Adapting to a Changing Market

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Unique Homes
Oct 25, 2019

Promontory, a private mountain community in Park City, recently announced the creation of a new ultra-exclusive neighborhood. Nearby, the Canyons Village is being revamped and revisioned with new resort properties, including some put on hold during the recession, cafes and amenities. And just as summer ended, long- awaited plans for Mayflower, an entirely new, separate, extensive ski resort abutting Deer Valley’s terrain, were announced. These might seem like isolated instances limited to Utah, but similar scenarios are underway in resort settings in the U.S. and worldwide. In Hawaii, the Caribbean and Mexico, new communities, hotels and resorts are on the boards or under construction.

“For the last 24 or so months, our brokers in resort markets around the world have been reporting strong activity from lifestyle-oriented buyers with many homes,” reports Stephanie Anton, president of Luxury Portfolio International.

Clearly, development in resort and second-home locales is full-on. New entries offer a distinctive spin on both lifestyle and residences with products and prices that reach across the entire upscale stratum from the uber-wealthy to newly minted millionaires. Not only are upscale consumers back in the market, but they are likely to be younger and well versed in resort real estate. Most importantly, according to experts such as Anton, “They are looking to connect more with life, and they are looking for a life well lived.”

In part, greater interest in vacation and resort properties is simply due to the staggering growth of personal wealth since 2010. Estimates show the number of individuals with a $1 million or higher net worth grew from 24.5 million in 2010 to 42.2 million in 2018, while total global personal wealth increased from $235 billion to $317 billion, according to global research firm YouGov, and Credit Swiss. The greatest gain in numbers is among those with a net worth of $5 million to $10 million.

Beyond these basics, reliable information on upscale consumers and second homes is scarce. “When we couldn’t find too much concrete data on the activity, we decided to go out and track it ourselves,” Anton explains. Working with YouGov and their study of 8,200 consumers in the top 10 percent or higher in their local economies, Luxury Portfolio conducted additional in-depth research into upscale vacation and second homes among consumers who plan to buy or sell a second or vacation home valued at or above $1 million in the next three years.

“What we’ve uncovered is proof that these are successful, self-made younger buyers and sellers who are wellness-minded consumers looking to invest in their families and their lifestyles to ensure a life well lived. Home is a critical component of that,” explains Anton. Research also shows these buyers are well schooled in luxury real estate; many have support from professional advisors.Approximately three quarters own two or more homes with 19 percent of Boomers and 17 percent of Gen X owning five or more homes. More than half believe this is a good time to buy vacation homes.

Also, says Tricia McCaffrey Hyon, executive vice president of sales at IMI World Wide Properties, marketing agents for Quivira in Cabo San Lucas, “When you look at the last five to seven years from an economic standpoint, we have the stabilization of the global economy for U.S. buyers, rising consumer confidence, lower interest rates, and a strong stock market. In terms of buyer motivation, when the market is strong, people are more focused on diversifying their portfolio.”

Global real estate consultancy Knight Frank estimates the ultrawealthy population (those with assets of $50 million and up) grew by 18 percent in the five years up to 2017, and forecasts an additional 40 percent gain in these numbers over the following five years. In Luxury Portfolio’s research, those with assets over $10 million exhibited the most confidence in the market.

Although new developments and resorts usually offer properties in a range of prices to appeal to a majority of upscale consumers, a few are specifically oriented to the ultra-market.

More Exclusive

In Orange County, California, ultra- private communities such as Coto de Caza attract interest from global buyers looking for a second or vacation home. Typically, they own many properties. Privacy is most important to these buyers, says Mariann Cordova with Berkshire Hathaway HomeServices California Properties, which adds to the appeal of this guard-gated community. Water sports might be a main focus, but amenities include a racquet club, and an extensive equestrian preserve with multiple arenas, including a Grand Prix arena and a dressage arena and over 40 trails.

Promontory offers 27 distinct neighborhoods. Along with extensive amenities, this 6,400-acre community is known for a dramatic mountain-top setting and spectacular views. Still, developer Francis Najafi of Arizona- based Pivotal Group says he reserved 143 acres above the back nine holes of the Pete Dye Signature course until the promise of Promontory was fulfilled. This parcel, dubbed Pinnacle, is now an ultra-exclusive neighborhood, offering even more breathtaking panoramas and an equally stunning private amenity space. “This is yet another option for potential owners who want a little more privacy, the views and additional services. This is where money is no object,” says Robin Milne, Promontory’s general manager.

Important to new ultra-private resorts is the balance between luxury and approachability. The setting might ensure seclusion, but connections to a larger resort and also to the local community are important, says Najafi.

In Punta de Mita, Mexico, Susurros del Corazón will be an entirely new experience, “one that embraces a laid-back beach spirit and perfectly balances luxury and approachability,” said Craig Reid, chief executive officer, Auberge Resorts Collection.

Expectations for service are high, but the desirable mindset is low key with an in-depth understanding of the preferences of each owner. Greg Spencer, CEO of Timbers Resorts, calls this “approachable luxury.”

In the Caribbean, Half Moon Bay Antigua is a new 132-acre resort presenting some of the most coveted land in the Caribbean including a limited number of homesites, large enough for a grand residence or a family compound, overlooking the bay. Two other significant properties, the Rosewood Estate set on a very private parcel and the Mellon Estate, one of the most expensive in the Caribbean, are offered for the first time in more than 50 years. A Rosewood Resort anchors the community and residential opportunities also include Rosewood branded residences in varied settings.

