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Skyrocketing Demand: Luxury Real Estate Surges 9% as Global Buyers Flock In

By Columbus International,5 February 2024

The transactions of luxury homes are experiencing a 9% increase, with demand surpassing supply, according to the report from the Gabetti Studies Office based on data from Santandrea Luxury Houses & Top Properties, specializing in the analysis of the prestigious real estate market. Foreign buyers represent 70%, while the remaining 30% are Italians. In most cases, the purchase is motivated by exclusive use, either as a primary residence or a second home. The average age of buyers ranges from 45 to 70 years for properties costing at least one million euros, and their maintenance can be costly. High floors and terraces are the most requested features, followed by parking spaces.

Milan stands out as the most expensive city, with prices averaging a 1.4% increase in 2023 compared to the previous year. In the Brera district, the average price per square meter exceeds 11,000 euros, while in the Quadrilatero, it stands at around 12,300 euros. In Rome, demand is increasing in the Prati and Salario-Trieste neighborhoods, with average prices for new/restructured properties around 6,000 euros per square meter. In the historic center, the average price per square meter exceeds 10,000 euros.

In Florence, the most expensive areas are central, such as the Lungarni, where a new/restructured residence costs an average of 6,200 euros per square meter. Genoa records price increases everywhere except in the Quarto/Quinto area. In Naples, prices remain essentially stable, and the number of transactions is slightly decreasing. In Turin, prices also remain stable, although the demand for purchases varies depending on the neighborhoods.

Source: Corriere della Sera

Battle Royale on Fifth Avenue: LVMH Eyes Prime Real Estate Amidst Luxury Retail Frenzy

By Columbus International,30 January 2024

In the intense competition for coveted space on the world’s most expensive retail boulevard, international luxury fashion giants are set to clash. LVMH Moët Hennessy Louis Vuitton, the powerhouse behind iconic brands like Louis Vuitton, Christian Dior, and Tiffany & Co., is reportedly in talks to acquire 745 Fifth Ave., a 35-story tower gracing the renowned shopping avenue, according to sources cited by Bloomberg. The lower three floors of this Fifth Avenue gem currently house a Bergdorf Goodman men’s store, and LVMH is engaged in a fierce bidding war with other contenders vying for ownership, as reported by Bloomberg. Neither Bergdorf’s parent company, Neiman Marcus, nor Paramount Group, the owner of 745 Fifth Ave., responded immediately to Bisnow’s request for comments.

The building also accommodates tenants such as private equity firm Eurazeo and law firm Haug Partners, according to the building’s official website. LVMH, known for its aggressive acquisition strategy, declared a spree for retail properties last year, investing nearly $2.7 billion globally. This included securing prime locations on Paris’ Champs-Elysées corridor and a central London site, as reported by Bloomberg. LVMH CEO Bernard Arnault emphasized the company’s pursuit of AAA locations, stating during an earnings call, “We try to secure and buy the best possible locations for our companies. If you take Fifth Avenue in New York, we have three of the best corners there are.”

This rumored acquisition comes on the heels of a major move by Gucci’s parent company, Kering, which recently spent a staggering $963 million on a 115,000 square feet retail condo at 715-717 Fifth Ave. In the previous month, Italian luxury fashion house Prada made a substantial investment of approximately $820 million, acquiring adjacent buildings across the street. Both of these deals were orchestrated by real estate mogul Jeff Sutton’s Wharton Properties. The battle for supremacy on Fifth Avenue’s luxury retail landscape shows no signs of cooling down.

Source: Bisnow

Retail Renaissance: U.S. Shopping Defies Odds as Investments Surge and AI Revolutionizes the Landscape

By Columbus International,30 January 20249 November 2024

Amid global uncertainties and cautious anticipation at the National Retail Federation’s Big Show, U.S. shoppers continue to defy predictions, propelling retail sales and inspiring confidence among major global retailers. The recent Commerce Department report revealed a higher-than-expected rise in December sales, fueled by online purchases and motor vehicle transactions. Senior executives, gathered at the annual expo, are shifting focus from a decade of retrenchment to discuss expanding store portfolios. Despite concerns about the economy and pandemic aftermath, retail real estate fundamentals are predicted to remain robust in 2024.

