The Annual Christmas Tree Lighting is scheduled for December 8th at 5pm in front of the Gasparilla Inn and Club at 5th Street and Palm Avenue.
TWELVE DAYS OF CHRISTMAS
The height of the “Social Season” begins in late December, just in time for the launch of our Twelve Days of Christmas. With a new theme to each day, our special activities are sure to spark holiday magic for your entire family, right through the New Year. Festive decorations, cheerful caroling, classic holiday movies and gingerbread house decorating are just a few of the events offered during the Twelve Days of Christmas celebration at The Inn.
Hurricane season can severely impact many Florida communities. Gulf to Bay Sotheby’s International Realty is committed to supporting recovery efforts by providing a list of essential resources for those affected. If you or someone you know needs immediate assistance, this guide will help connect you with the right organizations.
The new global brand campaign “1 of 1” aims at positioning the Sotheby’s International Realty brand as the Curators of the Unique; connecting the world’s most distinctive homes with the most extraordinary lifestyles.
By adopting the notion of “1 of 1,” which typically refers to something one-of-a-kind, Sotheby’s International Realty showcases homes for a new era of luxury. This approach is defined by the company’s keen eye for a home’s special attributes and the unique experiences and lifestyles they offer.
This campaign builds on the brand’s strategy to connect with an emerging affluent generation of buyers that values individualism and self-expression, which reinforces the brand’s ongoing strategy to engage an important and growing audience, the emerging affluent.
The creative inspiration behind the campaign draws on the brand’s heritage by framing the homes like artwork inspired by global windows of the world.
The relationship between high art and noteworthy buildings is as old as civilization itself: think of the celebrated sculptures that once adorned the exterior of the Parthenon in Athens, or Michelangelo’s magnificent ceiling frescoes for the Sistine Chapel in Rome. And when it comes to residential properties, nothing enhances an extraordinary home like a carefully crafted art collection. Virtually every cover story in Architectural Digest illustrates this point: important paintings hanging on the walls of a Park Avenue apartment or a French Riviera mansion signify beauty, taste, and style, elevating the perceived value of a home.
Art’s power to enhance an extraordinary residence has been proven again and again over decades of high-profile sales, in which Sotheby’s International Realty offered the homes of collectors whose art was also brought to auction through Sotheby’s. A few cases in point: in 2013, the Modern art collection of Alex and Elisabeth Lewyt, headlined by a rare Paul Cézanne still-life, sold for a total of US$99 million across 23 auctions in New York and Paris, far above the presale estimate. Likewise, their New York townhouse, sold by Meredyth Hull Smith, senior global real estate advisor and associate broker, Sotheby’s International Realty – East Side Manhattan Brokerage, achieved US$8 million, while their Sands Point Long Island estate, represented by Daniel Gale Sotheby’s International Realty went for US$17 million.
That same year, Jack Cotton Jr., real estate advisor, Sotheby’s International Realty – Osterville Brokerage, sold Rachel Lambert “Bunny” Mellon’s Cape Cod estate for a record US$19.5 million. Mellon was one of the greatest art collectors and philanthropists in the U.S., and a sale of “masterworks” from her collection at Sotheby’s created a sensation in November 2014, when the single-owner auction flew past its estimate to bring in a total of US$159 million, while her jewelry achieved US$45 million, more than doubling expectations.
We continue to see the marriage of art and real estate in today’s homes. Michael Carucci, executive vice president, Gibson Sotheby’s International Realty in Boston, Massachusetts, credits “the fusion of fine art and luxury real estate” as central to his success in selling some of the most valuable properties in New England. “It is very typical for owners of homes worth US$10 million and higher to be collectors,” Carucci says.
He often invites artists to show their work in properties he is representing, transforming residences into galleries. In 2020, he commissioned celebrated Boston artist Giovanni Decunto to create a suite of paintings for One Dalton Four Seasons Private Residences; the eventual purchaser of the US$7.2 million apartment fell in love with the paintings and bought them as well. Carucci is currently offering a US$10.9 million Boston penthouse at 1 Franklin Street; its owner is a well-known mega-collector, which has already sparked high buyer interest.
Like Carucci, Tania Toubba, real estate advisor, Sotheby’s International Realty – San Francisco Brokerage, recognizes the uncanny power of art to sell a home. “There is no better way to create environments that resonate with discerning buyers than to showcase a carefully curated art collection,” says Toubba. She is currently offering a sensational 8,000 square foot oceanfront residence in the Sea Cliff neighborhood of San Francisco, California, priced at US$26 million.
To show the house to its best advantage, she brought in artist Paul Rusconi to curate a collection of paintings, sculptures, and works on paper by blue chip masters including Robert Rauschenberg, Elaine de Kooning, John Chamberlain, and Damien Hirst. The launch event was treated like a gallery opening, attracting top-tier brokers, architects, designers, and builders. “It was a bold move that paid off,” says Toubba. “Our guests were blown away. The profound reaction to the installation affirmed that individuals develop a deeper emotional connection to a property when showcased with art.”
While finding the perfect luxury home can be time-consuming, buyers have a plethora of publicly available sales data to help them assess the particular market they are interested in. When it comes to high-end art, however, the market is famously one that is closely guarded, with fewer data sets available to the public, which has given rise to an industry of advisers, dealers, and other experts. For the uninitiated, entry into this world can feel daunting. Fortunately, a handful of publicly available art market reports provide hard data and important context that can be helpful for anyone contemplating the purchase of investment-grade art.
Foremost is the annual Art Basel and UBS Global Art Market Report. The latest edition, released in March 2024, provides the broadest assessment of the current global art market and is considered the most reliable. According to the report, the global art market totaled US$65 billion in 2023. This figure, which includes sales at auction and through galleries, is slightly below 2022, but still above pre-pandemic levels. The U.S. remains the largest market for art in the world, accounting for 42% of all sales (US$27.2 billion). For the first time, China surpassed the U.K., becoming the second biggest national market; a 9% year-on-year increase brought that country’s total sales to US$12.2 billion. The report credits post-Covid demand and the return of art fairs to Hong Kong as fueling that dramatic growth.
