Our Strength : Prestige, ultra-luxury and discretion
29 May 2018
Foreign clients of luxury real estate return to invest in France, after a period of scarcity following the last presidential elections. And that's good. But applying to the letter the apologue "To live happily, live in hiding", these wealthy foreigners and ultra-luxury goods sellers prefer to carry out their transactions in all discretion. For a handful of years, these properties have been sold on the fringes of the classic real estate market and are part of a niche market called off-market. A job apart, in which worldliness and address book are almost more important than real estate knowledge. Or how to make dizzying transactions by going against the fundamentals of trade.
After declines in 2013, the luxury real estate attracts new buyers in the first quarter of 2014. This is the finding made by Lux-residence.com, portal of real estate ads specializing in luxury goods, in April latest. "Our study reveals a clear increase for buyers living abroad, from 22% to 36% in the space of one year. This confirms the attraction for real estate made in France, "says Séverine Amate, communication manager at Lux-residence.com. In addition, the share of principal residences is increasing at the expense of investments.
In fact, rental and property investment projects went from 20% to 13% of purchase intentions in 12 months. And for good reason. Frightened by aggressive French taxation, buyers of luxury goods have preferred, since the last presidential elections, to invest in Sydney, London or New York. At the same time, the fortunes hexagonal, directly impacted by the famous tax of 75%, preferred to separate from their French property to go to the tax heaviest clement. And who says more goods for sale, says lower prices. Thus the so-called prestige goods, that is to say those whose value is greater than 2 million euros, suffered a decrease of about 10%. In the end, Paris and its luxury goods would become almost cheap with their average price per m² located at 15 000euros, while London flirts blithely with 36 530euros / m²! A decline that benefits today foreign buyers, aware that ultimately, the French tax policy does not concern them.
PRESTIGE, ULTRA LUXURY AND DISCRETION
"Ultra-luxury real estate is a niche market that doubles each year, but remains confidential. Although it is difficult to give a precise figure, there is on the ground an increase in sales in this segment compared to last year. The transactions would have doubled according to the confreres, and we make the same observation. From 8 last year, we will be about 15 transactions completed this year ... The third of them escaping registration at the notary, "analysis Balkys Chida-Klewer, business manager at Barnes Property Exception.
Because the HNWIs (High Net Worth Individuals), these elites who hold an available amount of more than 1 million dollars, are not always willing to spread their goods - or their intentions to buy elsewhere - in the public square . "To live happily, let's live in hiding," said Florian's fabulist Jean-Pierre Claris. An apologue that this elitist clientele has embraced, including real estate. Because who says prestigious real estate says cash and hard cash. By way of comparison, a "classic" property in Paris sells, on average, 420,000 euros, while a prestigious property approaches without blushing the 2 million euros. "The hyperluxe goods, that is to say really exceptional, oscillate between 4million and 100million euros," says Charles-Marie Jottras, president of Daniel Féau, a company specializing in luxury real estate, belonging to the Christie's network.
Now, these goods are precisely those that we do not talk about. Those who find buyers, of course, but who are negotiated under the mantle, from hand to hand, without any ad in a magazine specializing in real estate, no website, even that of a real estate agency, nor no press release whatsoever, make any reference to it, before, during, or after the transaction. These properties are part of a parallel real estate market: the off-market. In other words, a product that does not appear on any web or paper support intended for the general public, an exceptional good likely to appeal to a foreign clientele, physical or moral, but which is not for sale ... and becomes a certain price. It is therefore up to the off-market intermediary to sharpen demand and get the offer.
The systemic subprime crisis in 2007 changed the market. The buyers of "über" goods, that is, ultra-luxury, have become, more than ever, thirsty for discretion. Especially since most of these buyers want to invest in France to diversify their assets or simply by heart stroke, certainly, but not only. Quite often, these high-end purchases are motivated by capital transfers from foreigners who no longer have confidence in their respective governments. It is therefore primarily buyers of Russian, Chinese, but also, to a lesser extent, Maghreb, especially since the Arab Spring in December 2010.