New Consumer Mindset

Whether a development occupies a few dozen or thousands of acres, the affiliation of a well-known luxury brand has become important, if not essential. It’s not uncommon for the largest communities to have several premium hotels as well as branded residences.

Mandarina, a new community on Mexico’s Riviera Nayarit includes both a Rosewood and a One&Only resort. The Four Seasons is putting down stakes in a number of locations, including Los Cabos, Anguilla, and on a private island, Cayne Chapel in Belize. The Auberge Resorts Collection is expanding its presence in Mexico to the aforementioned Susurros del Corazón in Punta Mita. Quivira Los Cabos will have a St. Regis.

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Knight Frank identifies branded residences as a global trend proliferating from the Caribbean to China, with approximately 400 branded residences across the globe. They see little sign that growth in this sector will abate.

Post-recession, the presence of a respected brand is also an assurance for consumers. “Buyers are looking for evidence that they are making a sound financial investment.

When you look at a luxury brand that comes in, or a developer with a strong history in a specific market, it instills confidence in that decision to purchase a second home. You can have a beautiful resort just about anywhere, but when a reputable brand puts down a flag (like St. Regis is doing in Quivira), you’ll see a number of new buyers and brand loyalists who now feel that they are protected financially and that they are making a safe investment,” explains Hyon.

Today, comfort and ease of living take precedence over opulence and pretention for vacation homes in almost all price brackets.Experiences offered by a resort and a location as well as homes and amenities that facilitate shared time with family and friends matter most. “Buyers are more open to making investment decisions that revolve around how they are going to spend quality time with family and friends, and they feel really good about that decision,” says Hyon.

“Before the credit crisis, people often looked at vacation property through the lens of ‘where can I get a great vacation and get a 20 percent return.’ They kind of got away from why they were going to certain places, and what they are trying to accomplish,” observes Spencer, who sees multi-generational travel as the overarching trend over the last five to eight years.

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Authenticity has also become a premium. “It’s what people desire,” Spencer says. “You need to have a great product that also feels great, but it also needs to fit within the location. You still have to have high quality, but it doesn’t need to be overbuilt.”

“It is very important for us to preserve the natural beauty of the land, and we are being conscious in the development to create a community that is in harmony with its surroundings. The entire ethos of this property is to combine a rustic simplicity that feels very authentic with the world-class amenities you’d expect from an Auberge resort,” says Mark Cooley, partner, SV Capital Partners, developers of Susurros del Corazón.

Golf, Still Part of the Game

In spite of reports of its demise, golf is still in play as a desired amenity. Not every new resort is centered around greens and fairways, but those that aren’t are often in prime golf locations and are surrounded by courses. Frequently, they offer owners reciprocity with a signature course nearby. Quivira will include a Jack Nicklaus Golf Club. Greg Norman and Orena Ochoa collaborated, creating an 18-hole course at Caye Chapel.

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For the majority of the affluent, health and wellness is a growing passion. Expectations extend beyond a spa or fitness studio. At Mandarina, the first One&Only Private Homes in the world will incorporate DELOS wellness technology. The villas are sited for privacy, which developer Ricardo Santa Cruz, CEO of RSC, describes as is the ultimate luxury.

New Resort Paradigm

One objective in planning large resort communities is the curation of extensive, unique experiences, ones owners and guests would not have at home and that would make them want to return, says Santa Cruz. Along with a mile- long swimmable beach, walking and hiking trails, Mandarina’s 647 acres also include an organic farm and an organic kids farm, an equestrian center and polo club. Rather than a token offering, the programs for children and for teens are extensive and well thought out.

In the new resort paradigm, the ante for amenities and experiences has become so extensive and diverse that it’s hard for a development centered around a single hotel to meet these expectations, says Santa Cruz, which means new entries in the resort landscape sometimes occupy thousands of acres with a mix of full time and vacation owners.

Promontory is one of the most amentized resorts in the country, according to Najafi. There are two golf courses, a Pete Dye canyon course and a Nicklaus valley course as well as alpine and cross-country skiing, hiking, cycling, fishing, an equestrian center and a lake with a boathouse. A sandy beach meets an infinity- edged pool that abuts the lake, creating a very unique mountaintop experience. An award- winning clubhouse is a gathering spot with bowling, basketball, a soda fountain, 50-seat movie theater and arts and crafts studio.

Time is of the Essence

Accessibility has emerged as another essential, say developers such as Santa Cruz. “What everyone has less of is time, which makes accessibility more important,” which, he says, explains the surge of new resorts along Mexico’s Pacific Coast and the Bay of Banderos. “It’s possible to fly down on a Thursday and be back home on Sunday,” he says.

Mark Cooley with SV Capital, the developers of Chileno Bay and Susurros del Corazón explains: “Consumers are attracted to Mexico in particular because it feels like it’s worlds away yet has such easy access. The combination of having a true luxury getaway where you can relax, immerse yourself in culture and be only a 2- to 3-hour direct flight from most major U.S. airports provides the best of both worlds. For Mexico, it’s also a simple purchasing transaction.”