CBRE forecasts a decrease in the retail availability rate and a rise in asking rent growth, signaling a positive outlook for the industry. While low-income households face financial challenges, economists anticipate sustained consumer spending, provided the labor market remains stable. Traditional mall-based retailers are adapting by closing underperforming stores and turning to smaller, open-air suburban centers for expansion. CBRE predicts that neighborhood and strip centers will maintain occupancy, while mall and lifestyle centers may experience a slight increase in vacancy rates. Industry veteran Stephen Sadove predicts a “reversion to the mean” in 2024, envisioning a post-pandemic world with e-commerce returning to pre-COVID growth patterns.

Despite the rise of AI and other technologies, Sadove remains optimistic about physical stores, citing a net increase in store openings in 2023. The NRF Big Show highlighted the retail industry’s fascination with artificial intelligence, with AI solutions permeating discussions and expo displays. Google Cloud’s Amy Eschliman sees generative AI as a transformational force akin to the internet and mobile phones, capable of revolutionizing customer and associate experiences. Macy’s CFO and COO Adrian Mitchell emphasizes the positive impact of AI on pricing science and inventory allocation, stressing the need for retailers to embrace innovation actively. Ulta Beauty CEO Dave Kimbell sees AI as a tool to complement human connections, enhancing guest services and personalization without sacrificing the essential human touch in retail.

Source: Bisnow

From Bulgari to Porsche: Branded Residences Are Flooding the Prime Market – and Selling

By Columbus International,30 January 202430 January 2024

In 1927, the Sherry-Netherland apartment hotel marked a milestone as the world’s first “branded” residence on New York’s Fifth Avenue. Leveraging the reputation of the popular Sherry’s restaurant, the property, with its Gothic minaret and elegant apartments, made waves in the realm of luxury real estate. Fast forward almost a century… and here, the category of “branded” residences has experienced a significant increase, growing by about 150% in the last decade. Today, the landscape boasts over 700 branded residential developments, totaling over 100,000 homes in various stages of completion or planning globally, according to WATG Strategy. And a doubling of the sector’s size is expected by 2027, fueled by increasing interest in established markets like New York, Miami, London, Dubai, as well as in emerging markets like Oman, Poland, and Guyana.

What distinguishes recent years, besides the exponential growth of the sector, is the variety of brands eager to participate, particularly in the luxury segment. In addition to traditional hotel companies, fashion and jewelry houses like Armani, Roberto Cavalli, Fendi, and Bulgari, along with car manufacturers like Porsche, Bentley, and Aston Martin, have entered the arena. Chris Graham, founder of Graham Associates, defines a home with these designer labels as a “trophy purchase.” For both consumer companies and real estate developers, such collaborations prove advantageous for both parties. Recognizable brand names can command premiums on high-end developments, even in the most competitive markets. Edgardo Defortuna, president and founder of Fortune International Group in Miami, emphasizes the tangible impact of these brands, not only in terms of premiums but also in accelerating the sales processes. Historically, hotel companies have dominated the development of branded properties, constituting approximately 84% of the sector.

The expertise of hoteliers in the development and management of properties aligns well with the concept of residences as long-term versions of short-stay hotel rooms. Hospitality brands continue to be attracted to real estate, with Peninsula, Aman, and Rosewood making significant strides. Peninsula Residences London, with a reported sale of a penthouse for around $123 million to hedge fund magnate Ken Griffin, showcases the allure of these developments. Aman reported sales of branded residences totaling $2.4 billion in 2022, and Rosewood Residences has expanded its pipeline by over 200% in the last two years. Contributions are also expected from Mandarin Oriental, Six Senses, Equinox, and Faena. However, the shift to branded residences without adjacent hotels is not without challenges, as providing exclusive services and amenities solely for residents can result in higher maintenance costs. The market becomes more intricate for non-hospitality brands venturing into residential development. Companies like Jacob the Jeweler, Nobu, and Casa Tua, originally renowned for their expertise in jewelry, sushi, and Italian cuisine, are becoming lifestyle brands with real estate projects. Miami, a hub for international buyers and a city ranked among the top for branded developments, is experiencing an eclectic boom. Luxury automobile brands like Bentley Residences, Aston Martin Residences, and Porsche Design Tower are making significant strides, offering unique amenities like the futuristic “Dezervator” elevator in the Porsche tower.

