The Agency Red Paper 2025 Annual Market & Wealth Report

2

2025

ANNUAL WEALTH REPORT 3

TABLE OF CONTENTS

01

04

Luxury Real Estate Hot Spots Diversify Around the Globe

Letter from the CEO and President

REAL ESTATE

02

A Look Back at 2024 LUXURY HOUSING MARKET OUTPACES GENERAL MARKET

05

What Does a Historic Wealth Transfer Mean for Luxury Real Estate and Beyond?

03

More Listings & Sales Expected in 2025 4

06

A Closer Look at Off-Market Deals

07

Rethink and Reuse SUSTAINABLE MATERIALS IN NEW HOMES & RENOVATIONS

08

No Golden Visa, No Problem

LUXURY

09

11

The Luxury Consumer’s Evolving Persona

Longevity is the Latest Wellness Buzzword, and Luxury Builders Are Taking Note 12

Three-Row Luxury SUVs— With Plugs to Boot 13 10

All About AI

Spotlight on Luxury Collectibles

HOW LUXURY BRANDS AND REAL ESTATE AGENTS LEVERAGE AI 5

6

Welcome readers, to The Agency's 2025 Red Paper Annual Wealth Report.

As always, there have been dynamic shifts and developments in the real estate market and industry this last year—with anticipation soaring for what’s ahead. The always relevant, always unwavering question sits in the air: How is the market?

For us at The Agency, that multifaceted question spans neighborhoods, countries and hemispheres. Each holds fast to similar global themes, and each is nuanced in its own locality. And it extends beyond real estate into other asset classes, touching on the purchasing patterns of high-net-worth individuals throughout the realm of luxury goods.

This year’s report is a deep dive into this big question and a wide-ranging exploration of an answer. In the following pages, find a look back at 2024 and a look ahead to 2025. Read into the historic wealth transfer of this moment, and what it means for luxury real estate and beyond. Journey into sustainability in new homes and tap into Golden Visas and what’s ahead.

Beyond real estate, explore the luxury consumer’s evolving persona and intriguing luxury collectible trends. Also, did you know longevity is the word of the year?

Read on—there’s so much to explore.

MAURICIO UMANSKY

RAINY HAKE AUSTIN

FOUNDER & CEO, THE AGENCY

PRESIDENT, THE AGENCY

7

The Agency's Accolades The Agency had hundreds of media hits, millions of impressions, an international television presence, a new season of Buying Beverly Hills, and enjoyed global recognition as a leader in the industry.

Here’s what we accomplished in 2024.

A POWERFUL GLOBAL BROKERAGE Top Luxury Brokerage, Most Innovative Brokerage and Most Innovative Marketing Campaign

Growing Companies

7th Largest Privately Held Independent Brokerage in the Nation, #1 Among U.S.'s Top 50 Firms in Average Sales

INMAN 2024

FINANCIAL TIMES

by Sides at $2.5M

5 Years As One of the Americas' Fastest

REALTRENDS

Agents across our global network consistently ranked on top industry lists by Inman, The Real Deal, The Hollywood Reporter, HousingWire, LA Magazine, Variety and more.

POWERHOUSE LEADERSHIP Swanpoel Power 200 MAURICIO UMANSKY, RANKED 50TH

Los Angeles Business Journal's 2024 Female Executive of The Year

Inman’s 2024 Power Players

RAINY HAKE AUSTIN

MAURICIO UMANSKY

Finalist for Los Angeles Business Journal's 2024 Corporate Counsel Awards

Finalist for Los Angeles Business Journal's 2024 CFO of the Year

BRANDON BRAGA

CFO

General Counsel

SANDY KNELL

Inman, Future Leader of Real Estate, 2024 Marketing All-Star LAURA CORRIGAN

SVP of Marketing & Communication

Our dynamic leadership team and top agents took the stage at prestigious industry events and conferences including Inman Connect Miami, Inman Connect New York, Inman Connect Las Vegas, Inman Connect Austin, The Real Deal’s LA Forum, HousingWire's The Gathering, and the National Association of Real Estate Editors annual conference.

8

In addition to earning recognition from top publications around the world, more than 2,000 articles were secured by The Agency’s award-winning, in-house bi-coastal PR team in 2024, reaching an audience of more than 41 billion.

9

The Agency was nominated as Gold Winners for two Viddy Awards in 2024 for the 2023 The Agency Global Forum and Making Headlines.

10

A Growing Media Presence The Agency is rapidly becoming a media powerhouse, with a growing portfolio that includes The Agency Magazine, a biannual luxury publication; The Agency Edit, a weekly newsletter reaching over 700K subscribers; and The Agency Journal, a content hub that published over 300 original articles in 2024 alone.

These platforms are redefining luxury real estate media, providing unparalleled insights, trends, and market intelligence to a global audience.

OUR SOCIAL REACH In 2024, The Agency continued to expand its digital presence and drive engagement across multiple platforms. From viral campaigns that generate millions of impressions to targeted social media efforts resulting in inquiries and sales, The Agency is redefining the role of social media in real estate success.

65.1M

358,000+

500K+

Total Impressions, Up By 600K Year Over Year

Followers Across LinkedIn, YouTube, X, TikTok, Facebook and Threads

On Instagram @TheAgencyRE

BUYING BEVERLY HILLS SEASON 2 Aired on Netflix and Streamed in Homes Around The World

Ranked in the

Top 10 Shows in 26 Countries

12.8M+ Social Media Impressions

25 Pieces of Coverage, with 7.8M+ Views

11

12

13

High stock prices and increased home equity fueled growth in prime residential segment, even as high interest rates dragged down the rest of the market 14

REAL ESTATE

Luxury Housing Market Outpaces General Market With high-net-worth buyers in a better position to ride out this year’s market shifts, prime properties have led in both sales and price growth in major markets around the world.

HOME SALES ABOVE $1 MILLION INCREASED BY

5.2%

“Even though overall home sales have slowed during 2024, the luxury market is growing on an annual basis,” says Hannah Jones, Economist at Realtor.com.

OVER THE FIRST HALF OF 2024 REALTOR.COM DATA

In the U.S., while home sales overall fell 12.9% year over year in the first half of 2024, home sales over $1 million increased 5.2%, according to Realtor.com data. The luxury segment outperformed the overall housing market in terms of price as well, year to date. The median home sales price was up 5% year over year in the first half of the year, while the luxury sales price—meaning homes in the 95th percentile— grew 14.2% in the same time period.

THE MEDIAN "LUXURY HOME SALES" PRICE INCREASED BY

14.2%

Luxury homes tend to spend more time on the market than the typical U.S. home. However, the gap between overall and luxury time on market is the smallest in the past four years year to date as the overall housing market slows and the luxury market retains strength. In the first eight months of 2024, luxury homes spent an average 25 more days on market than the typical U.S. home, down from 28 days one year prior.

OVER THE FIRST HALF OF 2024 REALTOR.COM DATA

3.03% MUCH HIGHER THE AGENCY'S GLOBAL SURVEY*

How are sales prices in your area compared to last year? *THE AGENCY SURVEYED OVER 2,000 AGENTS ACROSS OUR 130 OFFICES AROUND THE WORLD.

54.55% SLIGHTLY HIGHER 12.12% SAME 24.24% SLIGHTLY LOWER 6.06% MUCH LOWER

15

So... what’s behind the luxury market’s relative strength?

WELL-PERFORMING STOCKS, INCREASED EQUITY

INTEREST RATES Interest rates, which have dragged on the housing market this year and led to reductions in inventory and spending activity, have played less of a role in the luxury market.

In the U.S., the median 30-year-fixed mortgage rate hit a high of 7.79% in October 2023—the highest it had been in two decades—then hovered around 7% for most of 2024, according to data from Freddie Mac. High rates had a twofold impact on the overall market: Many would-be sellers have been resistant to move, as the cost of borrowing has made monthly payments much steeper for the same house than they would have been just a few years ago. That’s led to an inventory crunch.

Meanwhile, buyers have been discouraged by higher rates, with many of them waiting out the market until they see cuts.

Luxury buyers, though, are less dependent on financing and therefore less likely to take out a mortgage. In fact, nearly half of all high-end home buyers in the U.S. bought using all cash during the first quarter of 2024—the largest share in a decade, according to Redfin data.

The housing market could be on track for a better 2025 than 2024. After months of signaling, the Federal Reserve finally cut interest rates in September—the first rate cut in four years since the early days of Covid-19.

And while more are anticipated in the coming months, rates are still holding higher than expected.

7% 16

High-net-worth buyers have also benefited from a well-performing stock market.

A strong stock market can contribute to strong sales in the prime property market, says Katherine O’Shea, Real Estate Director with Coutts, a British private bank and wealth manager in London. Beyond adding to their coffers, a well-performing stock portfolio may also increase investors’ confidence, making them feel more at ease when it comes to making major purchases like a home.

Likewise, many high-net-worth individuals are seeing equity gains from homes they may have bought during the pandemic.

Across the U.S., homeowners saw their equity increase by a total of $1.3 trillion since the second quarter of 2023, an 8% annual gain, according to data from CoreLogic.

“High home equity and the strong stock market have acted as a buffer against interest rates,” says Ali Wolf, Chief Economist for Zonda, a creator of housing market research tools.

IN THE U.S., THE MEDIAN 30-YEAR-FIXED MORTGAGE HOVERED AROUND 7% FOR MOST OF 2024 FREDDIE MAC DATA

CHALLENGES AHEAD FOR THE LUXURY MARKET IN 2025 AGENTS REPORTED THAT HOUSING INVENTORY IN THEIR AREA IS UP BY

Despite these rosier economic conditions for high-net-worth individuals, some uncertainty remains around how geopolitics could impact luxury real estate going into 2025.

“While the impacts of a prolonged period of monetary tightening take effect and inflation continues to decline across major economies, it does so against a backdrop of political uncertainty with more than 70 global elections in 2024,” O’Shea says.

66.67%

As housing affordability remains a top concern among politicians across the globe, policies scrutinizing wealth and increasing regulations on property could influence luxury markets.

COMPARED TO INVENTORY DURING THE SAME TIME LAST YEAR

Uncertainty stemming from the political results can potentially bolster other global capitals. The results of the U.S. election could give a boost to London, O’Shea says, lending them a “safe haven” status.

THE AGENCY'S GLOBAL SURVEY

63.64% MUCH HIGHER THE AGENCY'S GLOBAL SURVEY

How are listing prices in your area compared to pre-Covid?

24.24% SLIGHTLY HIGHER 3.03% SAME 6.06% SLIGHTLY LOWER 3.03% MUCH LOWER

63.64% MUCH HIGHER THE AGENCY'S GLOBAL SURVEY

How are sales prices in your area compared to pre-Covid?

12.12%

SLIGHTLY HIGHER

6.06%

SAME

9.09%

SLIGHTLY LOWER

9.09%

MUCH LOWER

17

REAL ESTATE

More Listings and Sales Expected in 2025 Political stability and falling interest rates likely to boost sales, experts say

While interest rates have not been lowered as much as anticipated yet, they are widely predicted to continue falling in both the U.S. and Canada in 2025, resulting in lower borrowing costs for home buyers.

The average rate of a 30-year fixed-rate mortgage in the U.S. is predicted to fall from 6.2% in the third quarter of 2024 to 5.9% in the fourth quarter of 2025, according to Fannie Mae’s September 2024 Housing Forecast, dropping an average of 0.1% per quarter this year.

HOUSING FORECAST INFORMATION VIA FANNIE MAE, SEPTEMBER 2024

2023

2024

2025

SA AR, THOUS. UNITS

Q1

TOTAL HOUSING STARTS

1,369 1,455 1,380 1,481 1,407 1,340 1,305 1,300 1,325 1,351 1,364 1,389 1,420 1,338 1,357

SINGLE-FAMILY (1 UNIT)

828

935

972

1,060 1,062 1,007

948

955

970

984

993

1,009

948

993

989

MULTI-FAMILY (2+ UNITS)

541

520

409

421

358

345

355

366

371

380

472

345

368

TOTAL HOME SALES

4,953 4,885 4,702 4,526 4,863 4,877 4,659 4,708 4,949 5,138 5,295 5,451 4,756 4,742 5,209

NEW SINGLE-FAMILY

636

EXISTING (SF, CONDO/CO-OP)

4,317 4,187 4,020 3,880 4,200 4,187 3,962 4,036 4,264 4,436 4,587 4,735 4,090 4,062 4,505

Q2

698

Q3

682

Q4

646

Q1

345

663

Q2

334

690

Q3

697

Q4

672

Q1

685

Q2

702

Q3

709

Q4

717

2023

666

2024

680

2025

703

PERCENT CHANGE: QUARTERLY YOY, ANNUAL Q4/Q4 FANNIE MAE HPI

4.2

2.3

4.3

6.0

7.3

6.9

6.3

6.1

4.9

4.3

3.7

3.0

6.0

6.1

3.0

6.6

5.9

PERCENT: QUARTERLY AVG, ANNUAL Q4/Q4 30-YEAR FIXED RATE MORTGAGE

6.4

6.5

7.0

7.3

6.7

7.0

6.6

6.2

6.0

5.9

5.8

5.7

6.8

TOTAL HOUSING STARTS

323

421

397

329

335

438

448

460

429

580

607

549

1,470 1,680 2,155

SINGLE-FAMILY (1 UNIT)

265

351

331

275

261

360

363

321

270

406

442

388

1,222 1,305 1,506

MULTI-FAMILY (2+ UNITS)

58

70

65

54

75

78

85

138

150

174

164

161

248

375

649

EXISTING (SF, CONDO/CO-OP)

18

17

16

16

22

18

19

30

36

30

27

29

17

22

30

NSA, BIL. $, 1-4 UNITS

THE FANNIE MAE HPI FORECAST IS UPDATED ON THE FIRST MONTH OF EVERY QUARTER. INTEREST RATE FORECASTS ARE BASED ON RATES FROM AUGUST 30, 2024; ALL OTHER FORECASTS ARE BASED ON THE DATE ABOVE.

