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Foreign Investment Edition I Summer 2011

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F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1


5 Founders’ Letter Global real estate investment trends and why investing in luxury properties in Los Angeles is the clear choice

9 U.S. Acquisitions U.S. properties make up over 45% of the portfolios of those surveyed

13 Top U.S. Cities 7 Global Trends U.S. remains on top when it comes to providing most stable and secure real estate investments

New York, Washington D.C., San Francisco and Los Angeles

17 Los Angeles The “It” city for real estate investment

23 About a8 The real estate brokerage for the novice or experienced real estate investor

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"Good fences make good neighbors." -Robert Frost, Mending Walls

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Founders’ Letter F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1


Founders’ Letter Today’s U.S. economy provides foreign real estate investors with a number of opportunities for capital appreciation. Specifically, the sliding dollar, low home prices, sluggish sales and motivated sellers have created the perfect foreign investment scenario. This is especially true in the Los Angeles luxury real estate market ($1.5M+), where a solid purchase of a single family residence or condominium today could, in the long run, provide a higher than average return. In this Foreign Investment Edition of architecture 8, we will explore global real estate investment trends, and learn why investing in luxury properties in Los Angeles is the clear choice. With that, we trust you will find the information in this edition useful and should you have specific questions about a local neighborhood or a specific home, please feel free to contact us or any a8 associate. Sincerely, architecture 8, Inc. Scott Cook, President + Eliseo Arebalos, CEO

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Global Trends Countries Providing The Most Opportunity For Capital Appreciation

F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1


Capital Appreciation While staples such as London, Paris and Shanghai still rank highly among foreign investors’ favorite cities, overall, a survey by the Association of Foreign Investors in Real Estate again found the U.S. as the country providing the most opportunity for capital appreciation. To put this in perspective, in 2006 the U.S. received only 22 percent of the vote, just ahead of China at the time. This year, t h e se con d m o st f a vo red country for capital appreciation is China with only 10 percent of the votes.

Source: Association of Foreign Investors in Real Estate

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Countries Providing The Most Stable + Secure Real Estate Investments

F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1


Stable and Secure

The U.S. also continues its stay in the top position as the country providing the most stable + secure real estate investment. Further, given concerns surrounding the possibility of a double-dip r e ce ss io n in the U. S . h a ve dissipated, a survey found that 72 percent of foreign investors who invested in 2010 plan to invest more capital in the U.S. this year.

Source: Wisconsin School of Business

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United States Acquisitions By the middle of the fourth quarter in 2010, a survey of 200+ individuals worldwide responded they own more than $600 billion of real estate abroad, with over 45% of that being in the U.S. alone. While real estate investors continue to have their eyes set on the U.S., their focus is concentrated on a handful of gateway cities, namely, New York, Washington D.C., San Francisco and Los Angeles.

Source: Real Capital Analytics

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U.S. Ac q uisitions live architecture

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Top US Cities Ranking at the top of some investors’ lists, investment opportunities in New York, Washington D.C. and San Francisco come at a premium when measured against comparable luxury properties in Los Angeles.

Los Angeles

In addition to other factors, premium prices in those three cities are driven by a relatively low number of available properties in highly sought after neighborhoods.

F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1


N.Y.: The luxury market in New York is typically defined by the highest priced 10% of all sales. With the median sales price increasing over 15% from Q1 and the number of available properties dwindling, it may not be the most opportune time to invest in the Big Apple.

New York

Washington D.C. Washington D.C.: Sim ilar to New Yo rk , W ashington D.C. has experienced a 15% decrease in inventory when compared to 2Q 2010. S.F.: Available properties in San Francisco sold, on average, within 55-60 days in Q2. This, combined with a small inventory, caused the median sales price to rise by almost 35%. Given inventory will remain the same or decrease, we will most likely witness a continued rise in the median sales price through the end of 2011.

San Francisco

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Top US Cities: New York

Washington D.C.

Los Angeles

San Francisco

F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1

by the numbers


N.Y. D.C. S.F.