Sotheby’s auction house has seen participation in auctions grow substantially since the start of the pandemic, largely due to the rise of online auctions and an increased focus on digital marketing. Year-end statistics show that the number of bidders increased 28% from pre-pandemic levels, in 2019. Last year saw an astonishing 11% growth in bidders from 2022, of which 44% were new customers. To meet increased demand, Sotheby’s now mounts 25% more auctions than in 2019, and offers many more items estimated at less than US$10,000. Interestingly, the luxury categories—watches, jewelry, and wine—fueled much of this growth and are now the biggest entry point for people interested in trying out the auction experience.
When buying real estate, the old maxim is that location is everything. For art, it is artists who power the market, and the most recent Sotheby’s Insight Report, published by the auction house in March and December 2023, identifies the 50 most bankable. While it is impossible to predict the future of the market with certainty, works by these artists have proven to be the most coveted over the past five years, and thus the most likely to maintain or increase in demand. All artists included in the top 50 today were born in the 19th and 20th centuries. Here are a few key takeaways for those considering investing in the high end of the art market.
The Five: Picasso, Monet, Warhol, Basquiat, and Richter
The art market is a pyramid, with tens of thousands of artists at the base whose prices are extremely affordable but aren’t likely to increase in value. The top end is much more selective: fewer than 900 artists have sold works at auction for more than US$1 million over the past five years, and just five account for a third of the total market during this period. Pablo Picasso, Claude Monet, Andy Warhol, Jean-Michel Basquiat, and Gerhard Richter never go out of style. The first four are among the few whose individual works have surpassed US$100 million at auction.
Women Ascendant
For most of recorded history, women were prohibited from becoming artists, and the few who overcame these restrictions were either ignored or relegated to second-class status, with little institutional support. As a result, they are underrepresented in museum collections, and were rarely the subject of career-making exhibitions. That is starting to change, as major museums focus more curatorial attention on female artists from all periods and the auction market realizes their potential. Leading the pack is the Abstract Expressionist Joan Mitchell, the first woman to break the US$10 million barrier at auction. She ranks at 17 in the top 50 by total sales, followed by Yayoi Kusama at 19, British painter Cecily Brown at 39, and Helen Frankenthaler at 47. Women have made tremendous gains in the market, but with just five represented in the top 50, there is still a long way to go.
Michael Carucci commissioned Boston artist Giovanni Decunto to create paintings for this One Dalton Four Seasons Private Residences apartment.
Top 5 US$1 million+ artists by value 2018-2023
Rank
Value of lots sold
Number of lots sold
1. Pablo Picasso (1881-1973)
US$2,467,417,757
278
2. Claude Monet (1840-1926)
US$1,506,471,768
2 96
3. Jean-Michel Basquiat (1960-88)
US$1,247,628,262
117
4. Andy Warhol (1928-87)
US$1,164,438,003
148
5. Gerhard Richter (b.1932)
US$849,834,052
107
Source: Sotheby’s Insight Report: The Artists Who Power The $1 Million+ Market.
A New Generation
The fastest-growing segment at the upper end of the fine-art market is dominated by young artists, which the report defines as those born in 1977 or later. Romanian artist Adrian Ghenie and Canadian Matthew Wong, who died at age 35 in 2019, both made it into the top 50, but several up-and-coming artists, notably 34-year-old British Flora Yukhnovich and 41-year-old Nigerian Njideka Akunyili Crosby, have injected excitement into the market, with rising prices resulting from the surge in demand.
Asian Opportunities
Works by several Chinese painters, including Zao Wou-Ki, Zhang Daqian (a protean figure who is often compared to Picasso), Sanyu, and Liu Ye, are among the most valuable in the world, but these artists are little known outside of their home country and their markets have generally been limited to buyers within China. Given the depth and quality of their work, it seems only a matter of time before the rest of the collecting world catches up. By contrast, Japanese artists Yayoi Kusama and Yoshitomo Nara have international followings: in fact, Kusama’s star keeps rising, perhaps because her recognizable art has become central to Louis Vuitton’s international advertising campaigns.
As with real estate, the fine art market experiences ups and downs. Education is key to understanding the market, and there are now more resources than ever before to judge its value. But regardless of its investment potential, great art has an uncanny ability to elevate a home—and add immeasurable pleasure to the lives of its occupants.
Sotheby’s Concierge Auctions accelerates the way luxury properties are bought and sold
Some have probably never considered the possibility of selling their luxury real estate at auction. They may not even be aware that such an option exists, and could even be forgiven for thinking a property auction is not something one chooses but is forced to turn to following financial hardship. They would probably be surprised to learn that the average price for the top 10 properties sold through Sotheby’s Concierge Auctions in 2023 was US$18.2 million. The year before it was US$20.3 million.
“It’s a great way to arrive at market value,” says Chad Roffers, co-founder and chief executive officer, Sotheby’s Concierge Auctions. A case in point is the Southampton, New York property La Dune, which sold at auction for US$88.48 million in March 2024. The historic estate on Gin Lane was once the most expensive listing in the Hamptons.
The first property to be sold live alongside art at Sotheby’s, La Dune received bids from seven individuals based in New York, Connecticut, Georgia, and the Caribbean, competing in the room and via telephone. A single buyer, based in New York, eventually secured the full property for more than twice his opening bid.
“Our partnership with Sotheby’s Concierge Auctions is a great benefit for our clients,” says Philip A. White Jr., president and chief executive officer, Sotheby’s International Realty. “The buyer pool for luxury properties is small, so for sellers who want to move quickly, the auction route allows them to sell a property—anywhere in the world—in just five weeks. Using this approach, we can target buyers who have the means and interest in luxury properties, enabling them to achieve fair market value.”