18

CONSUMER CONFIDENCE

A HEALTHY MARKET “I’m very excited about 2025. I think it’s going to be a healthy market,” says Mike Biryla, an agent at The Agency New York. After two years in which “we saw the fewest amount of transactions year over year that we had in decades, I think we’re going to start seeing buyers really start to come back,” he adds. “A lot of sellers have been reluctant to put their properties on the market and I think now that there’s going to be so much pent-up buyer demand, it’s kind of the perfect storm to see a lot of transactions happen.”

Sales of ultra-luxury properties have held steady over the past year, with ultra-high-net-worth buyers less affected by interest rates and more inclined to view property as a way to spread financial risk, says Steve Bailey, Managing Partner of The Agency in the Greater Toronto Area, but the increased cost of borrowing has slowed down sales of more affordable luxury homes. “I do firmly believe that with the continued drop in rates in both the U.S. and Canada, you’re going to see a very positive impact on housing, especially in the luxury space,” he says.

Lower interest rates tend to lead to an overall boost in consumer confidence that affects sales even at the top end of the luxury market (more on that in the sidebar below). “I think people are going to feel a little less strapped in terms of borrowing or credit card usage, or they’ll be able to do a little bit more spending generally speaking, so I think it will kind of grease the market on an overall level,” says Billy Rose, Co-Founder and Vice Chairman of The Agency.

Even cash buyers tend to feel more confident spending when interest rates are low, says Eric Haskell, at The Agency based in Montecito. “There’s a lot of people that go into a contract saying they’re a cash buyer but they’re borrowing on margin or they’re borrowing using some sort of banking relationship to get an ultra-low interest-rate loan,” he says. “I have clients that have bought houses up to $50 million and they do it as a cash offer and then they’ll end up doing a loan during the term of the transaction, so I think it impacts everyone across the board. My more high-net-worth clients have told me how much it impacts them, almost as much psychologically as it does financially.”

40.06% STOCK MARKET FLUCUATIONS THE AGENCY'S GLOBAL SURVEY

Which factors affect the luxury buyers in your market when it comes to buying power?

30.58% INTEREST RATE FLUCUATIONS 30.45% POLITICAL CLIMATE/REGULATIONS 20.82% ALL OF THE ABOVE 10.09% NONE OF THE ABOVE/OTHER

19

SUPPLY AND DEMAND

"In any respect, it should lead to more activity, more volume of transactions, more transactions on the absolute level and just free up the market quite a bit."

Whether or not buyers or sellers come out on top in 2025 will depend on a delicate balancing act between supply and demand. Rose forecasts an increase in inventory “as a result of sellers who are going to be willing to trade up and not end up being a lateral move,” he says.

“Greater inventory will theoretically lead to more of a buyer’s market, but there’s also been a big pent-up demand from buyers who have been sitting waiting for rates to get better, so the big question is going to be which is going to offset the other or exceed the other?” The questions arising are whether there will be greater buyer demand that exceeds new inventory, or new inventory that exceeds demand. “In any respect, it should lead to more activity, more volume of transactions, more transactions on the absolute level and just free up the market quite a bit,” Rose says.

66.67% OF AGENTS REPORTED THAT INTEREST RATES DIRECTLY AFFECT THE HIGH-END MARKET THE AGENCY'S GLOBAL SURVEY

BILLY ROSE

PUSHING UP PRICES High mortgage rates and elevated rental prices have left the market poised for a sudden flurry of action in 2025, says Tyler Whitman, Managing Partner for The Agency in the Hamptons. Many people, he says, “have been waiting for this moment, so if all of them enter the market at the same time when the mortgage rates go down, you are absolutely going to see an increase in prices.”

In particular, the $3 million-and-under market in both New York and the Hamptons is likely to see an uptick in transaction volumes as rates fall. “That’s a part of the market that’s been moving more slowly, so we’re excited to see transactions in that price range pick up a little bit more and hopefully have some more competition, which will lead to better prices for sellers,” Whitman says. “For buyers, though, mortgages becoming more affordable can actually make the homes less affordable. So there’s always two sides of the coin.”

45.45% BY THE START OF 2025 THE AGENCY'S GLOBAL SURVEY

When do you expect inventory to climb significantly?

20

20.20% BY MID-2025 6.06% BY THE END OF 2025 18.18% NOT UNTIL AFTER 2025

AN END TO U.S. ELECTION ANXIETY Another factor set to boost home sales in 2025 is the end of the election cycle, which tends to put a damper on the real estate market, leading people to halt their plans for making real estate moves. “Historically in New York the market from mid-September through the end of November freezes,” Biryla says of election years. “Regardless of who wins, 50% of the population is upset and people think that the world is going to end, and then come January or February things start to normalize and usually around March we’ll start seeing the market pick back up.”

Uncertainty is the greatest deterrent to those thinking of buying or selling a home, Haskell adds. “Being on the other side of the elections is going to feel good for everyone.”

The polarization made clear during an election cycle can be traumatizing, he says, “so the hope is that at least people can settle down for a second and know where the next four years are going and that’ll help in terms of confidence and business and homeownership.”

While it may take time for any housing or tax-related policies put in place by the new government to come into effect, knowing what those policies are is also likely to put homeowners’ and buyers’ minds at rest. “We should get clarity quickly after the election as to whether there are going to be major shake-ups or other impacts that affect property, and assuming we don’t see anything like that we should be moving into a new era with lower rates, more inventory and more sales,” Rose says.

21

CANADA SET FOR CHANGE Canadians are set to head to the polls for a general election in October 2025, but the housing market is likely to perk up following the U.S. election, says Ontario-based Bailey. “The whole world is looking at this and it’s extremely important for stock markets, for bond markets, for potentially more interest-rate reductions and, more importantly for us, it’s very important for U.S.-Canada relations,” he says.

But the Canadian election could prove significant should a change in government lead to the lifting of an ongoing ban on home sales to international buyers, currently set to remain in place until January 2027.

“If we do have a change in government that could be lifted. We’ve got people from Asia that want to buy, from the U.S., for sure, but you can’t do it unless you’re a permanent resident or unless you're a citizen,” Bailey says.

The relative weakness of the Canadian dollar means that for international buyers in the U.S., Europe and Asia, Canadian property is a particularly attractive investment, he adds. “For them to buy in Canada right now would be fantastic for us. I think it would help the luxury market.”

INTEREST RATES IN THE

5-7 % RANGE HAVE BECOME HISTORIC NORMS BILLY ROSE

A RETURN OF INTERNATIONAL BUYERS The number of international buyers has fallen over the past few years in several key U.S. markets, but the combination of post-election political clarity and falling interest rates— predicted in many of the world’s major economies this year—may be enough to reverse that trend. “Our hope is that we do see more international money coming in,” Biryla says. “I don’t know if interest rates are going to be the trigger that brings them over.”

If falling interest rates alone aren’t enough to entice overseas buyers, an end to election uncertainty may draw some to the table. “As far as what I’ve seen, boots on the ground, they’re not really affected as much by the mortgage rates,” Whitman says, “but the political environment affects them and there’s going to be a change there, no matter what, so I am interested to see what kind of impact that has on the foreign buyer market.”

22

10 BOOMING U.S. MARKETS (METRO SALES) INFORMATION VIA REALTOR.COM, JAN-JUNE 2024 ONLY

HOME SALES PRE-PANDEMIC VS. PANDEMIC

2024 VS. PRE-PANDEMIC

2024 VS. PANDEMIC

UNITED STATES

3.6%

-25.5%

-28.1%

PITTSBURGH, PA

-4.4%

-6.0%

-1.7%

COLUMBUS, OH

-10.4%

-18.5%

-9.0%

DETROIT-WARREN-DEARBORN, MI

-4.8%

-17.1%

-13.0%

CLEVELAND-ELYRIA, OH

-5.1%

-18.4%

-14.1%

BUFFALO-CHEEKTOWAGA, NY

-9.8%

-23.5%

-15.2%

CINCINNATI, OH-KY-IN

-5.6%

-21.8%

-17.2%

DALLAS-FORT WORTH-ARLINGTON, TX

0.4%

-17.0%

-17.3%

MEMPHIS, TN-MS-AR

3.2%

-15.4%

-18.0%

MILWAUKEE-WAUKESHA, WI

1.7%

-17.6%

-18.9%

BIRMINGHAM-HOOVER, AL

8.3%

-12.2%

-19.0%

METRO

A RETURN TO NORMALITY For both sellers and buyers, adjusting expectations after the pandemic years— when property prices reached record highs and interest rates reached record lows—is a continuing process. “What we hope to see is that we get into more of a balanced buyer and seller situation,” Bailey says. “A lot of sellers are still thinking based on what they saw during the pandemic, even though we’re so far from it at this point.”

Buyers, too, need to look at the bigger picture when it comes to interest rates.

“What we have to really keep in mind, and which I think will become hopefully more evident, is that rates in the 5% to 7% range have been historic norms,” Rose says. Returning to a healthy market will take a combination of adjusting interest rates and adjusting expectations. “We’re getting back to the historical norms, which will be half of the battle, and the other half of the battle is the buyer and seller pool understanding that this is normal, and we shouldn’t be looking at it through skewed eyes of what was a recent occurrence.”

Overall, real estate agents expect to see a healthier and more active market this year. “I think 2025 is going to be a great year,” Biryla says.

“I think 2026 is going to stay strong and roll into 2027.”

23

For insight into the mindset of buyers shopping for a home in 2025, consumer spending predictions may indicate how wealthy or even cash-strapped people are likely to be feeling.

Predicted growth in consumer spending can be a sign that people may feel confident paying slightly more for a home. “When you’re feeling better about your affordability and borrowing and cash position and all that, you’re going to feel better generally speaking spending more as well,” Rose says.

Economists predict a modest increase in overall consumer spending across durables, nondurables and services this year. As of September 2024, total consumer spending is projected to rise from $19.5 trillion in 2024 to $20.2 trillion in 2025, a 2.5% rise after adjusting for inflation, says Stephen Brown, Deputy Chief North America Economist at Capital Economics. For Canada, total consumer spending is projected to rise from $1.61 trillion in 2024 to $1.68 trillion in 2025, an increase of 2% in real terms.

2.5% THE ESTIMATED TOTAL CONSUMER SPENDING IS PROJECTED TO RISE TO IN 2025 STEPHEN BROWN, DEPUTY CHIEF NORTH AMERICA ECONOMIST AT CAPITAL ECONOMICS

24

The reason? Canadian households “have been a lot more exposed to higher interest rates, so there’s a greater share of variable rate debt, particularly for mortgages, in Canada,” he says.

“That’s been weighing on spending and even though interest rates are now coming down, immigration in Canada is also likely to fall next year, so that’s adding to a bit of the weakness.

By contrast, in the U.S. households aren’t quite as exposed to higher interest rates, but they’re also benefiting a lot more from the rise in equity markets at the moment. In particular U.S. equities, because they’re so tech-dominated, are doing very well, so that’s boosting households’ asset holdings, making them feel a bit wealthier, so they’re more likely to spend as well.”

Deloitte’s third-quarter report outlining a U.S. economic forecast, the United States Economic Forecast, noted that consumer spending “continues to exceed expectations,” with a recent increase in spending on durables, which is “often seen as a signal of rising consumer confidence.” Plus, according to the forecast, “interest-rate cuts should drive stronger demand for durable goods next year,” the company predicted. “Spending on services is predicted to increase more rapidly than spending on goods, rising 2% in 2025.”

Spending on durable goods was predicted to rise by 1.7% in real terms and spending on nondurable goods by 1.4%.

NOTE: DURABLE GOODS DON’T INCLUDE HOUSING, BUT THEY DO INCLUDE FURNITURE FOR HOMES.

CONSUMER SPENDING GROWTH DELOITTE ANALYSIS DATA

HISTORY

FORECAST

16

PERCENTAGE CHANGE

12 8 4 0 -4 -8 2017 DURABLES

2018

2019

NONDURABLES

2020

2021

2022

2023

2024

2025

2026

2027

2028

SERVICES

25

REAL ESTATE

Luxury Real Estate Hot Spots Diversify Around the Globe From Latin America to the Caribbean to Europe and the U.S., these areas are seeing sustained interest from high-end buyers

Since the pandemic upended the world and made remote and hybrid work the norm, high-net-worth buyers have been discovering and settling in more off-the-grid locations, opening up new markets outside cities and towns around the world, and making so-called feeder markets for luxury buyers more diverse.

In the luxury market, according to a report by Realtor.com that examined the increased pace of listing viewership by comparing pre-pandemic and pandemic times, many U.S. cities have fared well. Among them, the Virginia Beach area, the Cleveland, Ohio area, the Miami-Fort Lauderdale area and many more.