Porsche and Aston Martin are targeting their enthusiasts, offering exclusive deals like a limited-edition Aston Martin Vulcan race car with a $59 million penthouse in Miami. As these brands enter the residential development space, they emphasize maintaining the aesthetic and craftsmanship associated with their luxury vehicles. Bentley’s first residential project, scheduled to open in 2026, aligns with the brand’s commitment to sustainable luxury. By 2030, Bentley aims to sell 100% electric cars, targeting a more progressive audience interested in sustainability. In New York, the third-largest market for branded residences globally, Aman exemplifies the trend with ultra-luxury residences, a five-star hotel, and a private club within a beautifully restored Art Deco building. This integrated approach, offering top-end buyers every imaginable indulgence under one roof, indicates a growing desire for security and confidence in markets where wealth is still relatively new.

Source: Robb Report
Photo: Bentley Residences

Anagram Columbus Circle Luxury Rentals: 50% Occupied, Monthly Rents Soar to $26,000

By Columbus International,29 January 2024

A new 26-story luxury rental development in Manhattan, Anagram Columbus Circle, has reached the halfway mark in terms of occupancy just six months after opening for leasing. Situated at 1 W. 60th St., at the intersection of West 60th Street and Broadway, and in close proximity to Central Park, the upscale property boasts monthly rents reaching as high as $26,000. Global Holdings, the developer responsible for other prestigious residential projects in New York such as 15 Central Park West, has reported that Anagram Columbus Circle has drawn residents not only from various parts of the United States but also from overseas.

Leasing commenced in July, with a Global Holdings spokesperson stating to CoStar News that move-ins are currently underway, and all amenities are expected to be fully completed by spring. The rental units at Anagram Columbus Circle range from $4,660 for a studio to $26,750 for a four-bedroom unit, according to the spokesperson. Eyal Ofer, Chairman of Global Holdings, emphasized the sustained demand for premium rentals, citing the success of their previous projects like 15 Central Park West, Greenwich Lane, and 520 Park. The developer’s extensive portfolio spans over 10 million square feet of real estate, encompassing more than 120 properties and over 1,500 hotel rooms.

Anagram Columbus Circle features 123 residences, including three penthouses situated at the top of the building. Designed by INC Architecture & Design, the property is said to offer condo-level design and boasts 13,000 square feet of amenity space. The leasing success of Anagram Columbus Circle coincides with a CoStar analysis indicating a 2.9% vacancy rate in Manhattan’s Upper West Side, where the property is located. This vacancy rate remains near historic lows, making it one of the lowest among U.S. neighborhoods with at least 20,000 units. With asking rents of $4,950 per unit, the Upper West Side market is noted for its high prices within the New York metropolitan area. The low vacancy rate has provided landlords with the opportunity to push rents higher, according to the report.

Photo via Anagram

The Transformation Revolution: Old Offices Turn into New Homes

By Columbus International,24 January 2024

Already in the first weeks of 2024, promoters are undertaking an unprecedented mission to redesign old office buildings into actual residential units, setting a record for the highest number of transformed housing units. This growth is a direct response to the remote and hybrid work revolution that began in 2020, leading to high vacancy rates for commercial spaces in many American cities.

Among the proposals is the idea of alleviating the high costs of housing marked by persistent inflation by creating more supply. Providing an overview is the study conducted by RentCafe, which discovered that 55,300 housing units are undergoing conversion from office buildings, marking a quadruple increase compared to 2021. While the year-on-year growth of 22% is more modest than in previous years, the demand for residential space remains a driving force behind this transformative movement.

Despite challenges such as higher financial costs and extended timelines associated with zoning and permits, industry experts like Doug Ressler, the head of business intelligence at Yardi Matrix (RentCafe’s sister company), assert that this trend is destined to endure. Local governments are incentivizing the conversion of more office buildings as they “remain vacant due to hybrid work and preferences for newer and more efficient office spaces” after the pandemic. In particular, these government initiatives aim to breathe new life into these spaces. In Washington, DC, plans are underway to convert office spaces into 5,820 housing units – a significant increase from the previous year.

Following closely is the New York metropolitan area, with 5,215 new apartments planned from former office spaces. Notably, New York’s growth is fueled by the transformation of 25 Water St. in Manhattan, formerly an outpost of JPMorgan & Chase Co., into 1,263 apartments – the largest project of its kind in the country. Dallas takes the third spot, with 3,163 housing units created from offices, representing 83% of all conversion types, the highest share among major cities.

