Hot Property able, particularly Thanksgiving to the end of the year was dead. In mid-January, people are getting Ernie Cervi ready for either renting or purchasing for the fall and summer. I think that trend occurs every year. The degree and strength of that trend is obviously impacted by the macroenvironment, the stock market and the economy at large. Clearly there is a perception—as represented by the stock market—that the next six to nine months are going to be constructive for our economy. PB: I like Nancy’s comment that “Americans can’t wait.” That whole phenomenon, along with seasonality, plus the macro-environment are the ingredients that suddenly began to heat up and make the market cook. The year prior, the economic climate was, ‘Uh-oh. Things aren’t going well anywhere.’ We all said, there is plenty of money on the sidelines, they are just not writing checks. AVENUE: One of the sub-stories is that the higher end of the market (from a percentage point of view) way outperformed the general marketplace. AB: Yes, that is true. Both high-end sales and rentals were the most active in the first quarter of 2012. As I mentioned before, I believe we now are beginning to see the domino effect; all price points are becoming very active. EC: We know there is an increase in volume from this quarter over same time last year of 13 percent. And I think a lot had to do with the weather. Last year, you couldn’t even get to these houses. But I think our seasonality overall is getting diluted, so we can’t fall back on that. People came out in the first quarter not to look at rentals but to rent houses. PT: You have higher average prices, but that reflects certain extremely wealthy individuals continuing to buy extremely 64 | AVENUE MAGAZINE • JUNE 2012
expensive properties, whereas we became overly dependent on a group of primarily Wall Street bonus buyers in the 5- to 15-milliondollar range. Many of those buyers are on the sidelines.
experience, foreign buyers, especially those from Russia and Brazil, are coming via New York. They have a connection in New York, they have a business in New York, they have friends in New York, but they are not coming directly from Moscow and Rio to here.
“If it is priced well, people are going to buy it. I think we are going to
be in a buyer’s market for a while.” —Ernie Cervi AVENUE: Let’s talk to the buyer. In our recent roundtable in Manhattan, one of the big headlines was the increase in foreign buyers. Is that happening here as well? EC: Yes, I met with two sets of buyers from Great Britain buying properties in excess of 20 million dollars. They are seeing the Hamptons as an excellent buy, plus they don’t have a Hamptons-like summer in England, so they’re coming here. These two buyers are end-users, not investors. However, we have experienced Russian, Italian, and German buyers and investors alike. AB: Largely due to our international reputation and our affiliation with the Sotheby’s auction house, many of our customers today are South Americans. You can understand why: Their economies are strong, here it is summer versus their winter, and it is a solid investment. In addition to Europeans, we are beginning to experience Asian buyers. PB: Foreigners are trickling in here and there. But in reality, they are not calling from Moscow saying, ‘Hey, what’s available on Gin Lane?’ From my
PT: We see the same cross-section of Asian, Brazilian, Russian, and German. We get a lot of our activity through Christie’s international real estate referral system. They’ve had some big sales in St. Barth’s—$62 million to a Russian buyer down there, easily the biggest sale to date. AS: If the Russians come here in any significant numbers—if it is really a trend, you’ll know it, because there will be 15 or 20 of these guys. These deals are headline deals, because they will buy Nancy McGann something that is very high-priced, a highprofile property that makes it into all the papers and people extrapolate that there’s some trend of Russians, but I think there are three or four or five of them that we all know about. AVENUE: What are the hot areas Alice? AB: I think the new hottest areas will be any type of waterfront. It doesn’t have to be oceanfront, it is any available waterfront, like Sag Harbor, North Haven, and Noyack. AS: There is a constituency of buyers who always want waterfront. But we see