thepinkwaterreportS u p e r - p r i m e t r o p h y p r o p e r t y

As Founder and Chair of the Global Partnership at Sotheby’s

International Realty, my expertise is super-prime property

markets around the world. Never before have we achieved

sales at the record levels we are now seeing in New York,

London, Miami, the South of France, Switzerland and

other key global markets. As a growing number of the

ultra-rich and their wealth managers allocate more of their

portfolios to real property, a greater focus has emerged

on those segments of the real estate market which have

performed best over the past ten years. Research shows

that during the last decade super-prime trophy property

has outperformed every other segment of the real estate

market as well as many other investment categories, and

is predicted to continue its climb.

Royce Pinkwater Founder and Chair of the Global Partnership

Senior Vice President Sotheby’s International Realty

royce@roycepinkwater.com 212.606.7718

740 park avenue

Super-prime trophy property is best in class, the very top segment of real estate worldwide. New York is home to many of the world’s best properties. This year, New York City took the top spot from London as the world leader in the super-prime trophy property market. Throughout the super-prime category, buyers and sellers are in agreement and working together to close the biggest sales our town has ever seen.

During the last 25 years, super prime is the property category that has always weathered temporary dips in property values and steadily appreciated in price. American and overseas buyers are confident that investing in this type of property in New York City is a safe haven that also provides a great lifestyle, top schools and the best of art, dining and culture, among other benefits. According to Price WaterhouseCoopers, New York ranks first in the world as a capital market center and economic powerhouse.

Recent reports show that one third of super-prime property in New York is selling to international buyers. According to Forbes, since 2009 the number of billionaires in Russia and the Ukraine has more than tripled. There are a dozen new billionaires in Brazil and Turkey. Asia now has an estimated 43,000 ultra-high-net-worth individuals with a combined wealth of $6.2 trillion, CNBC reported in April. Much of this money is flowing into trophy projects in New York City, which along with super-prime art is seen as a safe haven. Indeed, international markets in high-end art and real estate are mirror images of one another, moving in synergistic lockstep.

15 Central park west

Artist Rendering

15 Central park west

As economic and geo-political concerns have pushed investors to look for stable locations for their wealth, super-prime trophy property in key global markets is in great demand and increasingly short supply. The best of the best is always a rare commodity.

In December 2011, an example of global wealth buying super-prime property in New York occurred when a new record was set by Dmitry Rybolovlev, who purchased a four-bedroom penthouse at 15 Central Park West from former Citigroup chairman Sanford I. Weill for $88 million, the highest price paid per square foot in a New York sale. Just four years earlier, Mr. Weill had purchased the property for $44 million.

The next generation of super prime residential is One57, Extell’s newest trophy development at 157 West 57th Street in Manhattan, which is selling briskly at an average price of $6,000 per square foot. At 90 floors, One57 is planned to be the tallest residential building in New York. Full floors in the building, all purchased by billionaires, have almost sold out, The New York Times reported on April 22. On May 17 The New York Times also noted another landmark transaction in the building, reporting that the 10,923-square-foot penthouse on the 89th and 90th floors has traded for a price somewhere between $90 and $100 million, which will now set a record as the most expensive apartment ever sold in New York City.

thepinkwaterreportS u p e r - p r i m e t r o p h y p r o p e r t y

“At Over $90 Million, Sale of Midtown Penthouse Sets a New York Record”“Foreign buyers, including Brazilians, Chinese and Russians, have been on a buying spree in New York and Miami in recent months ... Russian and Ukrainian buyers have shown a particular willingness to pay top dollar for so-called trophy properties.”

the new York times | May 17, 2012

thepinkwaterreportS u p e r - p r i m e t r o p h y p r o p e r t y

the plaza Hotel

For ultra-wealthy overseas buyers looking to acquire super-prime trophy properties in New York, condominiums offer several advantages over apartments in cooperative buildings. Condos can be bought in a corporate name or trust, and rented for cash flow. They sell more easily than co-ops, and are more liquid. When you buy from a floor plan and benefit from increases that developers lock in before the building closes, at closing you will have a property which might sell for perhaps 20 percent more than you paid. You will have a good investment long before you set foot in the apartment.

In the first week of April, a co-op penthouse at 2 East 70th Street that belonged to the estate of Teddy Forstmann was put on the market for $36 million. After a bidding war, the property went into contract at just over $40 million, The Wall Street Journal reported. There have been other recent notable sales, but none more so than last month, when Courtney Ross’s two duplex penthouses at 740 Park Avenue sold for a combined price of $52 million, the highest ever paid for a New York co-op. Mrs. Ross purchased the apartments in the 1980s for a total of $8 million.

Jumping for a moment to the commercial side of the super-prime market, there is a notable recent sale I wish to mention. As the Journal reported in April, an Indian conglomerate made an unsolicited offer of $600 million to acquire New York’s storied Plaza Hotel and its commercial space. Subrota Roy, who runs Sahara India Pariwar, reportedly paid $10 million for an exclusive period of time in which to perform due diligence on the offer. This is super-prime trophy property at work.

Going forward, the trend in the super-prime market is very large apartments, which developers are scrambling to create. While square footage is at a premium, it is still possible to create spaces of up to 12,000 square feet in New York — unheard of in many other key global markets. As prices have escalated, a new, wealthier class of buyers has emerged, and they want to live graciously, The New York Times reported on April 22. Wealthy Americans, as well as foreign buyers, have decided to put cash into luxury real estate, both as investments and as places they can enjoy, the Journal reported on April 30.

