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INSIGHTS FOR LUXURY BUYERS IN 2018

When purchasing a significant property, buyers should be aware of several factors during the buying process. The home’s location, new tax laws and your personal portfolio are all important issues to consider, whether considering a new primary or second home. For details and additional insight into economic factors one should be aware of, we sat down with LeadingRE Chief Economist, Marci Rossell.



Times are taxing. Politics—rather than economics—is driving real estate across the globe. The new changes to the U.S. tax code cap the deduction for state and local taxes to $10,000. Over the next decade, low-tax states will see an increase in home buyers which will potentially put upward pressure on prices in those areas. Now is the time for the affluent home buyer to keep their accountants on speed dial because laws are changing quickly. A home is a part of a larger portfolio and changing tax laws have an impact on the taxes on your assets, particularly if there is a change in geography. Though it may be discouraging for buyers in high tax area in the U.S., don’t be surprised if the next few years we see a financial innovation that mitigates the tax problem. In Europe, the political consequences of Brexit will impact luxury markets for the next decade, as financial centers such as Frankfort benefit from the gradual exodus of business from London.

New faces, same Central Banks. Every region of the globe is growing right now, for the first time in over a decade. Last year, India posted the strongest growth of the large economies at 7%, China expanded at over 6%, the Euro Zone grew 1.5%, Russia emerged from a deep recession, and economies in South America and Africa benefited from the recovery in commodity prices. As a result, central banks from Asia to Europe are rolling back monetary stimulus and tightening policy. In the United States, Jerome Powell has replaced Janet Yellen as Chairman of the Federal Reserve, and there are several open seats on the Board of Governors that need to be filled in 2018. But expect the same policy of slow, steady interest rate rises as the global economy continues to improve.

It’s about the balance. Real estate is part of a portfolio that includes stocks, bonds and other assets. The strong gains in stocks over the last few years may mean that it’s time to rebalance that portfolio and add more real estate to the mix. S&P 500 index has tripled in value since its low in 2009, a pattern that’s been repeated in stock markets around the globe. With the strong gains in stock over the past few years, buyers are encouraged to embrace more real estate.

Embrace the block, and the chain. Blockchain, an ever-growing list of records that are linked and secured using cryptography, has begun to influence financial services and will begin to change the way luxury buyers purchase homes in the near future. The first big real estate transaction using blockchain technology occurred in Ukraine last year. While still in its infant stages, blockchain technology promises to remake industries, just like the Internet transformed sectors from travel to finance. With real estate, blockchain technology is likely to have the greatest impact in less economically developed parts of the world where property rights are less secure, title is more difficult to establish and fraud is of greatest concern. It will make transactions cheaper and easier for the most sophisticated buyers, especially across borders.

Don’t wait. In U.S. markets, two strong forces will collide in 2018: millennial home buyers and the new tax code. The oldest millennials are now first-time home buyers. As they seek to put down roots for their new families, the most affluent millennials will be attracted to low-tax areas that will minimize their payments to Uncle Sam. Just as they drove up rents in the urban areas of their choice over the last decade, they will put upward pressure on luxury homes in their most desired neighborhoods in the years to come. Couple these forces with synchronized global growth—which puts upward pressure on real estate prices and interest rates across the world-- and it makes sense to lock in that attractive luxury property as soon as possible.


To view the article, take a look at the Spring 2018 issue of Luxury Portfolio Magazine here.

JET SET: ART SPOTTING

For us, a favorite portal into an unknown place – its past, present, and future – is the arts. Combining this with our love of unique spaces, we trotted the globe to gather our top locales for “art spotting” around the world, from a chapel designed by Henri Matisse in southeastern France to a warehouse converted into contemporary art center in Ho Chi Minh City, Vietnam.

21C MUSEUM HOTELS

Seven U.S. locations

Founded by art collectors Laura Lee Brown and Steve Wilson, 21c Museum Hotels are an innovative union of hospitality and artistic communities, where you’ll find museum and exhibition spaces within boutique hotels. At their recently opened Oklahoma City location, a former Ford Motor Company assembly plant was converted into a contemporary interpretation of the building’s industrial heritage with 14,000-square feet of exhibition space and luxurious rooms designed by New York based architecture firm, Deborah Berke Partners.