Cascade Hasson Sotheby’s International Realty
Indeed, one of the key takeaways from the Sotheby’s Concierge Auctions’ Luxury Home Index, last published in 2023, is that buyers looking for luxury properties are a select few, which means these homes can take longer to sell. “In our experience, if you don’t sell your property within 90 days of it coming on the market, it’s probably going to take you much longer,” says Roffers, adding that in some cases that can mean as long as three years.
As part of the auction process, over a period of 35 days, Sotheby’s Concierge Auctions usually fields nearly 500 inquiries per home listed for auction. This number is quickly winnowed down, and after 25-50 in-person visits to the property, each lot ends up with five to seven bidders, on average.
According to Frank Aazami, real estate associate, Russ Lyon Sotheby’s International Realty in Arizona, the Sotheby’s Concierge Auctions platform “expands the buyer pool for our sellers,” and that when it comes to managing a diverse portfolio of luxury properties around the world, “expediency is crucial.” Aazami adds that the auction format “allows us to move through the process efficiently.” In September 2024, his firm is collaborating with Sotheby’s Concierge Auctions to offer a significant guard-gated residence in the exclusive Saguaro Forest Community of Desert Mountain, in Scottsdale, Arizona.
Luxury homes also tend to have less quantifiable features, such as bespoke architecture or customized amenities. “These are unique assets, but they can be difficult to price,” Roffers says, “and you’re looking for a very specific kind of buyer who doesn’t always come along at the same time you are selling.”
He adds that many buyers are shopping for a third or even fourth home, which means geography and the type of home ranks behind their first priority, which Roffers describes as “lifestyle.” Sotheby’s Concierge Auctions bidders can browse its properties and mentally picture the lifestyle they might pursue there.
“Maybe they want to spend time in a warm place on the beach, or maybe they want to buy in a city with all the attendant museums and culture. They are constantly on the lookout for unique situations,” Roffers says. “We auction exceptional properties in interesting communities. Moreover, buyers get the opportunity to pay a truly market-driven price.”
This could mean that a person bidding on a Hamptons compound might not have even been shopping for a beach house when they checked out Sotheby’s Concierge Auctions. “We just sold a property in the ski resort of Vail for US$20 million,” says Roffers. “The buyer also spent US$3.5 million with us on a house in Texas.” Roffers estimates that three out of 10 bidders have not seen the property they are bidding on. They might have sent a representative to examine it before the auction but have not necessarily stepped through the front door until move-in day.
Most of the company’s auctions take place online, but there have also been live components at the headquarters of Sotheby’s auction house in New York, London, and Hong Kong, which is exciting to witness. “I remember one person was there in the room and she had her paddle raised the whole time,” Roffers says. “She was on the gas out of the gate and didn’t stop until she won.”
Roffers emphasizes that Sotheby’s Concierge Auctions is a good choice for a broad range of sellers. “The main thing I’d tell sellers is the sooner they decide to use us the better,” he says. “If the property hasn’t sold within 90 days, that’s the best time to get us involved.”
Above and Beyond at Auction
The spectacle of the auction room has been known to give rise to a competitive spirit among potential buyers. For example, according to a 2022 study shared by the American Economic Association of bidding behavior at housing auctions in Norway, researchers found that “competition is associated with higher sale prices, shorter bid deadlines, shorter intervals between subsequent bids, smaller bid increments, shorter time-on-market, and a higher sell-ask spread. Moreover, bidders who are unsuccessful in earlier auctions tend to increase their maximum bid as the number of unsuccessful attempts increases.”
How the nearby presence of cultural institutions can affect luxury real estate markets
American urban planner and theorist Kevin Lynch observed in 1960 that “as an artificial world, the city should be so in the best sense: made by art, shaped for human purposes.” This credo, advocating for cities to be artfully designed environments tailored to the needs of its residents, has taken on different forms in the years since, but a perennial truth is that substantial cultural investment is an essential element of urban life around the globe.
This notion is also backed by national statistics about the growing importance of culture on society. According to data released in March 2024 by the National Endowment for the Arts and the Bureau of Economic Analysis (BEA), the economic impact of the arts and cultural industries in America, for example, “hit an all-time high in 2022, contributing 4.3% of GDP, or US$1.1 trillion, to the U.S. economy.”
The history of harnessing cultural resources in the service of community-building is long and rich. In major cities such as New York, “luxury residences have built up around cultural concepts such as public spaces, the arts, and restaurants,” according to Stan Ponte, senior global real estate advisor, Sotheby’s International Realty – East Side Manhattan Brokerage. For example, Manhattan apartments near the Lincoln Center for the Performing Arts, opened in the 1960s, remain in high demand, Ponte notes.
Likewise, the High Line, a once-abandoned elevated rail line in the Meatpacking District that was converted into a public park in 2006, studded with rotating sculptural installations by high-profile contemporary artists, “has resulted in one of the most sought-after neighborhoods, with residential prices reaching as high as US$6,000 per square foot in 2024,” Ponte says. In comparison, the average price per square foot in Manhattan in 2024 is US$1,500, according to Realtor.com. “When the High Line opened in 2009, the average condo price was US$1,596,279. In 2023, the average price stood at US$4,345,027,” Ponte adds.
The High Line soon attracted other cultural institutions, such as the Whitney Museum of American Art, which moved into its Renzo Piano-designed building in 2015, and a flood of art galleries, restaurants and shops.
Most intentionally established cultural districts “start from somewhere,” says Daniel Payne, managing principal, AEA Consulting, a company based in London and New York that set up the Global Cultural Districts Network in 2013, whose members include policymakers, planners, and executives consulting on international development projects. Payne says a respected institution often provides the anchor for a dynamic neighborhood, such as the Brooklyn Academy of Music in New York or the Dallas Museum of Art in Texas. Other public projects, such as Millennium Park in Chicago, Illinois, introduce a different dynamic that generates new real estate value. In Hong Kong, the arrival of the Art Basel fair and an influx of galleries show how “residential real estate moves to follow the creative dollar,” adds Payne.