This year promises to be a great one for buyers and sellers of super-prime property in New York. Buyers have been back in the market for some time and sellers are joining them as they see their properties increasing in value. We are looking forward to several beautiful developments uptown: The former Carlton House at 680 Madison, 737 Park Avenue, 150 East 72nd Street, and 432 Park Avenue. Downtown, in Greenwich Village, a trophy project at 61 Fifth Avenue is under construction and will be officially offered in July. The eight-story building in a prime location will have three, super-luxe duplexes and one triplex penthouse. If buyers get in early (none of these buildings have their Attorney General approvals yet) they can create the space and home they wish for.

With super-prime trophy property our area of expertise, the Global Partnership is positioned to source and facilitate the best real estate — an increasingly rare opportunity. Working with our own network of designers, architects and construction managers, we can help sellers renovate their property into perfect condition, opening up new possibilities for super-

GLoBAL pArtNerShip

In response to the globalization of our clients’ lifestyles and businesses, I founded and chair a groundbreaking partnership comprised of the finest Sotheby’s real estate professionals in every key market worldwide. The scope and stature of our Global Partnership represents a first in our industry. In over 30 markets a nd growing, we work in lockstep, enabling us to have our fingers on the pulse of the worldwide real estate market at all times. Through our wide network of contacts, we source extraordinary opportunities for our clients’ portfolios. Whether it is a residential, commercial or an investment acquisition anywhere in the world, we

expertly guide our clients through the entire process.

Globalization = a global real estate partnership

Finest real estate professionals in every key market worldwide

Access to extraordinary real estate opportunities

The best residential, commercial and investment property in the world

A portion of every commission earned in the Global Partnership is donated to the not for profit of our clients’ choice.

GLoBALMarketupDAtekEY GLOBAL MARkETS OUTSIDE OF NEW YORk

LONDONCentral London is the city’s hottest market for super-prime properties, many of which are being purchased by ultra-wealthy foreigners who buy during short visits and then leave the homes empty as safe havens for their money. Supply and new developments are scarce as money floods the London market from the Middle East, Italy, Russia, kazakhstan, India and the Far East, driving prices higher. The exclusive districts of knightsbridge and Belgravia form the core of central London’s super-prime market. A penthouse in a new mixed-use development in Mayfair recently sold for £4,500 per square foot, while at One Hyde Park, prices have reached £6,000 per square foot. Still approximately 20 percent unsold, apartments in the building are priced at more than £100 million. Amid the debt crisis afflicting other European countries and rising taxes in France, the world’s super-rich are acquiring assets in London to preserve wealth and appreciate capital. Sellers, for their part, are achieving their prices. Activity is strong in the £30 million to £60 million range. By some analysts’ forecasts, prices per square foot for super-prime residential property in knightsbridge could reach £10,000 in five years.

MIAMIMiami is among the world’s top markets for wealthy buyers but has fewer super-prime properties and lower prices compared to other key markets like New York and London. After years in which there were few sales over $10 million in the South Florida market, a rebound began in the first quarter of this year, with the first sale of a residential property over $20 million in the Miami area. At Indian Creek, a wealthy village in Miami-Dade County, a single-family waterfront home sold for $39.4 million. For buyers from the United States, Brazil and other countries, South Florida’s most active super-prime markets are Miami Beach and Coral Gables, in enclaves like Cocoplum and Gables Estates, on Hibiscus Island, and super-luxury oceanfront condos at the boutique building South of Fifth. Such properties are undervalued compared to those in the world’s other super-prime markets. But with demand growing, pending sales were up 66 percent in the first quarter of 2012 over the same period last year. Price per-square-foot has risen 18 percent, to about $2,000.

SOuth Of frANceBuyers from around the world are making inquiries for super-prime properties on the French Riviera. In the area between Nice and Monaco, trophy properties are selling for €40 million to €80 million. Properties that had been on the market two years have all sold within the last eight months. In Cap Martin, a super-prime home recently sold for €50 million. From St. Tropez to the Italian border, waterfront properties with views of the Mediterranean are the most valuable. In this market, size is less important than waterfront views and private access. With no more land on which to build, new properties are scarce, driving up prices. Many buyers of trophy properties on the French Riviera are coming from Russia, Ukraine and kazakhstan. Owners are open to offers. The busiest season for super-prime transactions in Southeast France is April to the end of November, but inquiries continue throughout the year.

SwItzerLANDMuch of Switzerland’s super-prime trophy property can be found along the coast of Lake Geneva from the city of Geneva to Montreux. Swiss super-prime homes start at $10 million and go to $100 million. A waterfront property on Lake Geneva was recently priced at $80 million. Russian buyers, who are once again becoming active in the Swiss market, tend to prefer old buildings with high ceilings in the belle époque style. European buyers, by contrast, prefer newly built super-prime properties. In Gstaad, new properties are being developed at 55,000 Swiss francs per square meter. Super-prime developments are also under way in St. Moritz and the Verbier ski area in the

Swiss Alps, where a chalet was recently priced at $70 million.

For more information about super-prime trophy properties around the world, contact

Royce Pinkwater Founder and Chair of the Global Partnership

Senior Vice President Sotheby’s International Realty

royce@roycepinkwater.com 212.606.7718

www.RoycePinkwater.comwww.ThePinkwaterReport.com