STRONG SECONDARY U.S. CITIES: JAN-JUNE 2019 VS JAN-JUNE 2024 CNT TRANS

CNT TRANS MILLION

AVG MEDIAN SALES PRICE

AVG PCT95 SALES PRICE

UNITED STATES

-25%

55.5%

45.2%

65.5%

COLUMBUS, OH

-18.5%

86%

50.9%

RICHMOND, VA

-18.7%

231.3%

53.5%

CINCINNATI, OH-KY-IN

-22.3%

339.6%

58.3%

JACKSONVILLE, FL

-22.5%

162.9%

55.3%

94.2%

RIVERSIDE-SAN BERNADINOONTARIO, CAN

-23.5%

152.4%

55.6%

91.2%

INDIANAPOLIS-CARMELANDERSON, IN

-24.4%

59.5%

66.6%

49.8%

NASHVILLE-DAVIDSONMURFREESBORO-FRANKLIN, TN

-24.9%

180.1%

63.4%

216%

METRO

26

50.3%

U.S. CITIES WITH INCREASED LUXURY INTEREST OVERALL: PAGE VIEW COUNT PER PROPERTY PRE-PANDEMIC VS. PANDEMIC

2024 VS. PRE-PANDEMIC

2024 VS. PANDEMIC

UNITED STATES

101.5%

64.6%

-18.3%

HARTFORD-EAST HARTFORD-MIDDLETOWN, CT

164.4%

204%

15%

VIRGINIA BEACH-NORFOLK-NEWPORT NEWS, VA-NC

139%

127%

-5%

PROVIDENCE-WARWICK, RI-MA

149.9%

125.3%

-9.8%

METRO

U.S. CITIES WITH SUSTAINED LUXURY INTEREST OVERALL: PAGE VIEW CT/PROPERTY LISTING PRICE 95TH PERC PRE-PANDEMIC VS. PANDEMIC

2024 VS. PRE-PANDEMIC

2024 VS. PANDEMIC

UNITED STATES

101.8%

70.2%

-15.7%

VIRGINIA BEACH-NORFOLK-NEWPORT NEWS, VA-NC

194.3%

237.1%

14.6%

MIAMI-FORT LAUDERDALE-POMPANO BEACH, FL

108.3%

136.1%

13.3%

LOUISVILLE/JEFFERSON COUNTY, KY-IN

118.3%

146.5%

12.9%

HARTFORD-EAST HARTFORD-MIDDLETOWN, CT

137.6%

160.0%

9.4%

PROVIDENCE-WARWICK, RI-MA

160.0%

184.3%

9.3%

CLEVELAND-ELYRIA, OH

102.1%

117.5%

7.7%

HOUSTON-THE WOODLANDS-SUGAR LAND, TX

103.4%

113.8%

5.1%

BIRMINGHAM-HOOVER, AL

124.6%

132.3%

3.4%

METRO

According to a survey of The Agency agents, only around 18% of respondents say they’ve seen luxury migration stop since Covid. While the majority of respondents said that migration has slowed since the peak of the pandemic, the shift is still there.

THE AGENCY'S GLOBAL SURVEY

Are you still seeing as much luxury migration as started during Covid?

54.45% YES, BUT IT'S SLOWING 27.27% YES, AT ABOUT THE SAME RATE 18.18% NO, IT'S STOPPED

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Take a look at some of the new hot spots

for luxury homeowners all over the world.

PANAMA CITY Panama City, a global business hub that has earned a reputation as the “Singapore of the Americas,” has seen an influx of diverse high-net-worth buyers in recent years.

The typical purchasers—from the U.S., Canada and Europe—have been joined by their peers from Latin American countries, including Colombia, Venezuela, Peru and Argentina. There is also growing interest from Asia, particularly China.

“The diverse buyer demographic reflects Panama’s appeal as a global destination for luxury real estate, offering a blend of modern amenities, natural beauty and a welcoming environment,” says Victoria Levitam Cohen, Managing Partner at The Agency Panama. “The combination of economic stability, strategic location and favorable residency policies further enhance its attractiveness to a wide range of affluent buyers.”

The variety of luxury housing, which ranges from condos with ocean views to exclusive beachfront villas and private islands, is a major draw.

She notes that Panama’s significant tax benefits— there is no income tax on foreign-earned income, no inheritance tax and a range of other incentives—and its Qualified Investor Visa program, which allows individuals to gain permanent residency by buying real estate or investing in the stock market, have proved particularly attractive to remote workers and expatriates who are setting up family offices.

“Panama’s privacy laws, combined with the availability of exclusive properties like private islands and penthouses, make it a top choice for celebrities and others seeking discretion and luxury,” she says.

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The most popular areas are Panama City and its beachfront communities such as Buenaventura and Coronado. Emerging communities that are attracting a lot of attention range from Boquete, which has a cooler climate, to Pedasi, which offers seclusion and world-class surfing.

Other favorites are Santa Maria, which has a luxury golf course designed by Jack Nicklaus, and the Pearl Islands, a private development that has plans for a Ritz-Carlton Reserve Hotel and Private Residences and a branded fishing village.

“Panama,” Levitam Cohen adds, “is quickly becoming the premier destination for luxury real estate investment. It’s poised to be the next Miami or Los Cabos.”

CLEVELAND, OHIO The influx of newcomers interested in making their home in Cleveland has “skyrocketed,” pushing prices to record highs, according to David Ayers, Managing Partner at The Agency Cleveland.

Noting that the city’s real estate has been undervalued since 2008, he says the typical 6,000-square-foot house that sold for $700,000 at the end of 2020 and beginning of 2021 now trades at $1.4 million—double the price.

“In the summer of 2024, we listed two properties— one for $20 million, and one for $14 million, which are records not only for the city but also for the entire state,” he says.

Nick Zawitz, Managing Partner at The Agency Cleveland, says that pre-pandemic parcels that brought $100 to $200 per square foot have climbed to $300 to $400 per square foot.

Out-of-state investors and buyers from high-priced markets on the East and West Coasts, notably New York, California and Portland, Washington, and even Chicago, are discovering that the Midwest city has a lot to offer. Many of them have multiple homes.

“It’s a different way of life,” says Ayers, an Ohio native who relocated from New York City in 2021. “But you’re still near a major metropolitan city. And you’re near Lake Erie. There are rolling hills and trees; it feels like Connecticut and upstate New York. What you get for $5 million is so much more than in some of these markets.”

Rated in 2023 by National Geographic as one of the most livable cities resiliently weathering climate change, Cleveland is home to a variety of cultural amenities, including the Cleveland Orchestra. It’s also home to the top-ranked Cleveland Clinic.

“Cleveland is America’s best-kept secret,” Ayers says. “It’s a spectacular place.”

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NORTHWEST ARKANSAS Lured by “a lot more bang for their buck,” buyers from California and Texas are making themselves at home in Northwest Arkansas, says Calah Andelman, executive at The Agency Bentonville. “They often find they can sell a much smaller place back in their home states and put that money in a really nice luxury home here while still turning a profit,” adds Kaala House, Managing Partner alongside Andelman.

While the cities of Rogers, Bentonville as well as Fayetteville are attracting these out-of-state professional people who are relocating for work and buying primary homes for their families, some of the smaller towns such as Pea Ridge and Gravette also are becoming more popular.

Although prices in the small towns have increased, “they definitely don’t seem to be deterring people from moving to them,” Andelman says. “It’s not surprising

to us because they could be our best-kept secret for only so long before people realized how great they are and wanted to become part of that. So when a listing comes, it does get snatched up pretty quickly.”

Many of these purchasers get jobs at Walmart, Tyson and J.B. Hunt, whose headquarters are in the area.

“There’s more than a 50% chance that if you meet a newbie and ask where they come from and what they do for work, they’ll say they’re from one of the coastal states and work for Walmart,” Andelman says. “If anything, that has increased in recent years as these businesses push for a return to office and request that their employees relocate here.”

House notes that Northwest Arkansas will continue to be a draw because “beyond providing employment, these businesses have poured a ton of resources into making this a community anyone would want to live in.”

PORTUGAL Since 2018, there has been a steady increase in American buyers in Portugal, in addition to purchasers from all corners of the world, notably from Brazil and Northern Europe.

The weather, quality of life, infrastructure, schools, hospitals, safety and the country’s ranking as No. 7 in the world on the English Proficiency Index, are the main attractors. So are the high-end restaurants and shops and lifestyle amenities like golf, tennis and water sports.

He notes that Cascais, Lisbon, Comporta, Algarve and Porto are “extremely popular” and the Silver Coast “has risen steadily in the rankings.” Comporta, he adds, has “grown dramatically” in the past five years, and throughout the country, “growth has been organic but huge,” with lots of luxury hotel brands opening in the area as proof.

Real estate prices have risen steadily, with lack of supply being a key factor fueling the increase.

“Builders are building more trying to increase supply but haven’t been able to meet demand,” he says.

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“People are moving to Portugal in droves,” says Ayres Neto, Managing Partner at The Agency Portugal. “They are families, retirees, remote-work families.”

TURKS AND CAICOS An increase in the number of airline flights has opened up the Turks and Caicos market to more home buyers from Texas and the Midwest, who are adding to the growing population of residents who hail from the eastern U.S., Canada and to a lesser extent, the U.K.

O’Neill notes that the outer islands, such as South Caicos and North Caicos, are attracting more attention and development because prices are significantly lower, sometimes only 10% of what they are in Providenciales.

“Our predominant market remains second and third homes, largely for a combination of usage and investment,” says Sean O’Neill, Managing Partner at The Agency Turks and Caicos. “We are seeing more families moving here as our economy grows and seeking primary homes.”

“Turks and Caicos remains an escape, particularly for those on the Eastern Seaboard of the United States,” he says, adding that the increase in international brands, such as the St. Regis, the Hyatt Andaz, Kimpton and InterContinental, are making the area even more attractive. “They can get on a plane in the morning and be in their homes by lunch.”

The main attraction of the 40-island British Overseas Territory archipelago that’s southeast of the Bahamas is the gateway island of Providenciales, which is home to the international airport and a new $3.8 billion development project.

Prices, which increased significantly during the pandemic, are holding steady. “With properties that are rarely leveraged beyond 50%, if at all, and lack of annual property tax, sellers aren’t often motivated to sell,” he says, and “this pushes up prices.”

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MEXICO CITY Some buyers from as far away as Texas, New York and California, as well as local purchasers from Monterrey, are discovering luxury properties in Mexico City, with the city seeing its population grow steadily. In fact, Mexico City's 2024 population is estimated at 22,505,30 having grown by 223,900 in the last year—a 1% annual change, according to World Population Review.

Condesa, Roma Norte, Lomas de Chapultepec, Polanco, Virreyes, Pedregal and the golf clubs —Club de Golf Bosques, Lomas Country Club, Club de Golf de Santa Fe, Bosque Real, Valle Escondido and Club de Golf Chiluca—are the biggest draws, says Ricardo Umansky, Managing Partner at The Agency Mexico City.

Although demand is increasing in the city’s offthe-radar areas like Tabacalera, San Rafael and Juarez, they are not luxury communities.

“But they are driven by a luxury market,” Umansky says. “Prices have gone up so much in Roma Norte and Condesa that people who can’t afford them look for other options. Developments in these areas are being created to cover a high demand for properties for not-so-high prices.

They are for investors who will rent out units or local professionals who want to get an affordable primary home.”

MEXICO CITY'S 2024 POPULATION IS ESTIMATED TO HAVE GROWN BY

223,900 IN THE LAST YEAR— A 1% ANNUAL CHANGE WORLD POPULATION REVIEW DATA

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As younger generations inherit more wealth, their changing attitudes and tastes are already clear 34

REAL ESTATE

What Does a Historic Wealth Transfer Mean for Luxury Real Estate and Beyond?

Inherited generational wealth in the form of real estate, investments and cash will likely have an outsize impact over the next decade on individuals in their mid-to-late 40s from wealthy families, according to a recent report on family wealth transfer by London-based data firm Altrata.

Many luxury real estate agents say that the great wealth transfer has already begun. In fact, slightly more than 70% of The Agency agents polled said that some of their clients rely on family money to purchase homes.

“Generational wealth transfer is already a motivating factor in purchasing power,” says Paul Lester, Partner with The Agency in Los Angeles. “We see 30-year-old couples who can actively compete for the best properties in the $10 million, $20 million or $30 million range.”

Buyers with the support of family wealth now and the promise of more to come have an advantage over other buyers, Lester says.

“The ‘wealth envelope’ allows them to make decisions more succinctly and with less worry about their financial future,” he says.

THE AGENCY'S GLOBAL SURVEY

An estimated $31 trillion is expected to be transferred over the next decade by 1.2 million people, each with a net worth of at least $5 million. Two-thirds of that wealth, nearly $20 trillion, is anticipated to be passed on by about 155,000 individuals, each with a net worth of $30 million or more, according to Altrata. The report found that most of the wealth will go to heirs who are among the youngest Gen X generation and the oldest millennials.

The wealth transfer is likely to go to households that are already wealthy, so they’ll just live a “little more lavishly,” says Mike Biryla, agent with The Agency New York, who says a slow trickle of inheritance is already impacting high-net-worth households in his market.

“The markets where I work are among the wealthiest in the country and we’re already seeing younger generations buy $4 million to $5 million homes with inherited wealth,” says Tracy McLaughlin, agent with The Agency in Marin County, California, and Aspen, Colorado. “In a lot of cases, parents are helping them buy homes as an investment in their future.”

McLaughlin says that in Marin County more buyers have inherited wealth than in the past, when luxury buyers were more likely to be high earners in the technology, financial and legal sectors.

Agents reported that they see some clients helping younger generations with the homebuying process as an "early inheritance" or moving around funds/assets prior to a typical inheritance.