Cultural events also have the power to attract a wider clientele to the local real estate market. According to ONE Sotheby’s International Realty agent, Elena Bluntzer, the arrival of the Art Basel fair in Miami Beach in 2002, which city officials estimate contributes US$500 million to the local economy, as well as the development of the Miami Design District, have been transformative for the area—especially in the past few years. “Art Basel is a perfect fit for Miami’s eclectic tastes. Many of my clients are serious art collectors, so it’s crucial to find properties that complement and showcase their collections. Fortunately, Miami offers an abundance of such homes, making it an ideal market for art enthusiasts.”
The St. Regis Residences Brickell, designed by Robert A.M. Stern Architects, where ONE Sotheby’s International Realty is the exclusive listing partner, is “one of the most exciting, ultra luxury buildings in Miami right now. The architects and the developers have gone above and beyond expectations attracting the most discerning buyers to our dynamic city,” adds Bluntzer.
During Art Basel in Miami Beach last year, artists Caitlin Lonegan and Jongsuk Yoon even displayed their works in the building’s Sales Gallery.
To gauge the effect new or existing cultural institutions can have on the price of residential real estate, we asked six Sotheby’s International Realty leaders from cities around the world how the presence of galleries, museums, and other venues have had an effect on their local property markets.
Doha
The country’s sustainable development plan, Qatar National Vision 2030, was enacted in 2008, and the capital has been swirling with activity ever since. “The focus on art, education, and architecture is not just transforming the physical skyline of Doha but also enriching its cultural fabric, positioning the city and country as a beacon of innovation in the region and beyond,” says Zhanna Yerkozhanova, general manager, Qatar Sotheby’s International Realty.
Cultural initiatives and residential real estate are a compelling symbiotic formula. Msheireb Downtown Doha is one such mixed-use development that, Yerkozhanova says, “combines traditional Qatari heritage with modern design and sustainability principles.” The inaugural Design Doha biennial launched in February 2024, and destinations such as the National Museum of Qatar—designed by Jean Nouvel and opened in 2019—have further advanced the various Qatar Museums projects led by Sheikha Al-Mayassa bint Hamad bin Khalifa Al Thani under the patronage of her brother, the Emir of Qatar.
“We are investing in nothing less than a complete cultural infrastructure,” says Ahmad Al Namla, chief executive officer, Qatar Museums, in a promotional report published through The Wall Street Journal. “Since 2008, we have launched four new world-class museums, with another four in development; built incubator hubs for emerging artists and creative entrepreneurs; and strengthened cross-cultural cooperation through the bilateral Years of Culture initiative. We have also established exhibition galleries and events, preserved UNESCO World Heritage Sites, and installed 100-plus works of public art.”
While real estate transactions totaled US$4.6 billion in 2023, this was a decrease from the amount seen during 2022, when the excitement around the World Cup helped push transactions up to US$5.8 billion, according to a report issued in February 2024 by local company Hapondo. But investment in rental properties remained strong, according to data gathered by the Real Estate Registration Department of the Qatar Ministry of Justice, with sales of residential units totalling US$754 million in 2023, a rise of 82% from the year before, when they made US$414 million. The average price for residential properties also increased by 26% over the same time, from US$576,000 in 2022 to US$724,000 in 2023, according to the government figures.
“While the quantitative impact of cultural institutions on real estate values in Doha might vary, their overall contribution to making areas more attractive for high-end real estate investment is significant,” says Yerkozhanova. “The proximity to these institutions is more than a ‘nice to have,’ it is an asset to both the tangible and intangible value of luxury real estate in the city.”
Mexico City
It sometimes feels impossible to open Instagram without spotting swoon-inducing images of lush, plant-filled living spaces outfitted with cutting-edge interior design and art in Mexico City. The country’s capital is clearly on a hot streak, infusing yet more verve into its already robust art and design scene.
The international clientele served by Mexico Sotheby’s International Realty agent Mirari García Alcocer are drawn to Plank, as well as the hip hubs of Colonia Roma and La Condesa. “In Polanco you have shops, entertainment, theaters, and a lot of affluence,” she says. It’s near the city center but offers a breather from the intensity of Centro Histórico. García Alcocer points to the prestigious, leafy Polanco streets of Campos Eliseos and Rubén Darío as commanding the highest sales figures, ranging from US$836 to US$1,114 per square foot in 2024, given their proximity to Chapultepec Park, the National Museum of Anthropology and the Museo Tamayo of contemporary art.
Two attention-grabbing newer attractions—the Museo Soumaya, which houses billionaire Carlos Slim’s extensive collections of art and antiquities, and the Museo Jumex, a wide-ranging collection of contemporary art—are about 3km away in what has been dubbed Nuevo Polanco. With recent figures hovering at approximately US$275 per square foot in 2024, properties in this up-and-coming area don’t command as high a price just yet, and so pose appealing investment potential, García Alcocer says.
She believes these major cultural institutions have enhanced Mexico City’s appeal, as has the burgeoning art gallery cluster in San Miguel Chapultepec. “For some people, nearby cultural landmarks are a significant factor that can influence their choice of neighborhood or property. For others, they are viewed as desirable amenities within a wider urban ecosystem.”
Singapore
Global finance and cultural heritage thrive side-by-side in the carefully planned capital of the city-state. The future seems to have already arrived at cutting-edge sites such as the Marina Bay Sands resort, Marina Bay Financial Centre, and within the horticultural splendor of the Gardens by the Bay nature park—which is part of Singapore’s signature “garden city” vision of sustainability through livable density, first introduced by Prime Minister Lee Kuan Yew in 1967. Today, almost 50% of the city is devoted to green space, according to the government, and its ambitious Green Plan aims to make 80% of Singapore’s existing buildings eco-friendly by 2030.
Meanwhile, in the Civic District, prioritizing adaptive reuse and sensitive conversions have ushered in new chapters for the former City Hall and Supreme Court, which have been transformed into the National Gallery Singapore. In 2004, the Old Parliament House, built in 1827 and one of the oldest buildings in the city, became The Arts House, a venue for exhibitions and concerts. Similarly, Gillman Barracks is a cluster of contemporary arts organizations housed in a former military barracks that was built in 1936.