Unveiling the Pinnacle: Time Out’s Picks for the Finest Global Cities in 2024

By Columbus International,24 January 2024

In the realm of entertainment, where cities often take on the role of the main character in beloved TV shows and movies, and serve as the muse for countless songs and artworks, New York City stands out as an iconic destination. Time Out, a prominent media company, has recognized this by naming New York City as the best city for 2024. Drawing insights from the perspectives of around 20,000 city-dwellers globally, as well as input from its network of writers and editors, Time Out curated a list of the world’s best cities.

Criteria such as the culinary scene, architectural marvels, and cultural vibrancy played a crucial role in the evaluation. Time Out aims not only to inspire travel but also to offer a global snapshot of city living. New York City secured the top spot, with its plethora of museums and a thriving theater scene being highlighted as contributing factors. The city’s international reputation also played a significant role, as it was deemed the most desirable location for relocation by city-dwellers worldwide. Claiming the second position on Time Out’s list is Cape Town, South Africa, a city described unanimously by survey respondents as “beautiful.” Its enchanting blend of sea, cityscape, and majestic mountains contributes to its allure. Time Out commended Cape Town for its rich cultural offerings, including late-night museum events, theater, comedy shows at Theatre on the Bay, and the newly opened Time Out Market Cape Town. Despite the accolades, Katy Scott, a Cape Town native now residing in France, emphasizes the city’s contrasts. While praising its unpretentious coastal charm, Scott acknowledges that many of its attractions may not be accessible to the majority of citizens due to persistent inequality.

To gain a deeper understanding of the city and its people, Scott recommends venturing beyond the tourist bubble and exploring sites like Robben Island and the District Six museum, both endorsed by Time Out for their engagement with South Africa’s apartheid history. Time Out’s top five cities also include Berlin, Germany (celebrated for its vibrant nightlife), London, UK (recognized for legendary pubs and free museums), and Madrid, Spain (applauded for exceptional dining and drinking experiences). Notable smaller cities in the top 10 include Liverpool, UK (ranked 7th), and Porto, Portugal (ranked 10th), the latter being lauded for its romantic ambiance according to survey respondents. Grace Beard, Time Out’s travel editor, highlighted the common thread among all the cities on the list—a strong community spirit and an undeniable vibe.

Challenges and Hope: The Roller Coaster Ride of US Home Sales in 2023

By Columbus International,23 January 2024

In 2023, the US housing market faced significant headwinds, resulting in a nearly 30-year low in previously occupied home sales. Rising mortgage rates, soaring prices, and limited inventory created a challenging landscape for prospective homeowners. According to the National Association of Realtors (NAR), existing home sales plummeted to 4.09 million last year, marking an 18.7% decline from 2022. This represents the weakest year for home sales since 1995 and the most substantial annual drop since the housing slump of 2007. The median national home price reached a record high of $389,800, experiencing a modest uptick of just under 1% for the entire year, as reported by the NAR. The surge in mortgage rates in 2023, reaching a two-decade high of 7.08% in late October, added to the challenges.

The Federal Reserve’s efforts to cool the economy and control inflation contributed to this increase. High borrowing costs, coupled with already soaring home prices, constrained the purchasing power of potential homebuyers. However, there’s a glimmer of hope on the horizon. Mortgage rates have been easing since November, aligning with a decrease in the 10-year Treasury yield. The optimism stems from the belief that inflation has subsided enough for the Federal Reserve to consider cutting interest rates this year. As of this week, the average rate on a 30-year home loan stands at 6.6%, according to Freddie Mac. Economists anticipate further rate easing, which could boost demand as the spring homebuying season approaches in late February. Despite the positive outlook, the current average rate remains significantly higher than two years ago when it stood at 3.56%. This substantial gap has contributed to a limited supply of previously occupied homes on the market, as homeowners with rock-bottom rates hesitate to sell. In December, existing home sales declined by 1% from the previous month, reaching a seasonally adjusted annual rate of 3.78 million—the slowest pace since August 2010, according to the NAR. December’s sales fell by 6.2% from a year earlier, missing economists’ expectations. Lawrence Yun, the NAR’s chief economist, remains cautiously optimistic, stating, “The latest month’s sales look to be the bottom before inevitably turning higher in the new year. Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.” While challenges persist, there is anticipation for a positive shift in the housing market as we step into the new year.

