Monthly Archives: October 2014

Sotheby’s Auctions Remaining Pierre Berge Library

As one half of the duo who founded Yves Saint Laurent, Pierre Berge is regarded as a fashion mogul. On November 8 and 9, the French philanthropist will be putting up the other half of his famous library for auction at Sotheby’s in Paris.

The other half of the collection raised $12.8 million (which we covered originally here) so it would be no surprise if this collection fetches just as much. While the full auction catalogue is only made available in September, the current list of items included would make any literature fiend happy. The 380-work collection is expected to include the finest works of 19th century European literature, including the Marquis de Sade’s last novella as well as Gustave Flaubert’s account of his tour through France’s Loire and Brittany regions in 1886.

Made up of mainly English, German and Russian language classics, the collection also includes rare edition works from poets such as Byron, Shelley, Wilde, Tolstoy and Goethe. The proceeds of the auction will go towards the Foundation Pierre Berge-Yves Saint Laurent that Berge and his former lover Saint Laurent set up to support AIDS research.

Electric Concept: Vision Mercedes-Maybach 6

What’s 6 meters long, goes from zero to 100km/h in under four seconds and is fully electronic? Currently, nothing but Mercedes intends on changing that with the Vision Mercedes-Maybach 6. The German automaker unveiled the Vision, a stylishly spectacular (just look at that picture and tell us you aren’t convinced), futuristic and electric concept coupé, ahead of the famous Pebble Beach Concours d’Elegance in the US.

This outsized concept car is almost six meters long (5.70m or 18.5ft, to be precise) and is a 2+2 coupé with 24-inch rims. This might make it the longest coupe in the world but we digress.

Its electronic power system delivers 750 horsepower and onboard batteries promise a range of up to 500 kilometers (311 miles), according to the New European Driving Cycle. Plus, a quick-charge function brings 100km (62 miles) of range in under five minutes. The Vision will be all-wheel drive, with one electric motor effectively per wheel and that 500km range is apparently possible from a single charge.

In spite of its imposing dimensions, the Vision Mercedes-Maybach 6 boasts performances worthy of a supercar, including 0 to 100km/h (0 to 62 mph) acceleration in under four seconds and a top speed electronically capped at 250km/h (155 mph). Mercedes reports that none of this performance negatively impacts range but we’ll have to wait and see on that.

In terms of exterior design, the Vision Mercedes-Maybach 6 reinterprets the aesthetic features historically associated with Mercedes, notably the prominent front grille, apparently inspired by a pinstripe suit. Its butterfly doors nod to the legendary 300SL, while the back end surprises with a rear window shrunk to minimal size. The futuristic interior is reminiscent of the F 015, unveiled at CES 2015 in Las Vegas (USA).

This coupé is the latest addition to a series of visionary concept cars presented over the last few years by Mercedes, including the Vision Ener-G-Force (2012), the AMG Vision Gran Turismo (2013) and the Vision Tokyo (2015). It no doubt presages an upcoming addition to the Mercedes Maybach line, creating a direct rival for the Bentley Continental Flying Spur and the Rolls-Royce Wraith.

Check out the Vision Mercedes-Maybach 6 in this video:

Mainland Chinese Property Shopping Spree

I can’t resist reading, learning and analysing the patterns of the Chinese investor. By Chinese I mean the PRC citizens. Their sheer quantity and quantum of spending are nothing short of mind-blowing and they change the market dynamics. Hence it is of great value for investors to watch, understand, follow and try to predict this amazing phenomenon.

Chinese tourists are snapping up luxury goods in billions of USD. Wherever these big-spending tourists travel to, the retail is booming and hence the rental returns go higher, benefiting the landlords. In this article I will concentrate on property per-se. Unsurprisingly, the massive spending of PRC citizens on overseas shopping extends to property as well, with many of them buying while holidaying abroad.

HOLIDAY HUNTING FOR OVERSEAS REAL ESTATE

Over a third of China’s HNWIs have already bought property abroad, and 41% of them intend to invest in overseas real estate within the next three years – 66% plan to invest in residential properties, according to Juwai site data. The top 10 countries most enquired about by Chinese buyers on their site are the US, Australia, Canada, New Zealand, the UK, Thailand, Spain, Germany, Japan, and France. In fact, six out of these 10 countries were on the list of top 10 holiday destinations for rich Chinese in the last couple of years.