New projects include a Singapore outpost of Japan’s Whitestone Gallery and the New Art Museum Singapore, which share a 20,000 square feet building designed by architect Kengo Kuma—the largest art space in Southeast Asia, according to the organizers. Kuma is also co-designing a new Founders’ Memorial in the Bay East Garden with the local firm K2LD Architects, which is due to be completed in 2028.
Culture is an important pillar of society for the Singaporean government, which released an updated Heritage Plan in July 2023. According to the report, the country’s National Heritage Board, “recognizes the economic potential of heritage and aims to use it in order to invigorate Singapore’s cultural industries and boost our cultural capital both at home and abroad.”
Nancy Tey, senior associate vice president, List Sotheby’s International Realty, Singapore, says recent government efforts to incentivize more housing construction in Singapore’s Financial District means “it remains vibrant and lively at night and on weekends.” She adds that “there is a strong rental market in the city, as expatriates prefer to live close to their place of work and to places of interest and entertainment.”
While the price of private housing in Singapore is closely regulated through government policy to maintain stability, says Lewis Cha, executive director, List Sotheby’s International Realty, Singapore, “connectivity to amenities—whether cultural or commercial—would tend to increase the appeal and value of well-constructed residences that are within proximity.” This may be why prices for private homes in Singapore have steadily risen in recent years, climbing by 1.5% in the first quarter of 2024, compared with the previous three months, according to estimates released by the country’s Urban Redevelopment Authority.
Hong Kong
As Art Basel, Art Central, and Sotheby’s Hong Kong Sales converge at the Convention and Exhibition Centre every spring, the city experiences an invigorating charge. This energy, however, isn’t limited to one particular season. May Teng, business development manager, List Sotheby’s International Realty, Hong Kong, says momentum has been building as “blue-chip galleries and new auction houses open in landmark locations.”
This year, Sotheby’s auction house in Hong Kong will move to a new headquarters at Six Pacific Place and open a 24,000 square feet maison at Landmark Chater. The West Kowloon Cultural District is already solidly on the map, with the ambitious M+ museum, which opened in 2021, and the new Hong Kong Palace Museum.
Teng cites strong interest in the Harbourside towers in West Kowloon as an example of how proximity to a cultural and business hub drives up prices. During the first quarter of 2024, the building marked a record sale at over US$13.5 million, Teng says, translating to more than US$7,700 per square foot, while the average transaction for the three-tower complex constructed above Kowloon Station lands at around US$4,300 per square foot.
The city’s recently changed fiscal policy is another key factor. In February 2024, says Teng, the Hong Kong government “scrapped all ‘property cooling measures’ with immediate effect.” This means that three separate stamp duties levied on property sales have been abolished. “We welcome all international buyers to invest in property in Hong Kong, including global art collectors and investors who value international opportunities, luxury, art, and lifestyle,” she adds.
Los Angeles
“For high-net-worth buyers, the world’s playground is in Los Angeles. Three hundred days a year we have beautiful weather,” says Marc Noah, real estate advisor, Sotheby’s International Realty – Beverly Hills Brokerage. In recent years, Los Angeles has also become a cultural metropolis, with the arrival of the Frieze art fair in 2019 boosting the development of the gallery scene.
In the Mid-City area, a much-anticipated building designed by Peter Zumthor to house the David Geffen Galleries of the Los Angeles County Museum of Art (LACMA) is slated to open later this year. This will join the museum’s existing buildings by Renzo Piano, the Italian architect who has also made a significant imprint next door at the Academy Museum of Motion Pictures, which debuted in 2021.
LACMA’s permanent public art installations, including Chris Burden’s “Urban Light,” 2008, which the Los Angeles Times has called one of the “city’s most popular landmarks and tourist attractions,” have already transformed the foot traffic in the area, making the stretch of Wilshire a regular stop for visitors and Instagrammers.
Noah still sees the highest demand for luxury properties in the famed 90210 Beverly Hills zip code, where the average price per square foot is US$1,487, compared to a city-wide average of US$718, according to Realtor.com. He says that living near LACMA and the Petersen Automotive Museum in communities such as historic Hancock Park and Beverly Grove “is a benefit buyers get, but it’s not the only driving force.” He adds: “You get a great neighborhood, walkability, and a convenience factor.”
In a decentralized city such as LA, the presence of these institutions and other destinations, such as the Getty Center in West LA and Downtown’s Broad Museum and the Museum of Contemporary Art, help to anchor their neighborhoods, attract visitors, and nourish the general cultural climate. “Downtown has changed because of cultural districts, and MoCA has been there 30-plus years now,” Payne of AEA Consulting observes about LA. “Disney Hall and the Broad opened and that’s created some changes to the environment there.”
Dallas
Covering 118 acres of downtown Dallas, the Dallas Arts District is the largest contiguous urban arts district in the nation, according to the non-profit organization that manages its development. The district dates its foundation to 1984, when the Dallas Museum of Art opened its Edward Larrabee Barnes-designed building, and since then a number of significant cultural facilities have joined the neighborhood, including the AT&T Performing Arts Center, a US$354 million campus that opened in 2009 and includes an opera house, a 12-story theater, a public park, and 2,500-seat outdoor performance space.
More recently, a number of luxury residential high-rises have cropped up, such as Museum Tower, which was exclusively represented by Briggs Freeman Sotheby’s International Realty. The company is also the exclusive brokerage for the Hall Arts Residences, a 28-story tower overlooking the Dallas Arts District that includes just 49 luxury homes, including three penthouse apartments.
“Hall Arts Residences has—quite literally—pushed the height of luxury to new levels in the Dallas condominium market,” says Kyle Richards, real estate advisor, Briggs Freeman Sotheby’s International Realty. “It is also the first building in Dallas to achieve across-the-board sales at more than US$1,100 per square foot, during phase one of the project. The newly unveiled Masterpiece Collection—the last new homes available, on floors 20 through 25—is averaging more than US$1,300 per square foot. Two full-floor, custom-designed penthouses are being offered at an average of more than US$2,500 per square foot.”