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WHAT LUXURY MEANS TO YOUNGER GENERATIONS As young Gen Xers and older millennials inherit more family wealth, changes in attitudes are already occurring, says Oliver Chen, Managing Director and Senior Equity Research Analyst covering retail and luxury goods at TD Cowen in New York City.

“To younger consumers, luxury means time and convenience,” Chen says. “They’re also focused on wellness, longevity, happiness and beauty. But at the core, money brings convenience.” In the luxury housing market, that means younger wealthy buyers are more likely to look for features that contribute to their physical health and wellness, connect to nature and improve their mental health, Chen says.

Since the great financial crisis in 2008, Chen says younger consumers expect more transparency around everything they buy. “It’s fashionable to get a bargain, to shop at Costco and to mix a Birkin bag with a Target T-shirt,” he says. “When they spend money, they want something timeless such as a classic piece of jewelry or a watch that they can evaluate based on the cost per wear.” Previous generations valued buying specific items such as a Mercedes, a particular china pattern or a rug, but now luxury intersects with individuality and personal style, Chen says.

There’s also a more responsible attitude about wealth, Lester says. “People who are inheriting wealth now are more aware of what it takes to keep money over the long term,” Lester says. “They want to be careful so their generational wealth and their families continue to succeed.”

THE AGENCY'S GLOBAL SURVEY

How many of your clients buy homes with support from their family members?

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Generally, younger generations are more discriminating curators of collections such as art, clothes, cars and real estate, trending toward minimalism, Lester says. “They’ll collect 10 cars instead of 30 and maybe sell a car or two when it makes sense,” he says.

McLaughlin sees a big difference between secondhome buyers in Aspen and buyers in Marin who are purchasing their primary residences. “Young buyers in Aspen are buying art and furniture to match the quality of their home, while Marin buyers purchase very expensive homes without adding a lot of art,” McLaughlin says.

Gen X and millennial buyers everywhere are also more sensitive to security issues and are likely to want cameras and electronics everywhere, McLaughlin says.

“Younger generations are also more concerned with mission-focused spending,” Chen says. “If they have the resources, they will try to use them for the greater good or invest in companies that pay attention to their carbon footprint and other causes.” McLaughlin says that as younger buyers become wealthier, their climate-conscious focus will increase demand for energy-efficient homes with solar power. “We see more socially conscious people in the younger generations who are committed to solar energy and electric vehicles, but they want their luxuries, too,” says Jon Grauman, Principal, Grauman + Rosenfeld team with The Agency Beverly Hills.

0% MOST DO 72.73% SOME DO 27.27% HAVEN'T SEEN THAT AT ALL

THE AGENCY'S GLOBAL SURVEY

60%

The estimated number of Millennial and Gen Z homebuyers that are reported to recieve help from family members when purchasing a home or qualifying for a mortage loan.

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NEW WEALTH AND NEW REAL ESTATE TRENDS There’s an astronomical level of wealth in Los Angeles, Grauman says. “It’s not the people you see on the silver screen—it’s generational wealth, it’s people who run the studios, it’s tech money and venture capitalists,” Grauman says. “The wealthy Gen X and Millennial buyers want new homes. They don’t want to buy and renovate, in part because the pace of the world they live in moves too fast and they don’t have time.”

In addition, Grauman says younger buyers want outdoor space and more indoor space to entertain and work at home. McLaughlin sees similar patterns with young families in their mid-30s to their early 40s in Marin. “The focus is on their kids, so they want a usable yard, four or five bedrooms on one level, plus a wellness space where they can work out at home with a gym, a cold plunge and an infrared sauna,” McLaughlin says. “If they’re spending $30 million, they want around 7,000 square feet, but it’s not about more space or less space—they want the right space.”

Instead of media rooms that were popular 20 years ago, younger buyers want “ego spaces” such as a walk-in wine cellar, an art studio and a wellness center, McLaughlin says. Second kitchens for catering and extra appliances are also valued for entertaining at home.

MULTIPLE HOMES OR A SINGLE COMPOUND The ability to afford multiple homes is a trend that will likely continue as younger generations inherit wealth from their families, Grauman says.

“Wealthy people often own a primary residence in a tax haven where they spend six months and one day, such as in Florida or Texas,” Grauman says. “Then they also have homes in Aspen and L.A. There’s a referral highway among agents spanning the world of wealthy buyers, which I think will expand to more locations and more homes as wealth gets transferred.”

The ultra-wealthy think bigger than their neighborhood, Lester says. "Instead of people living near places they know, they choose to live in a place that serves their lifestyle best in terms of the weather, the culture, the safety and the lifestyle,” Lester says. Real estate “microclimates” exist throughout the world now, he says.

“You used to hear about wealth havens such as Cap Ferrat [in Southern France] where people would come and go, but now we see more people choosing a desirable place to live yearround such as Carmel and Montecito [in California] and Palm Beach [in Florida],” Lester says. “If you have wealth given to you, you can choose to live in places like that full-time, not just when you’re on vacation.”

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"Plus, Millennials and younger Gen Xers focus more on experiences than material goods, Biryla says. “Their work is different, too, since so many in their generations are able to work remotely there’s an added incentive to own multiple places,” Biryla says.

In New York City, Biryla says he’s seeing a wealth shift from the traditionally high-end Upper East Side to neighborhoods more popular with younger generations.

“There are already some challenges with the Fifth Avenue co-op market because as younger generations inherit those apartments, they sell them so they can buy something new in Tribeca or the West Village,” Biryla says. “They’d rather offload them than renovate or risk being rejected by a co-op board if they can’t meet certain financial requirements.”

While Biryla says some of the youngest wealthy individuals prefer the nomadic life and will own just one home and rent other places, those in their mid-30s to mid-40s are more likely to establish a luxury home in New York City with a second retreat nearby in the Hamptons or Upstate New York.

“A lot of these buyers are interested in value-add opportunities such as buying a Hamptons home for $3 million to $10 million since they’re easy to sell and can bring in significant rental income,” Biryla says.

Rather than buy a second or third home, some young wealthy people choose to travel to a resort or spa that provides similar privacy to a single-family home without buying one, Lester says.

“There’s a group of younger Gen X and Millennial buyers who want to identify places where they can live a more responsible life,” Lester says. “They want to achieve zero- carbon emissions, which means they’re more likely to choose a property where they can create a single compound of homes for themselves and guests without flying between multiple homes.”

Depending on how and where they work, some younger wealthy households choose to have two primary homes and split their time evenly, Lester says.

Whether they invest in a single spectacular property, two homes in the U.S. or a global collection of residences, as the next generation inherits more wealth they’re likely to influence luxury real estate markets for decades into the future.

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REAL ESTATE

A Closer Look at Off-Market Deals The practice is particularly popular for trophy properties… and it may become more prevalent

For high-net-worth sellers desiring privacy, offmarket deals can offer a swift and seamless sales process that eliminates the need for open houses and showings. For buyers, they can mean running up against less competition and fewer bidding wars.

These deals are not listed in traditional public channels such as the Multiple Listing Service and either reside on agents’ private lists, which are made available to select clients, or change hands privately, owner to owner. Since most fall under the former category, an in-the-know agent is more important than usual.

“At The Agency, we believe in giving our clients options and the freedom to choose the approach that best suits their needs."

MAURICIO UMANSKY, FOUNDER & CEO

"When it comes to high-end, multi-million-dollar properties, off-market deals provide privacy and exclusivity for sellers while allowing buyers a chance to avoid the competitive pressures of public listings," says Mauricio. "However, policies like Clear Cooperation run the risk of limiting those choices. Above all, I advocate for policies that have built-in flexibility and allow our clients to navigate the market on their terms."

In a real estate market with pent-up demand and not enough listings—which describes much of the world at the moment—off-market listings can help alleviate some stress for those who’ve been waiting on the 40

sidelines to buy. For example, in Salt Lake City, where demand continues to outstrip supply in the luxury market, off-market deals are happening much more frequently than they have in the past.

“People are flocking to Utah, and when we get a buyer, we almost immediately look for off-market properties,” says Joey Sutorius, a Managing Partner at The Agency Salt Lake City. “We pull up properties and send out letters to homeowners” to find them, he says.

He notes that the combination of price, privacy and ease of the arrangement are the main enticements.

So is the fact that the public cannot see how long the property has been on the market, a key factor because luxury estates typically take longer to sell.

Plus, “off-market transactions are amicable transactions— there’s no pressure on the buyer to make a quick decision,” Sutorius says.

Adds Sam Palmer, an agent at The Agency Beverly Hills, money is not always a motivator in such sales.

“Typically, these types of owners aren’t desperate to sell,” he says. “But if approached, they may say, ‘I paid $20 million for it last year, and if I can get $40 million now, I’ll sell.’ And buyers expect to pay a little bit of a premium for a special property.”

Because most off-market deals involve luxury properties, it goes without saying that a bargain isn’t a top priority for prospective buyers. “These deals don’t work for every property,” Palmer says. “It has to be a trophy asset that people know about and want to buy.”

Listing a home on the Multiple Listing Service “is oftentimes the last resort,” says Joey Parsi, an agent at The Agency Beverly Hills, who adds that “most clients will choose to list” rather than lower prices if the off-market deal doesn’t attract bids.

Off-market deals also occur when homeowners reach out to an agent and request a private sale.

In the luxury market in his area of Utah, where prices start at $1.25 million and properties average $450 per square foot, the initial success rate of Sutorius’ strategy, although low—200 letters typically yield three to four responses from homeowners—allows him and his team to build up a precise database of inventory and opportunities for future buyers.

“We keep the list in a little black book in the back pocket,” he says, adding that three to four times a year, the dots connect and off-market sales are made.

His team also has started hosting large, highly publicized “sneak preview” events that spark conversations with neighbors about selling their properties, too.

Until the supply-demand equation balances—“baby boomers are one of the biggest bottlenecks because they have too much stuff and aren’t downsizing,” Sutorius says— he predicts “off-market deals will become more prevalent here,” helping release some of that pent-up demand.

On the west side of Los Angeles, where Palmer specializes in properties that trade for $20 million and more, off-market deals are already routine. Celebrities, in particular, value the anonymity they bring.

“They don’t want the public in their homes,” Palmer says.

“And they don’t want the wrong agents coming through; they want the right agents, the select agents who deal with trophy properties and who can bring in the right buyers.”

Because most off-market deals involve luxury properties, it goes without saying that a bargain isn’t a top priority for prospective buyers. “These deals don’t work for every property,” Palmer says. “It has to be a trophy asset that people know about and want to buy.”

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Whether new build or a full renovation, the trend is moving toward more understated materials that speak to elegance and are better for the environment 42

REAL ESTATE

Sustainable Materials in New Homes and Renovations Perched in the hills of Atherton, California, 94 Melanie Lane is a striking example of how developers are pushing the envelope when it comes to new development.

Whether a new build or a full renovation, the trend is moving toward the use of more understated materials that speak not only to elegance, but are also better for the environment.

“I think the market is starving for homes like this one,” says listing agent Mara McCain of The Agency Woodside.

“Clients are increasingly requesting sustainable options that do not compromise on aesthetics,” says Victoria Levitam, Managing Partner of The Agency’s Panama office. “This aligns with a broader trend toward eco-conscious living, where buyers seek properties that reflect their values.”

She describes the home’s style as “organic modern,” which aptly fits the dark wooden exteriors and stark fine lines of the nearly 13,000-square-foot home. While there are all the typical features and amenities of a home of this caliber, such as imported Italian marble, a large outdoor entertaining area and custom white oak flooring, the outpost signals a turning point for material use in ways that blend in with their surroundings rather than stand out.

She points to the Ocean Reef development, a duo of islands set off the coast of Panama City. Within the project are a number of different residential options ranging from condos to full, estate-style homes and all share an appeal for what Levitam calls “modern, flexible spaces with hotel-style amenities.”

94 MELANIE LANE ATHERTON, CALIFORNIA

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These are homes that blend into the coastal surroundings with soft woods, private beach access and much more. “This includes open-concept layouts that allow for seamless transitions between work and leisure,” she adds.

Like the floorplan at 94 Melanie, there are an abundance of tall, towering windows that complement this shift toward kinder, gentler hues.

Looking more at renovations, The Agency San Miguel Managing Partner Juan Diaz Rivera is noting much of this same shift, especially among a set of more mobile and younger affluent buyers coming from bigger cities into resort communities.

“Whereas older groups would use granite and marble, now their kids are using polished microcement and patinated copper or bronze, bringing in a different aesthetic,” he notes.

In the popular resort region of Los Cabos, Diaz Rivera says that a younger, middle-class generation

coming from Mexico City is spurring a competitive rental market, but also creating pause for real estate as a large amount of new development comes online. He adds that it’s the next example of mobility following the pandemic where this demographic is looking for a new resort area to settle in, laying semi-permanent roots.

“This is going to change the market dramatically,” he says. “The wealth transfer that everyone was talking about 20 years ago is happening now among Americans and Mexicans, and there are more mobile Mexicans than ever.”

Diaz Rivera also notes that a similar younger generation is striving to keep the past alive while updating old spaces for modern living. In Panama City’s historic district of Casco Antiguo, buyers are honoring the country’s colonial past by keeping old windows and other features intact to abide by strict renovation regulations and to keep the spirit of the area alive.

94 MELANIE LANE ATHERTON, CALIFORNIA

A new era of luxury residents are looking for elegance in simplicity and functionality, allowing their home to become a part of their lifestyle rather than the defining piece of it.

