a summary matrix that compare 2009 to the prior year (2008) and prior decade (2000).

An excerpt

…There were 6,851 listings on the market at the end of 2009, 24.6% less than 9,081 listings in 2008, which was the highest level of inventory in the past decade. The 2009 inventory level was in line with the 6,860 average annual inventory level of the past decade. This resulted in a monthly absorption rate of 11.1 months, up from a rate of 10.6 months in 2008 and above the 9.2 monthly average over the past decade. The cause of inventory decline in the first half of the year was the trend of sellers removing their property from the market in hopes of re-listing when market conditions improve substantially. The decline in inventory in the second half of 2009 was attributable to the surge in sales activity simply working off the properties on the market…

Download the 2000-2009 Manhattan Market Report

Download other market reports prepared by Miller Samuel


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[92Y Tribeca] The New World of New York City Rentals with Curbed.com

July 27, 2009 | 10:57 pm | | Public |

I’m really looking forward to this one.

Lockhart Steele, blogfather of Curbed invited both me and CEO Dottie Herman of Prudential Douglas Elliman to talk rental market at the 92Y Tribeca this Thursday.

The New World of New York City Rentals with Curbed.com [92Y Tribeca]

I hope you can join us.


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