Nothing is new about fly-and-buy behavior that we all experience sometimes. However, nothing transforms the property markets the way the Chinese travelers do and they are already the fastest-growing tourism market on our planet.

Chinatown, SingaporeCASHING IN ON CHINESE TOURISM

The businesses around the world have realized that the value of Chinese holidaymakers is too lucrative to ignore. Hospitality business, retailers, even Chinese developers and corporate investors are joining the great money wave outside their country where Chinese globetrotters are flocking to for holidays. This is where the businesses and investors are seeking to invest to tap into the unprecedented demand for goods and services.

Chinese companies bought resorts in Hokkaido and duty free shops in Tokyo, basically to accommodate and cash in on their own holidaymakers and shoppers. They know to buy the best. Just an anecdote, in the last few trips we could not find a nice Japanese whiskey in many main stores around Tokyo, nor in duty free shops in the airport, all sold out to Chinese tourists!

Chinese nationals also became the largest foreign buyers of homes in the U.S.A. last year, as they buy American real estate in billions of dollars. A huge surge in Chinese buying of both residential and commercial real estate last year took their five-year investment total to more than $110 billion, according to the study from the Asia Society and Rosen Consulting Group. The sheer size of that total has helped the real estate market recover from the crash that began in 2006 and caused the 2008 economic crisis. Despite a slowdown due to China’s attempt to suppress capital outflows, the figure for the second half of this decade is likely to double to $218 billion, the study said.

Very interesting to note the findings from my research and open sources – it’s astonishing that in 2014 China issued 16 million passports. As of 2012, around 38 million Chinese nationals held ordinary passports, comprising only 2.9% of the total population at the time. If even a total number of passport holders just doubled in the last three and a half years, it means we’ve currently only seen around 6% of the Chinese population travelling so far. We can only imagine how the property markets will look when there will be many more of these lucrative tourists coming to shop overseas.

Sydney HarbourAROUND ASIA

Now let’s look closer to our home, what is going on in the cross-border buying of property. As I previously correctly predicted in this publication (that’s Palace magazine in Singapore) a few months ago, the Australian market got most of the incoming money poured into their property. This is despite various property taxes and limitations on foreign buyers, such as a prohibition to sell secondhand property to foreigners. Most of the buyers are Chinese.

Meanwhile in Southeast Asia, Chinese tourists turned around the Thai economy, becoming the single biggest source of growth and giving a much needed push to Thailand, without which it would be in decline. The number of Chinese visitors swelled by more than 71% last year to 7.9 million. That’s a substantial portion of the almost 30 million international tourists visiting Thailand. I don’t have enough info yet on their property buying in Thailand, but they really keep the 4-5 star hotels there busy.

What is seen though is that the majority of PRC tourists are still coming in groups and that limits their capacities to buy properties as they do in the U.S.A. and Europe. It’s only a matter of time when more of them will be coming on their own and will turn the tide on a desirable resort property of the Kingdom.

In our region, not only the Chinese dominate the property markets. In Vietnam the easing of real estate laws and a thriving economy gave confidence to Vietnamese diaspora to send money in record numbers, adding steam to the property sector, now undergoing another boom after emerging from the depression. I can see foreigners moving in as well, but overall, the Vietnam property market is dominated by overseas Vietnamese. I also note lots of construction going on in places like HCMC.

My only hope is that the developers won’t overbuild and together with buyers, won’t create another bubble. Singapore and Hong Kong are in the grip of their governments’ imposed cooling measures, so the residential markets are in decline overall. Singapore remains a choice investment for local investors and foreign funds, given its triple A rating and “safe haven” status.

Buying activity in the Singapore real estate investment market is poised for a comeback. For now though, I see mostly the bottom-fishers who are back and looking for bargains in high-end residential property in Singapore which is quite underpriced compared to similar properties in Hong Kong, London and Manhattan.

The shophouse is a market segment in Singapore, which is attracting investment. It has also been one of my favorites for many years. I love them! Values of shophouses, especially in central areas, have jumped over the past three years, escalated by their scarcity and demand from funds and foreigners. Some recent deals by foreign investors went for over USD 2,700 per sq. ft. in terms of gross floor area. In the business districts, prices rose some 80% in the last 4 years. It seems like more foreign funds and private investors are buying as locals tend to look more at the yields and recently the yields are very low.