In April 2014, for example, the equivalent of one year of Russian capital abroad was transferred in one month, following serious tensions in Ukraine ... to the point of undermining the Russian economy. To buy in France is also to obtain permanent visas allowing children to study in good schools, or even to obtain the nationality of a stable and democratic country. We understand that for buyers, confidential rhymes, in fact, with exceptional. "It's been about 3 or 4 years since Barnes went off-market, simply because it was our acquirers, sometimes very well known, who asked us. They wanted more privacy. And the trend is getting stronger a little more each day.
But depending on the nationality of the buyers, things can vary a lot. The Chinese, for example, have a great need to be reassured and, to do this, the good they seek must be recognized and cited in a body of reference. All other foreigners, they, consider that exceptional properties, especially in France, must absolutely remain confidential, "says Balkys Chida-Klewer.
MONEY, SUBJECT TABOU
For sellers, however, the motivations are a little different. To sell an apartment with a view of the Eiffel Tower or a private mansion in the 16th arrondissement of Paris, it is free from the curiosity of the family, neighbors, spouse or ... IRS! The sellers, for the most part French, also thought until then that to communicate on the sale of a good made it possible to sell it more easily. "But since these goods, even exceptional, are put forward, they are overused, and can not boast of being rare. They lose their beauty and, at the same time, almost 20% of their value! "Says Balkys Chida-Klewer.
"In France, money is a highly taboo subject. And economic news pushes sellers to be even more discreet than normal ", analyzes Harold Parisot, leader of Harold Parisot Conseils. The latter, with experience in the world of luxury insurance for wealthy customers, created 4 years ago the first intermediation company on the French market, intended for a private clientele. His work ? Link sellers of exceptional goods and buyers with outstanding bank accounts. Without anyone, except the main stakeholders and their direct intermediaries, to know.
"There is a lot of competition in the high end, and this competition is very well placed. I had to differentiate myself. But the huge difference between a good off and a good one is discretion. Foreign buyers want products that no one else has access to. But in real estate agencies, even in luxury, as long as the good is visible by the common man, it is no longer good for them. In fact, Harold Parisot has made off-market real estate his core business.
THE GOOD INTERMEDIATE: NETWORK AND MIMETTISM
But is not the seller of exceptional off-market goods that wants. Thus, for Charles-Marie Jottras, "this discretion necessary for the sale of certain truly exceptional goods has always existed. The difference is that we do not use that expression. But this kind of transaction, for us who rely on the Christie's network, is usual for a long time. " The network is what it is. No one needs to be a real estate professional to become a prolific off-market seller. His best assets? His address book and an innate sense of mimicry. "It is obviously much more difficult to sell off-market than sell classic. The off-market needs to go for both the good and the buyer. In addition, in the high-end, and especially in ultra-luxury, you must have a cultural level and a suitable speech. On the contrary, a classic good sells almost on its own. Often, a well-made advertisement and beautiful photos on the Internet are enough to trigger the sale, "said Balkys Chida-Klewer.
Barnes even has a research department whose goal is to flush out potential wealthy clients. In other words, it's about not bloting among the elite. "I am not a real estate agent. My clients, I look like them, it's vital in the off-market. I frequent the same places, we have friends in common ... The only thing that distinguishes me from them is that I do not have their fortune, "laughs Harold Parisot. Add to that the unwavering support of tax lawyers, family offices and private banks, and you get transactions whose numbers make you dizzy.
Business model : volume oR real off-market ?
Amounts that make apprentices real estate agents dream. Admittedly, an agent specializing in off-market luxury real estate will be remunerated on the same commission basis as a traditional agent, ie approximately 3 to 7% depending on the amount of the transaction. And in this case, the higher the amount, the lower the commission. But a transaction to 40 million euros, even at 3% commission, still brings some 1.2 million euros!
If the big actors such as Féau, Barnes, Coldwell Banker or John Taylor, propose almost naturally to their wealthy - and often exposed - customers, this type of transaction "discreet", they primarily have for main mission to make the volume. And for good reason, at Daniel Féau for example, "our stock has gone from 3.5 billion to 5.7 billion euros since the last presidential elections. We have returned 500 new properties in 6 months and today have about 1,350 properties for sale, "lists Charles-Marie Jottras. Impossible to make volume by doing only the off-market, the latter being totally at the opposite of the fundamentals of trade. So sell softly, yes.