In seven locations across the country, 21c Museum Hotels have featured installations and exhibitions from over 700 contemporary artists, including Chuck Close, Kara Walker and Elmgreen & Dragset. The fast-growing initiative now boasts over 75,000-square feet of exhibition space, with each location focused on site-specific touches that range from wallpaper to large-scale sculpture. Each hotel also places an emphasis on farm-to-table fare that celebrates the area’s culinary identity. Proof on Main, located within the Cincinnati location, was named one of Esquire magazine’s “Best New Restaurants,” while Lockbox, at 21c’s Lexington, Kentucky hotel, has been recognized by Bon Appetiton their list of “10 Best Hotels for Food Lovers.” 21cmuseumhotels.com


 

THE FACTORY CONTEMPORARY ARTS CENTRE

Ho Chi Minh City, Vietnam

When you find yourself in Ho Chi Minh City, chances are you’re looking to indulge in the unrivaled street food on nearly every corner, but in between those delicious bánh mì sandwiches and piping hot bowls of phở, The Factory Contemporary Arts Centre is well-worth a visit. While Vietnam has a well-known tradition in such artistic mediums as lacquer painting, silk production, and wood craftsmanship, The Factory serves as a multi-disciplinary platform showcasing a new generation of artists, located in the fashionable Thao Dien neighborhood.

The building itself – a repurposed warehouse – is a work of art that one enters by walking under an upended shipping container that whimsically comments on the country’s rapid industrialization. Inside, the open layout maintains soaring exposed beams of the building’s past life that complement the contemporary décor. It holds a variety of spaces, from a co-working area to F Bar & Kitchen, where we highly recommend a rooftop cocktail post art viewing. factoryartscentre.com


DIA:BEACON

Beacon, New York

Set in a former Nabisco factory built along the Hudson River in 1929, Dia:Beacon presents a collection of art from the 1960s to the present. The building, which was once used to produce the packaging for snacks such as Oreos, Chips Ahoy!, and Ritz Crackers, now stands as a symbol of Beacon’s past as a major industrial and manufacturing city, located about 70 miles north of Manhattan. Working closely with installation artist Robert Irwin, the Dia Art Foundation converted the 300,000-square foot space into a twenty-first century museum that has since been placed on the National Register of Historic Places.

In addition to their permanent collection, Dia:Beacon has regularly hosted internationally recognized exhibitions since opening in 2003 and galvanized the city as a sought-after arts destination drawing visitors from around the world. Past exhibitions include Andy Warhol’s Shadows and Dan Flavin’s series of fluorescent light “monuments to v. Tatlin”, while guests can expect to see works by such artists as Gerhard Richter, Louise Bourgeois, and Sol LeWitt in the permanent collection. If you find yourself in NYC, but unable to make the trip to Beacon, Dia’s Chelsea gallery is an equally impressive place to get your art fix in the city. diaart.org


CWART

Knokke-Heist, Belgium

What was once a farm located near Belgium’s border with the Netherlands now serves as an exhibition space for the town of Knokke-Heist’s vibrant creative community. This seaside resort town, set along the North Sea, is home to only 33,000 people, yet there are more than 40 art galleries and perhaps none as unique as Cwart. Dating back to 1335, the farm was recently transformed into a stunning modern-rustic space aimed at providing new opportunities to emerging. The off-the-beaten path destination is centered around works that evoke a fully immersive experience, with each project focused on exploring the relationship between traditional art forms and contemporary mediums.

Offering a feast for all the senses in a cozy atmosphere, after meandering through the exhibition space one can enjoy local dishes at Cwart’s restaurant or a glass of vino at the stylish wine bar. The multi-functional venue also holds events, film screenings, concerts and for those who need a place to work, there’s also a co-working space that caters to creatives and entrepreneurs. cwart.be

To read the full article, check out the Spring issue of Luxury Portfolio Magazine here.


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