Sometimes as low as 2-3%. However, funds and foreigners see a great value in these scarce property gems as they are aggressively buying these houses, counting on capital appreciation. Once the shophouse is nicely renovated, there is a good leasing demand, as tenants still find these rents worthy when compared with shopping malls or higher end office buildings. I think looking forward, more buyers will be showing interest in this property segment. I also see more value at less central locations that can cater to offices as well as F&B in locations such as Kampong Glam.

Kampong Glam is one of the ‘ethnic centres’ in a relatively central area of the city. Its prices did not increase as much as the hip corners of China town, such as Club Street. Being along the Victoria Street and the well-established exotic retail enclave of Arab Street, it is a promising investment location to have in one’s portfolio.

Alexander Karolik-Shlaen EMBA, economist and real estate investor, is the CEO of Panache Management – a luxury brands and property investment advisory

This article was first published in Palace magazine.

Record-Setting Car Auctions: Concours 2016

“The rise of Ferrari across the board has been a bit of phenomenon of the last 10 years,” begins Peter Haynes from RM Sotheby’s. Not only have the incredibly rare models from the 1950s and 60s rocketed in value but in recent years the prices of even 1980s and 90s Ferraris have jumped significantly — $575,000 for a 2001 Ferrari 550 Barchetta, anyone?

But is that about to change? “It’s a relatively limited pool of people that want to buy the very high value cars,” says Haynes. “You could potentially argue that Ferrari has been overheated because there have been far too many big Ferraris coming to market.”

A 1931 Bugatti Type 51 Grand Prix Racing Two Seater is one of the stars of this year’s Bonhams sale.

What sends an auction into a frenzy is when a seriously significant car that has been in private ownership for a very long period of time finally comes up for sale.

“There are lots of lovely Bugattis that haven’t come to market over recent years. Lots of D-Type Jags. And now that they are, they are shining,” says Haynes.

And after years of unavailability, a Le Mans-winning D-Type is coming up and it has a conservative estimate of $20-$25 million. “A big, historically significant car doesn’t need to be a Ferrari to make a record price. A Le Mans-winning D-Type Jag is always going to be one of the most valuable cars in the world,” says Haynes.

This 1955 Jaguar D-Type won the 1956 24 Hours of Le Mans.
© Patrick Ernzen Courtesy of RM Sotheby’s

But the D-Type isn’t a solo performer. There is a 1931 Bugatti Type 51 Grand Prix Racing Two Seater ($14-$20 million+) that went under the hammer at Bonhams’ Quai Lodge auction on August 19 (It actually sold for $4 million, narrowly edging the Ferrari LaFerrari at the same sale). Or a 1939 Alfa Romeo 8C 2900B Lungo Spider by Touring, one of only 12 in the world if you had upwards of $25 million to spare and attended the RM Sotheby’s sale. It closed for $19.8 million, making it the 8th most expensive car ever sold at auction.

A new order?

And then then there’s the total wildcard. The original Shelby Cobra, the car that Carroll Shelby himself built and owned until the day he died. A car that has never, ever come up for sale and one that represents Genesis verse one, chapter one in the bible of American international motorsports history. A normal Cobra can fetch upwards of $1.5 million. This one could fetch 20 times more. In the end, when the gavel fell, the car sold for $13.8 million, making it the most expensive American car ever sold at auction. It is, by our reckoning, number 21 on the list of most expensive cars in the world sold at auction.

“All of these cars are absolutely capable of entering the top 10, which up to now has been almost exclusively dominated by Ferrari,” says Haynes. From what we have seen, only the Alfa 8C lived to this billing, which is still a big thrill.

The very first Shelby Cobra CSX2000
© RM Sotheby’s

As well as Ferrari fatigue, any possible rearranging of the top 10 is also down to changing tastes. Every year the average age of auction attendees drops as does the age of the cars they covet. This leads to even Japanese models becoming motoring icons and thus collectible.

“We can only guess what our kids may be potentially interested in buying when they hit their 40s,” explains Haynes. “How will they view something like a Ferrari Daytona? They might think it’s very cool or they might think its a horrendous antique not worth the garage space. It’s going to be interesting.”