# of Properties Sold

Avg. Days on Market

Median Sale Price

# of Properties Listed**

Q2

265

138

$4,550,000

1,025

Q1

239

128

$3,950,000

1,312

# of Properties Sold

Avg. Days on Market

Median Sale Price

# of Properties Listed**

Q2

177

90

$1,460,000

328

Q1

97

99

$1,750,000

241

# of Properties Sold

Avg. Days on Market

Median Sale Price

# of Properties Listed**

Q2

148

54

$2,500,000

352

Q1

128

64

$1,854,574

328

2011

2011

2011

**Includes properties which are under contract Sources: Multiple Listing Service of Manhattan Mid-Atlantic Real Estate Business Intelligence San Francisco Association of Realtors MLS

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Los Angeles:

single family

Countries P A long time favorite of foreign investors, Los Angeles serves not only as the entertainment capital of the world, but also as a major port for the movement and transfer of goods and a strong link to the global network of commerce and finance.

Los Angeles

Currently, the Los Angeles real estate market is witnessing a large inventory of properties compared to the inventories of New York, Washington D.C. and San Francisco, high average days on market figures and, on average, sales prices ranging between 10-20% off the listed price. Together, these factors create the perfect opportunity for the novice and experienced investor alike.

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Los Angeles

Providing The Most Stable + Secure Real Estate Investments

# of Properties Sold

Sold Avg. Days on Market

Median Sale Price

# of Properties Listed Avg. Days Median Listed Listed** on Market Price***

Q2

336

99

$2,262,500

1925

163

$2,900,000

Q1

196

101

$2,397,500

1790

150

$2,982,500

Source: Combined Los Angeles/Westside Multiple Listing Service **Includes properties which are under contract ***Median listed price is higher when compared to San Francisco and Washington D.C. as a result of having 3 times the number of listings between $5-20M

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Los Angeles

Los Angeles:

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highrise + condo


Los Angeles # of Properties Sold

Sold Avg. Days on Market

Median Sale Price

# of Properties Listed Avg. Days Median Listed Listed** on Market Price

Q2

24

76

$2,200,000

224

233

$2,270,000

Q1

19

142

$2,050,000

232

226

$2,237,500

Source: Combined Los Angeles/Westside Multiple Listing Service **Includes properties which are under contract

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Los Angeles

Los Angeles:

F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1

residential income


West Hollywood # of Properties Sold

Sold Avg. Days on Market

Median Sale Price

# of Properties Listed Avg. Days Median Listed Listed** on Market Price

Q2

16

94

$1,752,500

182

169

$1,995,000

Q1

13

60

$1,802,200

164

180

$1,995,000

Source: Combined Los Angeles/Westside Multiple Listing Service **Includes properties which are under contract

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architecture F o r e i g n I n ve s t m e n t E d i t i o n I S u m m e r 2 0 1 1


Our focus and our passion in real estate motivates people to respond, bond and commit to extraordinary lifestyles influenced by architecture.

architecture 8, a full service real estate brokerage, focuses on architectural and significant properties where inspired design invites you home. With an unparalleled commitment to service, and where the client’s needs come first, architecture 8 utilizes the most current technology to manage, list, market and sell properties. Whether it’s a first time home buyer being guided through the purchase process or an experienced investor looking to enhance its real estate portfolio, architecture 8 will aid in realizing the client’s desires by using its expanded network of local, national and international brokerages to provide access to extraordinary properties. architecture 8’s philosophy of “live architecture” embodies more than just recognizing the aesthetic and functional value of a property. To “live architecture” is to appreciate the unique elements and subtle details of each property and to allow the same to affect and influence one’s life. Le Corbusier wrote: "You employ stone, wood, and concrete, and with these materials you build houses and palaces: that is construction… But suddenly you touch my heart, you do me good. I am happy and I say: This is beautiful. That is Architecture." be inspired. live architecture.

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Summer 2011 Foreign Investor Edition . architecture 8