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It’s in contrast to the wave of new development, where new clients are requesting monochromatic natural stones like travertine and limestone, and installations that make them memorable and visually striking, according to Levitam.

These materials also happen to have less of an environmental impact whether they’ve been responsibly harvested or reclaimed from another source.

“The overall design ethos leans toward freshness, combining contemporary aesthetics with a cozy ambiance that invites warmth and comfort,” she says.

These features support a new lifestyle simply not known by Panamanians a generation ago—remote work and the digital nomad lifestyle are allowing fresh tastes and design inspiration to filter into these new developments, creating a new dimension within the country’s luxury real estate offering.

“They prioritize practicality and ease of maintenance,” Levitam adds.

Gone are the days of lavish, over-the-top finishes, intricate landscaping and boldly colored, statementmaking materials. A new era of luxury residents are looking for elegance in simplicity and functionality, allowing their home to become a part of their lifestyle rather than the defining piece of it.

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REAL ESTATE

No Golden Visa, No Problem Agents in Spain and Portugal don’t expect a big hit to markets as investment plans wind down as other permit options remain

It’s the end of a golden era in Europe.

Spain, Portugal, Greece and Cyprus in the past two years have all scrapped or added major restrictions to their “golden visa” proposals, which grant residency rights to foreigners making real estate purchases over a certain amount in those countries.

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But even as the residency programs wind down, agents in some of the most sought-after markets expect little change in home prices.

“The impact on the market is highly overrated,” says Ayres Neto, Managing Partner of The Agency Portugal.

THE AGENCY'S GLOBAL SURVEY

95%

The number of agents who have reported no negative effects to their market/business as a result of the new Golden Visa changes.

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That’s counter to what politicians in the European Union are saying—that the withdrawal from the program would reduce upward pressure on housing prices from foreign nationals and free up more units for locals.

5,407 of the total visas going to them, according to statistics from Portugal’s Foreigners and Borders Service. Brazilians and Americans make up the next largest share, with 1,256 and 781 visas awarded, respectively.

“Housing is a constitutional right and not a mere speculative business,” said Spanish Prime Minister Pedro Sánchez in announcing the country’s decision to end the program in April.

But the number of homes transacting through the program made up less than 1% of the overall market in both countries.

“The government is trying to say, ‘Look, we know there are issues regarding the supply of housing and high prices in general, and we don’t think we should be making it easier for wealthy foreigners to acquire properties,’” says Josep Turro, Managing Director of The Agency in Barcelona. “It’s more a message than anything.”

The programs started up in the wake of the eurozone’s debt crisis in 2012, as countries sought a way to stimulate their economies and in particular their stagnating housing markets. The programs typically set an investment floor of around €500,000— and sometimes less for regions with less foreign real estate demand.

Since Spain launched the program in 2013, it has issued 14,576 visas to real estate investors making cash purchases of more than €500,000. Chinese investors topped the list of those awarded the visa, by nationality, followed by Russians.

Agents don’t expect prices across most markets to change as a result of these programs winding down.

In Portugal, the golden visa program will still exist, but in a different form—though real estate investment will no longer be applicable, investors will have other options, such as a venture capital fund investment or science and research contribution of €500,000 or more, or incorporating a company creating at least 10 jobs.

Other options also exist for foreigners looking to get residency in Portugal. The D7 visa, known as the “passive income” visa, allows non-EU citizens with a minimum yearly income of €8,640 per year to legally reside in Portugal. Visa holders must spend at least six months out of the year residing in Portugal.

Portugal has issued 12,718 visas between 2013 and 2023, generating around €6.5 billion in real estate investment. As in Spain, the Chinese are the largest nationality represented in the program, with

“If you live in Portugal for six months or more of the year and have passive income from pretty much any country on the planet, you can still have pretty much the same benefits that the golden visa gives,” Neto says. “The only condition is that you need to live here half of the year, whereas the golden visa was seven days.”

SINCE 2013, SPAIN HAS ISSUED

PORTUGAL HAS ISSUED

VISAS TO REAL ESTATE INVESTORS MAKING PURCHASES OVER €500,000

VISAS GENERATING AROUND €6.5 BILLION IN REAL ESTATE INVESTMENT

SPANISH GOVERNMENT REPORT DATA

U.S. DEPARTMENT OF STATE REPORT DATA

14,576

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“It is very much a drop in the ocean,” Turro says.

12,718

Other Countries Rush In With Their Own Golden Visas While Spain and Portugal might be ending their real estate investment program, it hasn’t meant the death of such programs in Europe entirely.

As of August 2024, Greece’s program requires a higher minimum investment of €800,000 in its most popular regions, like Attica (which includes Athens), Thessaloniki, Mykonos and Santorini.

Meanwhile, other areas in Greece have a more attainable entry level — €400,000. That’s a 60% increase from the previous minimum of €250,000.

Hungary, meanwhile, is relaunching its real estate investment program as of January 2025, providing a 10-year residency permit for the purchase of a residential property with a minimum price of €500,000. Prices there are among some of the lowest in the European Union.

WHITE MARBLE, A NEW LUXURY DEVELOPMENT ON THE ISLAND OF THASSOS, REPRESENTED BY THE AGENCY'S CHRISOULA PAPATRYFON

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Canada Extends Its Ban on Foreign Ownership Early in 2025, Canada announced that it would extend its ban on foreign ownership of Canadian housing through the end of 2026. The law, intended to keep locals from getting priced out of the housing market, was originally meant to expire at the end of 2024.

John Faratro, Managing Partner of The Agency Montreal, said that the policy has led to a slowdown in the downtown and luxury condo market, which was largely propped up by foreign buyers.

“Prices have dropped a little bit,” Faratro said.

“We have some developers in difficult situations because that whole market has disappeared.”

While prices have cooled down in Canada’s urban centers since the pandemic, it’s hard to separate out the impact of the ban from the overall cooling effect that high interest rates have had on the market, he said.

Some foreign clients have also found workarounds to the restrictions. Visa holders in Canada, including students, can still purchase residences.

In some cases, parents with children studying in Canada have loaned money to their children to buy a property, rather than purchasing the property themselves.

Additionally, foreign buyers are still able to purchase homes outside of urban areas, making it still possible to buy in ski resorts or lakeside towns, Faratro said.

“This policy was mostly created for two of the hottest markets in Canada — Vancouver and Toronto,” Faratro said. “We’ve seen less impact in other places.”

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For its part, Spain offers a remote worker or “digital nomad” visa, which allows its holders to work remotely in the country for up to three years and pay a fixed income tax of 15% in return for bringing a foreign salary.

In Marbella on Spain’s southern coast, 7.1% of buyers in the last year took advantage of the golden visa plan, driven mainly by Russian and British buyers, says Leif Orthmann, Managing Partner of The Agency Marbella.

Still, it’s difficult for agents to judge whether purchases of luxury properties were motivated by the residency permit, or if the golden visa was simply an “add-on” for these buyers who would have bought property in any case.

Orthmann did have one client—an American—who rushed to buy something over the summer before the golden visa program ended. But stories like this are more the exception than the norm, he says.

“We don’t really expect to see the golden visa have a major impact on prices in the luxury market,” Orthmann says. Alby Euesden, Managing Director of The Agency in Mallorca, agreed. “When you draw back the curtains on the golden visa, there are plenty of other ways one can set things up that could be even more lucrative,” Euesden says.

PRICES ON THE ISLAND OF MALLORCA HAVE INCREASED BY

10.6%

BETWEEN 2022 & 2023, REPRESENTING ONE OF THE LARGEST INCREASES IN REAL ESTATE PRICES ACROSS THE COUNTRY. ALBY EUSEDEN, THE AGENCY MALLORCA

In his market, Euesden has seen few golden visa transactions. Most of his clients in Mallorca come from within Europe—Britons, Germans and Northern Europeans—but they use their Mallorcan homes as a vacation destination, not a path to residency.

Few Britons have applied for the program as they’d already bought their homes pre-Brexit, and golden visa applicants must apply for the visa within five years of making their home purchase.

More than the golden visa program, it’s the increase in demand from luxury travelers that has bolstered the market there, he says. Prices on the island increased by 10.6% from 2022 to 2023, representing one of the largest increases in real estate prices across the country.

“Markets continue to increase steadily here,” Euesden says. “It’s a destination market, so most of the people who are buying here are buying a place to use as a holiday home.” A residency permit, he says, isn’t necessarily on many buyers’ minds.

More than any direct impact on property sales, the program’s real impact was the way it marketed these countries to luxury buyers globally.

“It’s been good for these countries, because it’s brought attention upon them,” Neto says. “In terms of numbers and metrics, the program wasn’t significant— it was the power of people talking about it that was.”

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52

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Leading luxury brands focus on digital innovation, personalization and sustainability to meet new demands of discerning clientele 54

LUXURY

The Luxury Consumer’s Evolving Persona Luxury goods continue to resonate with discerning individuals across borders. And while their traditional elements—namely craftsmanship, heritage and exclusivity—remain relevant, a complex interplay of economic, technological and societal factors is causing luxury brands to focus on other aspects to meet the evolving demands of their discerning clientele.

These factors—chief among them digital innovation, personalization and sustainability—reveal the everevolving desires and aspirations of consumers.

“The luxury consumer has certainly evolved, shaped by a complex blend of economic trends, technological advancement and a growing emphasis on sustainability and personalization,” says Mauricio Umansky, CEO of The Agency. “Today’s luxury buyers are incredibly tech-savvy.” The luxury consumer’s interest in bespoke experience is something that The Agency carries into the real estate realm as well. “Our clients expect a bespoke experience, and we achieve that by truly understanding their individual needs and preferences. Whether it’s a turnkey luxury home or a property with unique architectural elements, we curate options that align with their lifestyle and aspirations,” Umansky says.

Sustainability for high-net-worth individuals spans everything from their clothes and accessories to their homes, he says.

“Sustainability is becoming an increasingly important factor for luxury consumers,” with many of Umansky’s clients looking for eco-friendly homes, energy-efficient designs, sustainable building materials and smart-home technology that minimizes environmental impact.

“So many luxury clients are seeking heritage, sustainability, and digital sophistication,” says Rainy Hake Austin, President of The Agency. “I am so proud of how our agents readily adapt their service approaches to accommodate these shifts, crafting real estate experiences that align with each client’s unique vision and lifestyle.

In luxury real estate, adaptability and consumer insight are essential to staying sharp and delivering exceptional results.”

One constant among the luxury retail industry specifically is the continual need for brands to reinvent themselves. In recent years, the industry has embraced new trends with cutting-edge technologies to entice a younger clientele. According to Bain & Co., Gen Zers and Millennials are predicted to account for 70% of luxury spending by 2025, surpassing Gen X and Baby Boomer consumers.

GEN ZERS AND MILLENNIALS ARE PREDICTED TO ACCOUNT FOR

70%

OF LUXURY SPENDING BY 2025 BAIN & CO DATA

55

The luxury goods market has enjoyed a remarkable surge during the past decade with growth rates exceeding mass consumer goods markets by a wide margin. Luxury goods sales in the U.S. are driven by increased consumer confidence and a growing appetite for high-end fashion and accessories. According to Statista, the luxury goods market is projected to generate a revenue of $474 billion in 2024, and it is projected that online sales will account for 15.4% of the total revenue in the market. This market is anticipated to grow at an annual rate of 4.04% between 2024-2029.

The luxury fashion market specifically is expected to grow by 2% to 4% in 2024, with regional and national variations, according to an analysis by consulting firm McKinsey & Co. To achieve future growth, luxury brands have to cater to a younger demographic that has growing concerns about sourcing and sustainability. These brands now face the imperative of adapting to a new era where digital innovation, sustainability and personalization are not just valued but expected by consumers.

DIGITAL INNOVATION Luxury brands are increasingly focusing on digital innovation to maintain their competitive edge and meet the evolving expectations of their discerning clientele. The most successful and influential luxury brands are leveraging digital innovation to unlock growth and reach new audiences.

Burberry is a notable example of a luxury brand that has introduced an artificial intelligencepowered chatbot to offer personalized styling advice based on user preferences and purchase history; Chanel has been using AI to analyze social media trends and consumer behavior, allowing them to tailor their marketing messages more effectively. According to a report by McKinsey, AI-driven personalization can increase revenue up to 15%, with luxury brands expected to see a significant share of this growth as they enhance their digital offerings.

Luxury brands are also integrating digital innovations into their physical stores. Louis Vuitton launched in-store augmented reality (AR) mirrors that allow customers to virtually try on clothes and accessories. These digital enhancements are expected to drive a sizable increase in in-store sales for luxury brands as they bridge the gap between online and offline experiences.

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Brands like Cartier and Hermès have also significantly expanded their online offerings, integrating features such as virtual consultations, live shopping events and exclusive online collections.

Given how transparency and ethical sourcing are increasingly important to luxury consumers, blockchain technology is being used by brands like LVMH (through its Aura Blockchain Consortium) to provide digital certificates of authenticity and trace the origins of their products.

Digital innovation is also helping luxury brands optimize their supply chains for sustainability. Stella McCartney has been using AI, in partnership with Google, to predict demand and reduce waste, and virtual prototyping to minimize the environmental impact of sample production. The adoption of these technologies is expected to significantly reduce operational costs while improving sustainability metrics.

Brands like Dior and Balenciaga continue to invest in virtual showrooms and online events, too. Luxury brands have also been developing sophisticated mobile apps and loyalty programs to enhance customer engagement. Prada’s mobile app offers exclusive content, personalized product recommendations and virtual styling sessions.