But do not expose any of these exceptional goods ... no! This is why Barnes distinguishes "off-market" and "real off-market". For off-market goods are, in this case, all gathered in a luxurious catalog for the 3,000 or so most affluent customers around the world. The real off-market is not the subject of any publication. "It's very difficult for us to call a potential buyer if we do not have the start of something to show him so that he can go to visit a property," Balkys Chida-Klewer explains. So we are still obliged to create an off-market file that serves as a showcase ... A way of saying to our customers: see what we can offer you off-market, imagine that we have even more prestigious in real off- market. "A method of procedure that goes totally against the current of that of a Harold Parisot, who prefers to look after his address book, his nerve of war, going from mundane receptions to mundane receptions, from mouth-to-mouth - ear in cooptation.
And paradoxically, it is only by exposing themselves a little in the media that these professionals of the confidentiality and the discretion can hope to multiply the annual number of their transactions: "the big agencies make volume. I realize between 2 and 4 transactions a year! If I was better known, I would probably have more sales, so logically, I must be a minimum exposed ... But it is not completely illogical. Look at private banks, they advertise, but at no point do they talk about their customers ... ", defends Harold Parisot.
Still, this phenomenon, for tax reasons and because there is, in France, a real political and social will to continue to hunt witches, may well be growing. This is evidenced by the number of off-market real estate players, like Harold Parisot, who are now on the Web. Follie's, Immobilière Clément, Unik & Luxury ... all highlight their ability to operate transactions in complete confidentiality.
The criteria of the exception
Certainly, it is difficult to imagine an exceptional property whose price range would be below 2 million euros. But beyond any financial consideration, a property of exception, prestige or luxury, call it what you want, must meet certain criteria that are immutable and, above all, absolutely essential.
Thus, the location must be not only indisputable, like the Avenue Montaigne in Paris, which remains, for professionals, a safe bet, but also fashionable. The residence of One Hyde Park in London has thus become the place to be of the biggest fortunes of the planet, and holds the record of the most expensive apartment ever sold in the English capital, at the beginning of May: 188millions euros for a duplex apartment of 1 500m2!
Another essential criterion: the view. No exceptional property without a clear view, or without a view of an iconic monument such as the Eiffel Tower or the Seine. Thus, on the website of Daniel Féau, a duplex of 524m2 overlooking the Eiffel Tower, the Louvre and the Place de la Concorde, is for sale 16.4million euros.
Materials and equipment, both indoor and outdoor, are also of great importance. Marble, air conditioning, carved stone, buildings signed by a renowned architect ... For example, the One 57, in New York, a building built by the French architect Jean Nouvel whose apartments are snapped up at a price of Gold is the most expensive residential building of the Big Apple. Moreover, DPLG architects or French interior designers are generally a guarantee of excellence abroad. The benefits of buildings or apartments exceptions must also meet the most stringent standards in terms of security and services: ultra-luxurious common areas, dogman and porter in livery, concierge integrated ... "Unfortunately, even if efforts are observable each year, in this case, Paris is good last, "says Balkys Chida-Klewer, business manager at Barnes Property Exception.
Finally, last essential criterion, and not least: the orientation. Because depending on the country of origin of the buyer - remember that beyond 5 million euros, the buyers are 100% foreign - it is not necessarily the south that will get a maximum of votes. Thus, for Chinese and Muslims (Gulf countries, Malaysians, Indonesians, Turks, etc.), a good should be oriented, preferably, to the east. For the first because the east is the mark of the rising, for the second because the good will be oriented towards LaMecque. The North can also become a privileged orientation, especially for South American or Maghreb nationals, who are exposed to the sun all year round. Some buyers even place special importance on the balance of energies. For Asians, the five elements of Feng Shui (wood, fire, earth, metal and water), if they are gathered in the same place, guarantee them a better quality of life and health, even excellent profitability for their business premises. Not difficult, foreign buyers ... but certainly demanding!