Comparatively, the average asking price for a condominium tower apartment in Dallas is US$560 per square foot, Richards says, and the average sold price is US$460 per square foot. “The average sales price for all condominium sales activity in Dallas County is US$300 per square foot,” Richards says. “That goes to show the importance of putting an emphasis on services, amenities and quality finishes in a superior location, such as the Dallas Arts District.”
As these locations show, cities shape their inhabitants, and vice versa. This reciprocity can reach its most dynamic potential when eager audiences have easy access to forward-thinking institutions, which in turn become part of the fabric of everyday life. That’s artful living, indeed.
What will the anticipated drop in U.S. mortgage rates mean for real estate markets?
An intensely awaited development for the U.S. housing market this year is a long-anticipated fall in interest rates. While inflation has dropped over the past year, this progress has been slow, and officials within the Federal Reserve, the country’s central bank, have kept interest rates at 5.25% to 5.5%—a 23-year high—since July 2023.
Where the Federal Reserve leads, mortgage rates follow. The average 30-year rate reached a peak of 7.79% in October 2023, the highest level in 20 years, according to national mortgage lender Freddie Mac. As a result, property sales have been on a steady decline over the past three years, based on U.S. Census data. The difficulty in securing a property during this higher-rate cycle even led U.S. President Joe Biden to comment on the issue in his State of the Union address in March 2024.
He proposed a US$10,000 tax incentive designed to encourage first-time buyers and those wanting to sell their starter homes. “I want to provide an annual tax credit that will give Americans US$400 a month for the next two years as mortgage rates come down to put toward their mortgage, when they buy a first home or trade up for a little more space,” he said.
With another presidential election taking place in November 2024, concerns that the Federal Reserve’s decision on rates might be further delayed were dismissed by its chairperson Jerome Powell, who said the bank’s policymakers will “do what we think is the right thing, when we think it is the right thing.”
Industry experts expect borrowers to get a bit of breathing room by 2025, however. The Mortgage Bankers Association estimates that rates will fall to about 5.9% by 2025, while Wells Fargo has made a similar forecast of 6%. In mid-June 2024, the Federal Reserve projected that it would only make one cut to interest rates this year, with Powell saying the “restrictive” policy “is having the effect we would hope for” in stabilizing the economy.
“I believe we can say with some certainty that U.S. mortgage rates will be lower at the end of the year,” says Anthony Chan, former chief economist, JPMorgan Chase. He anticipates that the rate at the end of 2024 will be around 6.4% and will fall to 5.9% in 2025.
“As buyers see lower rates, they will be less worried about the ‘lock-in effect’—the hesitancy of selling their house if it means taking out a higher-rate mortgage for their next home,” adds Chan. “This will ultimately support housing activity if the economy avoids a slowdown.” Fears of a downturn have dropped significantly, with JPMorgan Chase reversing its prediction in 2024. At a speech at the Economic Club of New York at the end of April 2024, the bank’s Chief Executive Officer Jamie Dimon said the economy was “booming,” adding that “the American consumer—even if we go into recession—is much wealthier than before.”
Less Means More
While leading institutions predict interest rates will decline, homebuyers face other roadblocks to securing a property: rising prices and low inventory. Although the number of homes on the market has risen this year, according to data released by the National Association of Realtors in April 2024, the projected time it would take for this current inventory to run out if no additional homes were built or offered for sale is 3.2 months—well below the six-month national average. Inventory for newly built homes is above this average, at 8.3 months, according to U.S. Census data.
This, in turn, could create upward pressure on prices until inventory reaches normal levels. Investment bank Goldman Sachs estimates that property prices will rise in the U.S. due to pent-up demand. According to Roger Ashworth, the firm’s senior strategist on its structured credit team, and analyst Vinay Viswanathan, home prices could rise by 5% in 2024, and by 3.7% in 2025.
J.P. Morgan Private Bank advised its clients in April 2024 that “now is a good time to buy a luxury home.” The bank said this was because the luxury market “is not impacted by changing mortgage rates like the overall housing market is” but is driven by increases in total net worth. “A post-pandemic surge in the total wealth of the top-income households… has spurred dramatic gains in luxury housing prices,” the bank added, and “that shows no signs of abating.”
Cities such as Chicago, Illinois are already seeing this effect. “Lincoln Park has been more in demand than I have seen in 20 years due to the lack of inventory and the healthy amount of appreciation over the past few years,” says Sam Jenkins, vice president of sales, Jameson Sotheby’s International Realty. “Good inventory that is priced correctly is few and far between.”
Despite the 5%-10% increase in prices, he says the Chicago market is fairly accessible. “But the time is now if you are looking at the big picture in the long-term,” adds Jenkins. “By next spring it could be a frenzy again, with multiple bids and more demand waiting in the wings.”
In New York City, prices could be tempered as sellers who have been waiting for a year or more finally list their properties. “It is likely that as interest rates fall, sellers will feel more bullish about the market and finally list their ‘warehoused properties,’” says Jonathan Hettinger, senior global real estate advisor, Sotheby’s International Realty – Downtown Manhattan Brokerage. “This increase in supply could limit the price appreciation we would normally expect in a declining interest rate environment.”
In New York City, the market for luxury properties selling above US$4 million has been somewhat insulated from the rise in interest rates. “This is because many such purchases are done on an all-cash basis,” says Hettinger. “It’s likely that a decline in interest rates will impact lower-priced properties more than those at the top end. Cash buyers always have a major leg-up on buyers who require a mortgage—I don’t see this changing.”
George Ballantyne, global real estate advisor, Gibson Sotheby’s International Realty in Boston, Massachusetts, agrees. “I don’t think I have any luxury buyers who have mentioned interest rates during their search or negotiation,” he says. These buyers have other sources of financing and their offers are not contingent on them obtaining a mortgage, adds Ballantyne.