Online will soon surpass all other luxury sales channels THE SHARE OF ONLINE SALES FOR PERSONAL LUXURY GOODS WILL GROW TO 33% BY 2030, DRIVEN BY BRANDS' OWN WEBSITES AND NEW DIGITAL OPPORTUNITIES. BAIN & CO & LUXE DIGITAL DATA

PERSONALIZATION Customer personalization has quickly become a critical focus for luxury brands, driven by the ever-growing demand for tailored experiences. (According to McKinsey, 85% of luxury shoppers expect a personalized experience.) Successful luxury brands are leveraging data analytics, AI, and innovative customer engagement strategies to deliver it.

Gucci, for one, utilizes an AI-driven recommendation engine that analyzes customer data, including browsing history, purchase patterns and social media activity, to offer personalized product suggestions.

“The luxury goods industry continues to push digital product passports to connect and re-engage with their customers,” says Graham Wetzbarger, a luxury appraiser and consultant. “Brands are wagering that connected products create value, personalize interactions and story-tell values like sustainability.”

Luxury brands have also been adopting AI to implement dynamic pricing models that adjust based on customer behavior and demand. (Chanel was among the first brands to test AI-driven pricing strategies for its limited-edition items.) Luxury brands using AI-driven personalization have reported up to a 30% increase in sales, according to Deloitte, while AI-driven personalization reduces cart abandonment rates by 30% in luxury e-commerce, according to Accenture.

11%

MONOBRAND STORES

5%

TRAVEL RETAIL

11%

DEPARTMENT STORES

9%

OUTLET STORES

11%

SPECIALTY STORES

33% ONLINE

85% OF LUXURY SHOPPERS EXPECT A PERSONALIZED EXPERIENCE MCKINSEY DATA

LUXURY BRANDS USING AI-DRIVEN PERSONALIZATION HAVE REPORTED UP TO A

30%

INCREASE IN SALES DELOITTE DATA

57

Spending from younger consumers is growing 3x faster than other generations On-demand customization is another trend that is expected to grow. Hermès is among the most notable brands that have expanded their bespoke offerings, allowing customers to personalize everything from the color and material of their handbags to the monograms on their scarves.

The use of predictive analytics to anticipate customer needs is becoming more prevalent. Brands like Prada have invested in advanced analytics tools that predict future purchase behavior, enabling them to tailor marketing messages and product offerings accordingly.

Brands are also involving customers in the design process; Burberry has launched a platform where customers can co-create their trench coats by choosing fabrics, linings and other details. It is generally believed that this collaborative approach not only increases customer satisfaction but also drives higher average order values.

The use of virtual and augmented reality (VR/AR) has also been gaining traction as technologies have improved. Cartier’s AR app allows customers to virtually try on jewelry and receive personalized suggestions based on their facial features and style preferences.

SUSTAINABILITY Gone are the days when luxury brands were shielded from the kind of scrutiny that producers of mass consumer goods have long faced. Luxury brands are now integrating sustainability across their value chains, from sourcing materials to production processes and end-of-life product management.

Traceability and ethical sourcing have become key buzzwords, with consumers, especially younger ones,

expecting that brands will prioritize transparency in their supply chains. LVMH’s Aura Blockchain Consortium provides digital certification for its products, enabling consumers to trace the origins of materials used in luxury goods like leather, diamonds and precious metals.

“The sustainability battle continues as technologies in traceability and environmental impact support traditional techniques and materials,” Wetzbarger says.

PERCENTAGE OF SHOPPERS WHO BOUGHT LUXURY GOODS IN THE PAST YEAR VOGUE BUSINESS INDEX DATA

58

18%

46%

63%

60%

BABY BOOMERS

GEN X

MILLENIALS

GEN Z

The use of organic, recycled and eco-friendly materials has become widespread, with Gucci a notable example of a brand that has committed to using 100% sustainable materials—including organic cotton, recycled polyester and eco-friendly dyes—by 2025.

Often referred to as the “circular economy,” the resale and second-hand markets for luxury goods have also been gaining traction. According to a Bain & Co. report, the global secondhand luxury goods market is expected to reach $64 billion by 2025, with an annual growth rate of 10% to 15%.

It’s widely expected that more brands will take control of their secondhand markets. Burberry and Stella McCartney have launched their own resale platforms, where customers can buy and sell pre-owned items.

reducing emissions across its entire supply chain, including transportation, manufacturing and retail operations.

Consumers are increasingly demanding that brands not only implement sustainable practices but also report on their progress. In response, luxury brands are publishing detailed sustainability reports—e.g. Kering Group’s annual environmental profit and loss (EP&L) statement, which showcases the environmental impact of its brands, including Gucci, Saint Laurent, and Balenciaga—a level of transparency that is becoming standard across most luxury-adjacent companies.

Recycling and upcycling initiatives are becoming more widespread, too. Cartier operates a jewelry recycling program where customers can return old or broken pieces to be repurposed into new designs.

To build trust with consumers, many luxury brands are obtaining third-party certifications for their sustainability practices. For example, in an effort to confirm its commitment to ethical sourcing and environmental stewardship, Bvlgari seeked and received certification from the Responsible Jewellery Council (RJC).

Many luxury brands have also set ambitious goals to achieve carbon neutrality. Hermès is committed to becoming carbon neutral by 2030, focusing on

Sustainability is no longer a peripheral concern for luxury brands; it is now a core element of their business strategies.

65% OF LUXURY CONSUMERS UNDER THE AGE OF 35 CHECK A BRAND'S SUSTAINABILITY CREDENTIALS BEFORE SHOPPING

64% 18-24

65% 25-34

61% 35-44

59% 45-54

58% 55-64

VOGUE BUSINESS INDEX DATA

47% OVER 65

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LUXURY

Spotlight on Luxury Collectibles Despite volatility, look to sub-trends to see what’s in store for art, cars, handbags and more

The luxury collectibles market is undergoing a period of profound transition as younger buyers with new and growing wealth look for ways to diversify their investment portfolios and satisfy a penchant for fineries.

Even as sales in key high-end collectible categories like fine art and wine slumped in 2023, interest by a new generation of buyers has been driving up sales volume and shifting the focus away from traditional segments like paintings by Old Masters and toward works relevant to pop culture and celebrity.

Michael Jordan’s Last Dance jersey, which went for $10.1 million at a Sotheby’s auction in 2022, a pumpkinshaped handbag created by Japanese artist Yayoi Kusama and Louis Vuitton that fetched $151,200 at Christie’s in September, and a Boba Fett Star Wars action figure with a $1.31 million gavel price at Goldin Auctions in August are the types of splashy sales attracting more young folks to collectibles.

NEW COLLECTORS AND A POST-PANDEMIC NORMALIZATION Beginning in early 2023, Generation-X bidders (those born between 1965 and 1980) accounted for the largest share of bidders in the $1 millionplus market at Sotheby’s auctions, overtaking Baby Boomers (with birth years from 1946 to1964) for the first time, according to the auction house.

Younger collectors are particularly active in the high-end market for contemporary artists. Gen X and Millennials (1981-1996) accounted for between 74% and 85% of bids in recent auctions for works of street artist Banksy, sculptor KAWS and painter Adrian Ghenie. This new crop of high-end collectors tends to view collectibles more as assets to be traded rather than to be held for the long term, says Bradley Calleja, a partner at Collect Alpha, a boutique art and collectibles research firm.

“Millennials are collecting at two or three times the rate of previous generations and they’re bringing a change of behavior and taste,” he says.

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This has contributed to higher levels of volatility.

The broad market for collectibles surged during the pandemic, as people had more spare time during lockdowns and digital marketplaces expanded to make it easy to trade from home. Among notable sales during this period were a full T. Rex skeleton sold for $31.8 million at Christie’s and an NFT (non-fungible token) representing a collage called Everydays: The First 5,000 Days by Michael “Beeple” Winkelmann that fetched $69 million, also at Christie’s.

Interest by a new generation of buyers has been driving up sales volume and shifting the focus away from traditional segments like paintings by Old Masters and toward works relevant to pop culture and celebrity.

11%+

Fine art prices ended 2023 with the biggest price gains. thanks to several early-year big-ticket sales, even though sales were down.

PER THE 2024 ART BASEL AND UBS MARKET REPORT

-7%

-3%

AUCTION SALES DECLINED

DEALER SALES WERE OFF

PER THE 2024 ART BASEL AND UBS MARKET REPORT

PER THE 2024 ART BASEL AND UBS MARKET REPORT

-6%

-9%

-1%

COLLECTIBLE WHISKEY PRICES SLID DOWN

CLASSIC CAR PRICES DROPPED

PER THE KNIGHT FRANK LUXURY INVESTMENT INDEX

PER THE KNIGHT FRANK LUXURY INVESTMENT INDEX

THE KNIGHT FRANK LUXURY INVESTMENT INDEX DECLINED IN 2023

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But since then sales and prices in many high-end segments have pulled back. “A Rolex Cosmograph Daytona watch that went for $15,000 was suddenly selling for $50,0000 during Covid, and now it’s under $20,0000 in most secondary market channels,” Calleja says.

The Knight Frank Luxury Investment Index, which tracks asset prices, declined by 1% in 2023. Fine art prices ended 2023 with the biggest price gains of 11% thanks to several early-year big-ticket sales, even though sales were down. Auction sales declined 7% and dealer sales were off by 3% in 2023, according to the 2024 Art Basel and UBS Market Report. Meanwhile, collectible whiskey prices slid the furthest, down 9% and classic car prices were down 6%.

For collectibles in general, prices and sales began stabilizing in the second quarter and 2024 is expected to close somewhat stronger than 2023. Even NFTs, one of the hardest-hit collectible segments that contracted by more than half in 2022, are on the move again. Dealer sales of digital art increased from

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1% of their total sales in 2021 to 5% in 2023, with NFTs driving most of that increase, according to UBS. Higher volatility in pricing is likely to be more of a norm due to the trading habits and preferences of younger collectors, who continue to amass wealth in finance, technology and through a massive wealth transfer currently under from the Baby Boom generation, says Sebastian Duthy, managing director of Art Market Research. “More people are coming to the collectibles market looking for a quick return,” he says.

Volatility is expected to be most pronounced in the lower end of the luxury market, where more speculative bets are made on trendy items such as limited editions or co-brands, says Zuzanna Pusz, head of European luxury goods research at UBS. They don’t always have staying power, Pusz says, pointing to Swatch, the watch brand that launched a higher-end watch with Omega two years ago. “Prices were crazy—now they’re nowhere near where they were,” she says.

A LOOK AT SUB-TRENDS To truly understand each collectible segment, Pusz says, look at the sub-trends. For example, in the collectible car market there’s been a notable shift away from 1950s and ’60s classics such as Corvettes, Jaguars and Ferraris to sports cars built between 1980 and 2000. Hagerty’s Blue Chip Index, which tracks classics from the earlier period, was down 3% from 2019 through 2023, while its Supercar Index of more recent models was up over 60%.

In watches and handbags, the scarcest products made by top-tier brands such as Rolex, Hermes and Chanel have the most reliable long-term appreciation, while lower-priced fashion bags are more speculative.

No matter the current climate, collectibles can be good diversifiers in investment portfolios. “They are unique from traditional stocks and bonds with the potential to move in a different pattern,” says Matt McGrath, a managing partner at Evensky & Katz/Foldes Wealth Management. But they present their own unique risks.

For example, they can be hard to value, particularly items that are mostly sold at auction.

“This makes many, if not most, collectibles relatively illiquid—you can’t easily convert them to cash,” McGrath says. Given the risks, “you should probably allocate only as much money as you are comfortable losing should things take a bad turn.”

No matter the current climate, collectibles can be good diversifiers in investment portfolios.

The fine art market is particularly stratified. The under-million segment dried up after the pandemic, while the blue-chip contemporary market is where the interest and action are these days, experts say. “The Warhols and Basquiats and new age established artists being picked up by museums with good auction records—these blue chip contemporary works are doing exceptionally well, and there is a great opportunity for collectors right now,” says Arushi Kapoor, an art advisor and dealer.

After the post-pandemic softening in the market, “it’s easier to find the right pieces that would be phenomenal investments when the market goes back up,” Kapoor says.

Consider the sale of Jean-Michel Basquiat’s 1982 Untitled (ELMAR) at Phillips during the spring of 2024. The auction house estimated a $60 million high sales price, which would have made it the second-highest price ever for a Basquiat work. The final gavel price fell far short, at $40.2 million— essentially, a deal for the collector.

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TIME is MONEY

Watches See Price Plateaus, a “Healthier Market” and a “Bright Outlook” It’s been a wild ride for watch collectors as of late. Frenzied buying during the pandemic caused prices to double or triple on sought-after models, only to top out in March of 2022 and embark on a two-year plunge.

The good news? Prices are finally plateauing. “It’s now a much healthier market because there isn’t as much speculation,” says Ryan Chong, head of watch operations at Bezel, a leading online marketplace for luxury watches. “There are a lot of buying opportunities now that prices have bottomed out.”

-12% THE OMEGA SPEEDMASTER SALES PRICE HAS DROPPED SLIGHTLY FROM ITS 2022 PEAK

-30% DROP IN SALES PRICE FOR THE ROLEX SUBMARINER DIVING WATCH WATCHCHARTS ANALYTICS DATA

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Buyers will find Omega Speedmaster models, which are solid entry-level collectibles with a history of price appreciation, available for 12% less than at their 2022 peak, according to Watchcharts Analytics. Prices on the Rolex Submariner, a diving watch introduced in 1953 with prices ranging from $7,000 to over $100,000, are down 30%.