Source: New York Post

Resurgence in Big Apple Retail: A Beacon of Hope Amidst Economic Challenges

By Columbus International,23 January 2024

In the face of the pandemic’s challenges, New York City’s retail sector has not only weathered the storm but has emerged stronger than ever. Unlike many other segments of the city’s commercial market, retail has experienced a remarkable resurgence, with owners seizing opportunities to lease prime spaces at reduced rates and shorter terms, triggering a notable revival. Gene Spiegelman of Ripco remarked, “We’ve seen a fairly healthy amount of recovery, with rents down by an impressive 50%.” This decline in rental costs has sparked a feeding frenzy for well-located spaces, particularly benefiting vacant restaurants and luxury fashion fronts. A noteworthy transaction in this revitalized landscape is Dolce & Gabbana securing the unique former Hermès store at 695 Madison Ave. Similarly, Prada made a significant investment, paying $835 million to retail tycoon Jeff Sutton for a building at 724 Fifth Ave., along with the adjacent structure at 720 Fifth Ave., formerly dominated by Abercrombie & Fitch. Jeff Sutton had initially planned a slender new tower in the area next to the Aman Hotel in the Crown Building. However, it remains uncertain whether this development will proceed as originally envisioned.

The positive momentum in the retail sector is further complemented by favorable changes in mortgage rates. Since November, mortgage rates have been on a downward trend, aligning with a decrease in the 10-year Treasury yield—a crucial factor influencing loan pricing. The easing of these rates reflects optimism that inflation has cooled sufficiently for the Federal Reserve to consider interest rate cuts later this year. Currently, the average rate on a 30-year home loan stands at 6.6%, according to Freddie Mac. While this rate is lower than in previous weeks, it remains significantly higher than the 3.56% recorded just two years ago. This disparity has contributed to a limited inventory of previously occupied homes on the market, dissuading homeowners from selling due to the contrast in interest rates. Despite the easing of mortgage rates, existing home sales experienced a 1% decline in December compared to the previous month, reaching a seasonally adjusted annual rate of 3.78 million—the slowest sales pace since August 2010, according to the National Association of Realtors (NAR). Sales for December fell by 6.2% from the previous year, falling short of economists’ expectations. Lawrence Yun, Chief Economist at NAR, expressed optimism, stating, “The latest month’s sales look to be the bottom before inevitably turning higher in the new year. Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.” In the midst of economic uncertainties, the resilience and resurgence of the Big Apple’s retail sector stand as a beacon of hope, signaling potential positive shifts in the real estate landscape as the new year unfolds.

The Castles of Gaiole in Chianti and San Donato in Perano: Stories of History, Wine and Real Estate

By Columbus International,22 January 2024

Gaiole in Chianti, in the heart of the province of Siena, continues to be the stage for an epic narrative involving two castles steeped in history, noble houses, and winemaking traditions. While the Castle of Gaiole still seeks its guardian, another fortress, the Castle of San Donato in Perano, awaits a new chapter in its millennia-long story. San Donato in Perano is a fortress that speaks of centuries-old battles and nobility, of hills holding secrets between heaven and earth, and of wine flowing like vital blood through the history of Chianti. Despite its medieval charm, the fortress has failed to find buyers in past auctions, including the one in 2017.

Now, it prepares for a new sales attempt on April 8th, with a starting bid of 3.2 million euros. San Donato in Perano is not merely a testament of stone and history; it was the pulsating heart of Chianti Classico production. However, the crisis severely impacted the industrious agricultural estate of the Strozzi family, leading to the sale of its viticultural part, now owned by Frescobaldi. Despite the castle retaining its majesty amidst the gentle hills of Siena, the absence of its vineyards seems to have compromised its appeal in the eyes of investors.

The castle, with its vastness encompassing villas, residences, and chapels with ancient souls, seeks to allure distinguished buyers with a collection of precious furnishings and historical machinery. However, without its vineyards, the castle risks losing part of its allure, failing to engage those who seek not only history but also profitability. The future of San Donato in Perano hangs in limbo, and speculations about its transformation are diverse. Some dream of seeing it turned into an exclusive resort, while others hope for a patron who can enhance its history.

Enthusiasts of culture and historical heritage hold their breath, hoping that this castle does not become yet another forgotten beauty. While awaiting that spring auction, Chianti looks at its castles with a mix of nostalgia and hope. It is wished that someone can recognize in them not just real estate but true pieces of Italian history to preserve and cherish for future generations.