A similar effect is seen on the West Coast, where “many Bay Area residents have access to substantial assets, whether they are personal or familial,” says Alex Hachiya, senior real estate advisor, Sotheby’s International Realty – San Francisco Brokerage. “Now more than ever, sellers prefer to work with buyers who make all-cash offers.”
Hachiya also echoes a warning about waiting for interest rates to come down, as this “will most likely mean buyers will end up paying a higher purchase price, since additional buyer activity will drive prices up.”
In general, a more important factor in the luxury field is how U.S. equity markets are performing and what returns are being generated, says Chan. “If investors are doing well, as they did in 2023 and have so far in 2024, that will boost demand for luxury housing.” Buyers who have seen massive gains in their stock market portfolios may also opt for slightly more expensive homes when interest rates start declining, he says, as a way to secure those profits.
Global Ripples
Global financial markets are interconnected, so a change in U.S. interest rates affects capital flows in other countries, which in turn can lead to changes in interest rates, says Paulo Fernandes, owner and CEO, Paris Ouest Sotheby’s International Realty in Paris, France.
Europe’s real estate markets have already seen some softening—prices for residential properties declined by 0.3% in the EU in 2023 and 1.1% in the Eurozone, based on data from Eurostat released in April 2024. The largest drop occurred in Germany (7.1%) where economic growth has been slow, while prices rose in Bulgaria (10.1%), Croatia (9.5%), Lithuania (8.3%), Poland (13%), and Portugal (7.78%) due to higher growth.
Any impact felt in France from falling interest rates in the U.S. will be “indirect, complex, and may take some time to materialize,” says Fernandes. “It is difficult to give a precise time frame, as it depends on many factors and how the financial markets and central banks react to the new conditions. The national economy and the state of the political sphere should also be taken into account. These can attenuate or amplify the impact.”
The same applies on the other side of the world. “If interest rates increase, the yen will appreciate, which may impact the number of inbound clients for a bit,” says Mugi Fukushima, director, List Sotheby’s International Realty, Japan. “Overseas clients account for 30% of our clientele, so we’re watching what happens [in the U.S.] quite closely.”
“Some estimates suggest that it takes between one and two years for U.S. monetary policy to have its maximum effect,” says Julian Brown, managing director and founder, New Zealand Sotheby’s International Realty. “However, there is a large degree of uncertainty because the structure of the economy changes over time, and conditions vary.”
Fluctuating exchange rates are important to how attractive the New Zealand property market is. “We have a lot of international interest, especially from the U.S., due to the weaker New Zealand dollar,” says Brown. Buyers who are interested in purchasing homes in New Zealand also have more flexibility when it comes to mortgages, as they can be split into multiple loans at different terms and rates.
Buyers in the U.S. should also be aware that while 7.55% may be the standard for a 30-year fixed-rate mortgage there now, they vary globally, averaging 3.95% in France for example, or as high as 11.01% in Mexico, where most property deals are primarily done in cash. These rates are influenced by various factors, including the monetary policy of central banks, the local inflation rate, and each country’s economic growth.
“The bottom line is that residential real estate markets in the United Kingdom, Europe, and Asia are influenced by economic growth, while luxury markets are more influenced by local equity markets,” says Chan. “In Asia, Thailand and Malaysia are facing some growth headwinds. After a recession, New Zealand may recover during the second half of the year. South Korea is expected to enjoy stable economic growth. Japan may be slowing down, but is coming back with a booming equity market, which should boost sales of real estate.”
Mortgage rates vary widely across the world, as does the typical term of a loan. There are also many variations in the types of deals offered by mortgage lenders, from long-term or time-limited fixed-rate deals to variable rate loans tied to the current interest rate.
Speak with your Sotheby’s International Realty Global Advisor to learn more today.
More than half of the world’s population will vote in national elections this year, so how will political change affect real estate markets?
This year marks an unprecedented wave of national elections across the globe. According to Reuters and The Economist, about half of the world’s voting-age population—over four billion people spanning nearly 80 countries that collectively account for more than 60% of global GDP—will be eligible to cast their ballots in what Time magazine has dubbed “the ultimate election year.”
The most closely watched election is in the U.S., the world’s largest economy and third-largest nation by population, which will elect its next president in November 2024. The Democratic and Republican party platforms’ approaches to real estate are starkly different. Democrats are looking to improve housing affordability through initiatives such as tax credits and down-payment assistance, while Republicans aim to stimulate economic growth through pro-business, low-tax, low-regulation policies.
“The U.S. 2024 presidential election represents a critical moment for investors and financial analysts around the world—with the potential to have an impact on several areas, from economic policies to specific markets, the outcome could shape the global economic future,” says Renata Victorino, director, Bossa Nova Sotheby’s International Realty in São Paulo, Brazil. Victorino and her colleagues in South America are keeping a keen eye on what is happening in the U.S., even as municipal elections take place in Brazil in October 2024 to decide the leaders in more than 5,000 cities and towns across the country.
Meanwhile, in other areas of the world, India—the largest nation by population—started its massive six-week election process in April 2024 and voting for the parliament of the 27-member European Union took place in June 2024.
These events could have a dramatic effect on real estate markets for years to come, with the outcomes already playing out in countries that held elections in the first half of 2024, and the anticipation of changes in the political landscape felt in countries that have yet to hit the polls.
The Election Effect
“Historically, the housing market tends to experience a slowdown in activity during presidential election years,” according to a report issued by the Nationwide Mortgage Bankers in March 2024. “This trend is particularly noticeable in the months leading up to the election as individuals prioritize political developments over real estate decisions.”
“Every election year the market typically softens,” says Claire Reynolds, managing partner, United Kingdom Sotheby’s International Realty in London, who has been involved in luxury property sales for two decades. “Uncertainty can create a wait-and-watch attitude, resulting in a market with temporarily subdued growth.”