Chong advises sticking with top brands and models with a long record of price appreciation.

Despite the recent long decline in collectible watch prices, the most sought-after models such as Rolex, Patek Phillippe and Audemars

Piguet have had positive returns over a longer time horizon. The ChronoPulse Watch Index, which tracks prices of more than 140 luxury watch models, has a 23% five-year return through September 30, 2024.

Looking ahead, he expects a strong market not only for the leading brands for functionality— such as Rolex and Breitling—but also for designforward brands like Cartier. “There has been a renaissance in design-driven watches—Cartier has seen an explosion in vintage watches,” Chong says, adding that collectors who buy and hold are likely to see solid long-term gains.

“An interesting facet of the industry is the high number of young buyers— 70% of our buyers are Gen Z or Millennials,” Chong says.

“That makes for a bright outlook for the future of the watch collecting market.”

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VINES to VAULT

Wine Collecting Sees Historically High Peaks—and Some Troughs The collectible wine market has regained steam after a couple of years of softening prices, with blue chip categories such as first-growth Bordeaux, Burgundy, Champagnes and California wines showing the most strength.

But there are also lesser-known opportunities for collectors in up-and-coming wines, says David Parker, CEO of Benchmark Wine Group. “Wines from Mount Etna [in Italy] are hard to get and are treasured. Also, wines from Switzerland and some eastern European areas like Slovenia are showing on the radar,” Parker says. “Port used to be an old-school collectible 100 years ago and it’s now becoming popular, and Madeira is doing extremely well.”

Parker says the recent softening in the market after a March 2022 peak is part of a broader trend.

“Prices tend to move up rapidly for a couple of years, then correct, then start that cycle all over again,” he says. “Each peak has been historically higher than the one before.”

73% THE ESTIMATED NUMBER OF CLIENTS THAT COLLECT WINE THE AGENCY GLOBAL SURVEY

66

“Prices tend to move up rapidly for a couple of years, then correct, then start that cycle all over again,” he says. “Each peak has been historically higher than the one before.”

There are some current challenges: Younger generations are drinking less wine, special interest groups are pushing messages against alcohol consumption and U.S. tariffs, proposed by former President and Presidential-elect Donald Trump, could shift the focus among U.S. collectors away from foreign wines to domestic vineyards.

“We’re cautiously bullish in the short term,” he says, but “in the long term, wine is a great investment because it trades out of sync with stocks, real estate and precious metals so it can reduce portfolio risk,” Parker says, adding that if a bottle does lose value, there is still an upside: “You can drink it.”

THE AGENCY'S GLOBAL SURVEY

Which type of collectors items do your clients collect?

30%

82% 73% CARS WINE

70%

64% HANDBAGS ART

JEWELRY/ WATCHES

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A Clutch MOVE

The “Holy Grail Bags” Continue to Appreciate in Value Fashions come and go, but in the world of collectible handbags, the most coveted brands and styles have endured. Even through recent changes in collector demographics and the digitization of the marketplace, Hermès Birkin and Kelly bags, along with a short list of others such as Chanel’s Classic Flap, continue to headline the collectible handbag market with long-term price appreciation and occasionally stunning auction prices. Last year, a Birkin 20 Faubourg Snow made in 2021 topped Sotheby’s handbag auction sales at $280,670.

Even at the upper echelon of collectible handbags, Hermès Birkin and Kelly bags stand apart as “holy grail bags,” says Judy Taylor, CEO of Madison Avenue Couture, which resells high-end bags. “These are assets that have had significant appreciation over time.” In contrast, fashion bags made by top luxury brands such as Fendi, Gucci and Bottega Veneta often retain much of their value for resale, but they’re less reliable investments for the long term.

The allure of top bags is preserved by keeping them scarce, Taylor says. The most soughtafter Hermès bags aren’t available at retail; big spenders may be offered the opportunity to buy one after a big spree on other products at Hermes, but otherwise the secondary market is the only channel open to collectors.

“I tell clients if you’ve never bought a Birkin before, buy a black 30-centimeter with gold hardware and Togo leather. It’s our number one seller,” Taylor says. “They’re around $32,000. Right before Covid, they went for about $20,500.”

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LUXURY

Longevity is the Latest Wellness Buzzword, and Luxury Builders Are Taking Note In the ever-expanding world of health and wellness, the biggest trend to emerge in recent years revolves around the most basic of concepts: longevity.

The world’s leading health resorts and wellness centers have put in place a heightened emphasis on extending life and optimizing health beyond traditional spa treatments. It’s a trend fueled by advancements in science and technology that promise to not only extend lifespan but also improve the quality of those additional years.

Leading wellness spas and resorts are now blending cutting-edge scientific research with holistic health practices. Some have even opened dedicated longevity clinics offering personalized care plans—including extensive diagnostic and genetic tests—costing upward of $50,000 per week.

Consumer spending on wellness products and services has grown 12% annually since 2020, contributing to a $5.6 trillion wellness market that is forecast to hit $8.5 trillion by 2027, according to the Global Wellness Institute.

The longevity segment is playing a significant role in this growth. As consumers become more aware of the potential to extend their lives while maintaining good health, the demand for longevity-focused wellness programs is exploding.

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The aging population is a key driver. As the global population of individuals aged 65 and older continues to grow—according to United Nations Population Fund data, the global share of people aged 65 and over has nearly doubled from 5.5% in 1974 to 10.3% in 2024, a figure that is projected to reach 20.7% by 2074, with the number of those aged 80 and over more than tripling—there is a rising demand for services that can help maintain health and vitality in later years. Wellness resorts are increasingly targeting this demographic with specialized longevity programs that address the unique health challenges and goals of older adults.

Even those with only a passing interest in the booming wellness industry are responding to the idea of extending one’s lifespan, as evidenced by the wide assortment of “biohacks” now available to the public. From “Blue Zone” retreats (named after the geographic areas of the world dubbed “blue zones,” where people live longer- and healthier-than-average lives) with poolside vitamin IVs to bioregenerative treatments such as ozone therapy, hyperbaric oxygen chambers, and infrared light mats, the health and wellness industry has fully embraced this newfound focus on longevity.

Lately, a growing number of consumers who have experienced these treatments at spas and wellness centers seek to bring the longevity trend into their private homes.

CONSUMER SPENDING ON WELLNESS PRODUCTS AND SERVICES HAS GROWN

12%

ANNUALLY SINCE 2020 GLOBAL WELLNESS INSTITUTE DATA

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"As a developer, I prioritize incorporating wellness centers into the houses I build, which has garnered positive feedback from potential buyers,” says Los Angeles-based Santiago Arana, Principal of The Agency.

“While a nice gym and steam shower used to be sufficient 8-10 years ago, the demand has evolved to include features like indoor/outdoor gyms, steam units, dry saunas, infrared saunas, cold plunges, as well as additional wellness amenities such as hyperbaric chambers, red light chambers, cryotherapy chambers, ozone machines and magnesium pools, among others,” he adds.

A growing number of luxury-adjacent businesses are taking notice. As part of its “2024 Exclusive Benefits Guide,” private jet company Sentient Jet offers its “Jet Card” owners access to an exclusive partnership with Human Longevity Inc. The San Diego-based venture’s goal is to build the world’s most comprehensive database on human genotypes and phenotypes, and then utilize machine learning to help develop new ways to fight diseases associated with aging.

Human Longevity—which, according to its most recent findings, claims 25% of Americans at age 50 won’t make it to age 75—offers a wellness service known as “Health Nucleus,” which offers customers a range of medical tests such as a full genome sequencing and tests for early indications of cancers, Alzheimer’s and heart disease; this testing is meant to help people catch diseases earlier than otherwise possible and to identify risk factors for diseases later in life.

Much of the longevity trend falls under the catch-all term of “biohacking,” which can be applied to just about any science- or technology-backed approach to optimize bodily functions and extend life.

More spas and resorts are offering truly personalized longevity services, where genetic testing, biomarker analysis and advanced diagnostics are used to create tailored programs.

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“As Bahamians, we have a rich cultural heritage that celebrates a slower, more enjoyable way of life aiding our population’s longevity,” says Danny Lowe, Managing Partner of The Agency Bahamas.

The Well—a chain of wellness centers with locations in New York, Connecticut, Mexico and Costa Rica—has attracted the likes of Gwyneth Paltrow and Reese Witherspoon with its longevity-focused offerings such as customized IV drips, infrared sauna sessions, cold plunges and health coaching sessions.

The SHA Wellness Clinic in Spain has long been known for its focus on longevity, offering programs that combine genetic testing with personalized nutrition, fitness and stress management strategies to slow the aging process and enhance overall health.

Stem cell therapy and other regenerative medical treatments are becoming central to the longevity offerings at high-end wellness centers. These treatments focus on repairing and regenerating damaged tissues, potentially reversing certain aspects of aging.

It bears mentioning that the concept of longevity extends beyond just physical health; it encompasses mental and emotional well-being as well. Luxury wellness resorts are increasingly offering integrative programs with mindfulness practices, stress reduction techniques and mental health support. Chiva-Som in Thailand, for one, offers a comprehensive longevity program that includes meditation, yoga, nutritional guidance and advanced medical therapies, aiming to balance the mind, body and spirit for a longer, healthier life.

Nutrigenomics, the study of how food interacts with our genes, is another area gaining traction in the context

of longevity. Kamalaya, a wellness sanctuary and holistic spa in Thailand, incorporates nutrigenomics into its longevity programs, offering personalized nutrition plans that align with guests’ genetic profiles to promote optimal health. These programs often include specialized diets rich in antioxidants, antiinflammatory foods and other nutrients known to slow aging and support cellular health.

Detoxification has long been a staple of wellness programs, but now it’s being applied with a focus on longevity. Chenot Palace in Switzerland offers advanced detox programs designed to cleanse the body at a cellular level, using techniques like cryotherapy, hyperbaric oxygen therapy and IV nutrient therapy to promote cellular regeneration and longevity.

Even those who make regular, dedicated visits to longevity-focused clinics constantly encounter new, innovative treatments utilizing cuttingedge technology. Euphoria Retreat in Greece has integrated the likes of hyperbaric chambers, infrared saunas and photobiomodulation therapy into its wellness offerings.

When observing the booming trend, skeptics will point to the lack of rigorous scientific validation of many of the therapies being offered under the umbrella of longevity. Mindful operators and practitioners are attempting to balance the demand for cuttingedge treatments with the need for evidence-based practices to ensure safety and efficacy.

According to United Nations Population Fund data, the global share of people aged 65 and over has nearly doubled from 5.5% in 1974 to 10.3% in 2024, a figure that is projected to reach 20.7% by 2074.

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While some luxury homeowners are looking to bring longevity-focused offerings into their homes, others are seeking out homes where the local lifestyle offers a holistic approach to longevity.

“As Bahamians, we have a rich cultural heritage that celebrates a slower, more enjoyable way of life aiding our population’s longevity,” says Danny Lowe, Managing Partner of The Agency Bahamas.

Since the start of the global pandemic in 2020, Lowe has observed a notable influx in clients seeking to be part of his island’s culture, with many looking for offthe-grid private islands, beach villas and boutique luxury resorts and residences that offer fully sustainable living immersed in their surroundings.

“This shift has further fueled the demand for luxury properties that promote wellness and a deeper connection to nature for their residents. People are seeking a lifestyle product that they can call home,” he

says, citing developments like Four Seasons Ocean Club, Montage Cay Residences, Goldwynn Resort & Residences, Aqualina Bahamas Cable Beach and the islands’ newest wellness center, Champion Spirit Club, as examples of how high-end residences are integrating cutting-edge wellness facilities.

“These amenities foster both physical health and mental well-being, responding to an increasingly discerning clientele that prioritizes holistic lifestyles,” Lowe says.

Looking ahead, areas such as gene editing, microbiome optimization and advanced AI-driven health diagnostics are expected to become part of the longevity landscape in the coming years.

As these technologies evolve, wellness resorts will continue to adapt, offering increasingly personalized longevity programs. And the wealthy people who frequent them will likely want to bring these treatments home, too.

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EVs come in all dimensions these days, including family size with lots of amenities 74

LUXURY

Three-Row Luxury SUVs— With Plugs to Boot The modern electric car market dates only to 2008, when the rarefied Tesla Roadster debuted, followed by the Nissan Leaf (2010), and then two years later the bigger and more luxurious Tesla Model S. While there were some more obscure choices, too, the EV buyer didn’t have too many options—and there was virtually nothing for larger families.

That’s all changed now. The toughest category to conquer, considering the challenges of battery power, is one of the most popular—the three-row SUV. There are now more than 10 of them on the market, or soon to be so. Here’s a rundown:

KIA EV9 AND HYUNDAI IONIQ 9 The Hyundai, shown in concept form, is likely coming as a 2025 model, with pricing starting between $50,000 and $60,000. It rides on the E-GMP platform that both Hyundai and Kia will use for their new EVs, and the target range is around 300 miles. It may have the same basic EV architecture as the existing Kia EV9, which is available now and selling well. The EV9 (starting at $54,900) is available with both 76.1- and 99.8-kilowatt-hour battery packs (the latter yielding 304 miles). Both vehicles have innovative interior design and highly usable third rows.