Christie-Anne Weiss, global advisor, TTR Sotheby’s International Realty, Washington, D.C., who has more than 40 years’ experience in navigating the market during presidential elections, agrees. “From my experience, what we see again and again is that our market gets quieter around October,” the month before Election Day, she says. “Once the election is over and we know who the president is, business will resume as normal. It is buyer psychology; people do not make major investment decisions when there is imminent uncertainty.”
This effect spans the world. Pre-election uncertainty “slows down housing sales, specifically in metro markets, and impacts stock market activity, especially if a coalition government looks like it’s coming into power,” says Ashwin Chadha, chief executive officer, India Sotheby’s International Realty, whose background as a seasoned banker with BNP Paribas, Citibank, and Barclays has been invaluable to his work in real estate.
A sense of political stability, on the other hand, can have an unsurprisingly positive effect. Since India’s incumbent Bharatiya Janata Party (BJP) has held onto power in this year’s elections, Chadha observes that the real estate market is likely to benefit. “The current government has reiterated its intentions for high spending, drawing in investments to boost the manufacturing sector,” he notes. “Both infrastructure spending and manufacturing augur positively for the property market, including luxury real estate.”
Manufacturing is one of the industries that has led to the rise in the country’s millionaires, which numbered 850,000 in 2022, an increase of 473,000 since 2012, according to research by the Swiss bank Credit Suisse. It also calculated that the number of millionaires in India grew annually during that time by around 8.5%, compared with an average GDP growth of 5.6%.
Nearly 80 countries (dark blue on map) are holding elections in 2024, according to news sources including The Economist, Reuters and Time magazine. This equals:
4 billion people eligible to vote in elections worldwide
50% of the world’s population
60% of GDP
Hein Pretorius, real estate associate, Lew Geffen Sotheby’s International Realty in South Africa, says May 2024 was a “watershed” election for South Africa. “This is the first year since 1994 that the ruling African National Congress [ANC] party does not have an outright majority,” he says. “The ANC is going to have to choose a partner in a coalition government, and it has a number of options.” The party’s main opposition, the Democratic Alliance, which has pushed a major land reform policy that would transfer state-owned land to individuals, has said it is open to coalition talks.
In the U.K., meanwhile, the Conservative and Labour parties went head-to-head in a general election on July 4, 2024 with the Labour party winning by a clear majority.
“The recent elections offer an opportunity for change. Against the backdrop of an optimistic interest rates outlook, housing plays a big part of the new government’s manifesto,” says Reynolds. “Only 18% of buyers [in central London] are purchasing their main home, 54% are purchasing a second home, and the other 28% are buying for investment,” Reynolds adds, citing statistics gathered by her firm. “International investment is hugely vital for the prime central London market, with the three most dominant groups of buyers being from the U.S., the Middle East, and China.”
Keeping Watch on Interest Rates
While real estate agents the world over are watching out for political changes, they are keeping an even closer eye on interest rates, which may play an even bigger role in homeowners’ decisions to buy and sell than who occupies the seats of power. This is because interest rates are set by the Federal Reserve’s Federal Open Market Committee, a group of 12 banking leaders, and not by those seated in the White House or Congress.
“There’s a lot more conversation about politics this year, and a lot of polarization,” says Russ Anderson, president and chief executive officer, Briggs Freeman Sotheby’s International Realty in Dallas, Texas, who has three decades of experience in real estate and banking. “But, when it comes to real estate, people are more focused on interest rates than politics. No matter who wins, if interest rates start falling, I think people will buy. If they stay elevated, people will remain on the sidelines.”
Weiss echoes this view, saying that the major drivers in property markets this year are “interest rates and the broader economic environment, more so than the upcoming election.” While interest rates are affecting the market at various price points, Weiss sees transactions taking place across the board, especially with the increase in luxury inventory in the Washington, D.C. area. “It is a wonderful time, in particular, for cash buyers,” she says.
In Brazil, rates are already going down, and are expected to fall further, Victorino points out. The country’s central bank reduced the basic interest rate by half a percentage point in March 2024, reducing it from 11.25% to 10.75%. “The change helps to make financing for real estate more accessible,” she says. According to a survey of economists released by Brazil’s central bank, the expectation was that by the end of 2024, rates would reach single digits. “The most affluent buyers do not depend on credit, but for investors, the reduction in interest rates makes real estate a more interesting option, favoring those seeking long-term profitability.”
As for India, strong economic fundamentals are being bolstered by falling interest rates along with rising wealth. “The economy is growing by close to 8%, and inflation is now pretty much under control,” says Chadha. “According to a report by Jefferies, a leading global, full-service investment banking and capital markets firm, India is expected to be the world’s third-largest economy by 2027. It is currently the fifth-largest economy, having just displaced the U.K., and our prime minister has an aggressive economic plan.” Such economic growth would also affect property markets.
An Interconnected World
While real estate agents are watching their own local elections closely, the property market is highly interconnected globally, so they have an eye on other elections as well, and the U.S. election looms the largest.
Chadha, even in his bullishness, recognizes concerns from abroad. “There are always risks,” he says. Internationally, a slowdown in the U.S. could have “a cascading effect on foreign investment.”
But Victorino points out that “investment in the real estate market is one of the most stable, and the easiest to recover, even in unstable scenarios.”
Experts including Lawrence Yun, chief economist at the National Association of Realtors (NAR), agree that investing in real estate is solid in the long-term. According to a report issued by the NAR in 2023, upper-income households in the U.S. saw the value of their homes increase by an average of US$150,800 over the past 10 years. “This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life,” says Yun, adding that, on average, homeowners are able to build “a net worth about 40 times higher than that of a renter.”
“An uncertain market can present good opportunities for those with an appetite for higher-risk investments, or those who take a longer-term view,” says Reynolds. “For those taking a five-year or longer view, we’re forecasting good growth.”
Discover the allure of Boca Grande with local entrepreneur Sandy Stilwell Youngquist, who shows off her favorite historic landmarks and Old Florida hideaways.
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