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CADILLAC ESCALADE IQ AND VISTIQ Everything about the on-the-market IQ is big. It has an enormous 200-kilowatt-hour battery pack (giving a whopping 450 miles of range) and a drivetrain that can produce up to 750 horsepower in launch mode. GM debuted a pillar-to-pillar front screen on the extra-luxurious IQ, but now it’s available on other models. In addition to its third row, the IQ has a large front “frunk” that can swallow a fair amount of luggage. The IQ starts at $129,990. The midsize Vistiq is a second three-row Cadillac EV, coming in 2025 as a 2026 model with a lower price point, around $65,000. With two motors, it could have 500 horsepower, and 300-mile range.

MERCEDES EQB AND EQS SUV RIVIAN R1S The R1S three-row SUV has won plaudits for its many thoughtful touches, its available power and up to 410 miles of range, but the $77,700 price has deterred some would-be owners. The cabin is beautifully styled with excellent fit and finish— impressive in a start-up company—but the third row is best for children and small adults. With a choice of three- and four-motor setups, the R1S can access more than 1,000 horsepower.

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The third row is a $1,250 option in the $54,200 EQB, but it’s limited in size. Otherwise, this is a very impressive, highly luxurious electric SUV. Driving range is about 250 miles. Power options range from 188 horsepower to 288. Upgrade to the bigger EQS and the price jumps substantially to $105,550, but it buys a truly state-of-the-art electric SUV, loaded with technology, but the third row is still an option, offering somewhat tight accommodations, and can compromise luggage space when in use.

TESLA MODEL Y VOLVO EX90 Appearing as a 2025 model, expect the sevenpassenger EX90 to be ultra safe, remarkably quiet, nicely appointed and smooth riding via air suspension.

Range will be up to 308 miles. And with twin motors there should be 402 horsepower (standard) or 510 (performance model), the latter offering zero to 60 miles per hour in 4.7 seconds. Early reports on the third row are encouraging. Pricing starts at $79,995.

This is an international bestseller because of its huge performance, on-board tech and usability. The third row is a bit of an afterthought, though, and is a $2,500 option. It’s best for compliant children, so something else might be better if you plan on moving more than five people regularly.

VW ID. BUZZ LUCID GRAVITY The 2025 SUV could be the savior of this technologically impressive start-up company. Lucid’s Air high-performance sedan uses space brilliantly, and the third row in the Gravity reportedly handles adults quite well. The numbers are certainly stellar: seating for up to seven, up to 440 miles of range, zero to 60 mph in under 3.5 seconds, up to 800 horsepower at peak. The price starts under $80,000.

Though not technically an SUV (more of a minivan, and a descendant of the much-loved Microbus) the 2025 Buzz is hotly anticipated and already quite established in Europe, where there are commercial versions available. There will be rear-and all-wheeldrive versions of this long-wheelbase, three-row model and range of about 260 miles. The styling is retro, and cute as can be. Expect pricing to start around $50,000.

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LUXURY

AIl About AI: How Luxury Brands and Real Estate Agents Leverage AI The technology can transform the design process, forecast demand and handle supply chain management, but it can’t replace one-on-one relationships

Artificial intelligence and machine learning are profoundly transforming how luxury brands and real estate firms engage with customers, delivering more personalized, efficient and immersive experiences, all while enhancing customer satisfaction and loyalty. They won’t, however, ever replace the need for a top agent.

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As the technology continues to advance, its role in

luxury real estate is likely to expand even further.

REAL ESTATE Luxury real estate agents are increasingly embracing AI in almost all stages of the sales process, to meet growing demand for personalized experiences and enhance efficiency.

AI is another strong tool in the agent’s toolbox, helping to optimize property searches and marketing strategies.

The Agency has utilized AI to enhance social media marketing of land property for sale. AIgenerated images help buyers visualize potential developments, making listings more appealing and engaging. This approach boosts visibility on social platforms, attracts more buyers, and streamlines the property-buying process.

JLL's 2023 Global Real Estate Technology Survey determined that more than 80% of real estate occupiers, investors and developers planned to increase their real estate technology budget over the next three years. According to the same report, there is an ever-growing number of companies globally providing AI-powered services to real estate and already delivering value in terms of improved efficiency and cost-savings.

According to a survey of agents from The Agency, nearly 73% say they’re using AI, mostly for copywriting, marketing and lead generation, and nearly 90% say they plan to use it more in the future.

When asked how they plan to use AI in the future, respondents mentioned accounting, pricing models, deal-making, and improving photos and videos.

Making those steps more efficient means agents have more time for one-and-one relationships with their clients and can focus on white-glove service.

“AI is transforming the way our agents work, allowing them to serve clients with even greater efficiency and care,” says Mauricio Umansky, CEO

73% THE ESTIMATED NUMBER OF AGENTS WHO SAY THEY USE AI FOR THEIR BUSINESS THE AGENCY'S GLOBAL SURVEY

and Founder of The Agency. “We’re seeing a real shift in how business is done. By streamlining processes like accounting, pricing models, and content creation, AI frees up more time for agents to focus on what really matters—the personalized, white-glove service our clients expect.”

Algorithms are being used to match clients with properties that suit their preferences and needs.

By analyzing vast amounts of data, including past searches, preferred locations, budget and lifestyle factors, AI can provide highly personalized property recommendations.

AI enables smart filtering options in property search engines, allowing clients to find properties that meet hyperspecific criteria, such as architectural style, proximity to amenities or eco-friendly features.

Predictive analytics also play a role by identifying properties that may soon become available or are likely to appreciate in value, giving clients a competitive edge in the luxury market.

For luxury clients who view real estate as an investment, AI can offer predictive analytics that assess the potential return on investment of different properties. By analyzing factors like historical price trends, neighborhood development plans and economic indicators, AI can help clients identify properties that are likely to appreciate, ensuring they make sound investment choices.

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“AI is transforming the way our agents work, allowing them to serve clients with even greater efficiency and care,” says Mauricio Umansky, CEO and Founder of The Agency.

“From my perspective and interest, the most exciting area where AI is being applied is in creative—both development and automation,” says Matt Plaia, Art Director at The Agency. “At its most basic level, yes, you can generate images, expand backgrounds and write copy. But you can also develop 360-degree marketing plans and craft commercial scripts that are accompanied with self-prompted storyboards.

For some time now, there has also been movement in the augmented reality/virtual reality space, such as Zillow’s 3D Home—offering services like property tours and highly immersive experiences. However, accessibility has always been the main issue in scaling those forms of media.”

The Agency “has employed the technology from Adobe’s Firefly to elevate brand photography, all the while maintaining a careful approach so as to not lose any authenticity,” he says. “In a recent video, we used Firefly to develop the stills for a sequence that was eventually animated using another AI tool: Runway.

This video generation technology—which also just partnered with Lionsgate—has been integrated into our video content in various ways, from animating motionless photography and creating dynamic content to directing our own cinematic scenes when stock media simply does not cut it.”

AI is a true soup-to-nuts proposition in real estate since it also can be used to streamline the transactional process. AI tools can automate the generation of contracts and other legal documents, ensuring accuracy and reducing the time it takes to close deals.

The technology can also assist in the negotiation process by analyzing market data and previous transactions to suggest optimal pricing strategies. AIdriven tools can help agents determine the best offer or counteroffer based on real-time data, enhancing the likelihood of a successful transaction.

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LUXURY BRANDS Similar to real estate brands, AI and ML allow luxury brands to analyze vast amounts of customer data, including browsing history, purchase patterns and social media activity, to generate hyper-personalized recommendations that tailor product suggestions to individual preferences. Gucci has been at the forefront of this approach by using AI-driven recommendation engines to suggest products based on a customer’s previous interactions with the brand, leading to higher engagement and conversion rates.

Companies are increasingly using AI to dynamically personalize the content that users see on their websites or apps. Examples include personalized home pages, product listings and marketing messages that adapt in real time based on the user’s behavior. Burberry employs AI to personalize the shopping experience on its digital platforms, ensuring that each customer receives a unique, tailored experience.

AI-driven chatbots are revolutionizing customer support by providing instant, around-theclock assistance, from product and real estate recommendations to order tracking, without the need for human intervention. Louis Vuitton famously uses an AI-powered chatbot named “Louis” to assist customers online, providing immediate responses and enhancing the overall customer experience.

Advances in natural language processing have enabled AI chatbots to engage in more natural, conversational interactions with customers. This humanlike interaction is particularly important in the luxury sector, where personalized service is a key differentiator. Brands like Dior are leveraging AI to create chatbots that not only answer questions but also engage customers in meaningful dialogue, reflecting the brand’s tone and style.

AI-powered augmented reality tools are transforming the online browsing experience by allowing customers to virtually try on products or tour their way through real estate listings. LVMH’s Sephora uses AI-driven AR to enable customers to virtually try on makeup, helping them make informed purchasing decisions without needing to visit a physical store. This not only improves customer satisfaction but also enhances a company’s profitability by lowering return rates.

These new technologies are also enabling luxury brands to predict customer behavior and anticipate their needs by analyzing past purchases and browsing patterns. Chanel uses predictive analytics to identify customers who are likely to purchase new collections, enabling the brand to target them with personalized marketing campaigns.

AI is also transforming how luxury brands create and distribute content on social media. By analyzing engagement metrics, AI tools can identify which types of content resonate most with specific audiences, allowing brands to tailor their social media strategies accordingly.

Dolce & Gabbana uses AI to analyze social media trends and optimize its content strategy, ensuring that its posts align with current consumer interests and preferences.

“It is no longer a matter of ‘when’ an AI tool will accomplish traditionally complex tasks, but ‘how’ one can take what currently exists and plot each step,” says Matt Plaia, Art Director at The Agency

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AI in MARKETING 82

As artificial intelligence becomes ever more widely used in almost every sector, savvy real estate agents are harnessing the power of AI to aid in marketing homes.

“In order to be competitive, you have to use whatever technology you can to your advantage,” Haskell says. He has been making use of AI tools to help with writing both listing descriptions and more complex documents.

“You can basically write an addendum to a contract and tell ChatGPT to spell it out in a ‘lawyer-ly’ tone and it’s pretty incredible what it can do,” he says. “In terms of pricing strategy and algorithms to figure out pricing on a particular home I think it has some value, but there are a lot of variables that are hard to put your finger on and hard to feed into some sort of an AI system in order to truly calculate why a unique property is valuable.”

THE AGENCY'S GLOBAL SURVEY

Do you expect to use AI more in the future?

87.88% YES

12.12% NO

The use of AI to help in creating listings that stand out is widespread and set to grow. “If there’s one thing that kind of curses all of us in the real estate industry it’s coming up with something new and exciting every time we list a new luxury house or ultra-luxury home, and ChatGPT has been a great sounding board to get new and fresh ideas out there,” Bailey says.

He has also found AI technology useful when creating marketing visuals, too. “It’s very useful for cleaning up photos so you can get rid of unwanted signs, people, obstructions…to make things look a little more clean than they would be, because it’s hard to find that perfect day and that perfect shot all the time,” he says.

“I’ve seen some people use AI for walkthroughs, like voiceovers. There’s not a ton of it in our market yet, but certainly I think that AI is going to definitely reshape our industry.”

AI is also simplifying the way agents work by allowing more efficient approaches to client communication, such as following up with potential buyers, Whitman says. “Companies reach out to me all the time and ask me for

“It’s just going to advance and make us more capable and allow us to serve our clients better.” case studies, so we’ll talk through hypothetical scenarios and they’re basically trying to build AI tools to remove some of the behind-thescenes work that we have to do,” he says.

“Now that we’ve all started to see how good AI can be, I think it's exciting for us to know what's coming.”

Currently, all AI technology requires a measure of human oversight, agents agree, but it is set to become ever more integral as its capabilities expand. “As it starts to learn more about the algorithms and the searches and wealth mapping and finding the best type of buyers for those properties and marketing it to them precisely, it’s going to have a far larger impact over time,” Biryla says. “It’s just going to advance and make us more capable and allow us to serve our clients better.”

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The Red Paper – The Agency Report 2023 (this “Report”), and the information contained in it, including without limitation all text, data, graphs, and charts (collectively, the “Information”) is the property of The Agency Holdco, Inc. or its subsidiaries (collectively, “The Agency”), and is provided for informational purposes only. The Information may not be modified, reverse-engineered, or reproduced, in whole or in part without prior written permission of The Agency. The Agency reserves all rights in the Information and the Report. This Report contains general information about The Agency and its franchisees and its and their undertakings from time to time, including without limitation information related to the real estate markets in which it and they do business; and the real estate industry generally. The data, estimates, and views expressed in this Report are based upon past or current market conditions and/or data and information provided by public sources, unless otherwise identified in the Report. Although every effort has been made to assure the accuracy of the data contained in this Report, The Agency makes no warranty or representation, either expressed or implied, with respect to quality, performance, or fitness for a particular purpose. Certain information set forth in this Report contains forward-looking statements that are based on The Agency’s and its franchisee’s current internal expectations, estimates, projections, assumptions and beliefs, and which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as anticipate”, “believe”, “plan”, “estimate”, “expect”, “predict”, “intend”, “will”, “may”, “could”, “would”, “should” and similar expressions intended to identify forward-looking statements. These statements are not guarantees of future performance of the real estate market. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements. As such, undue reliance should not be placed on any forward-looking statement. The information contained in this Report should not be relied on for investment, tax, legal or financial advice. Any reliance placed on this Report is done entirely at the risk of the person placing such reliance. In no event will The Agency or its franchisees be liable for direct, indirect, special, incidental, or consequential damages arising out of the use or inability to use this Report.

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