Gulf Coast International Properties is proud to share with our clients our Port Royal mid-year market report. This paper details closed sales, pending sales, sale price, inventory and other trends for Naples' finest luxury real estate market. Port Royal, Aqualane Shores, Olde Naples, Moorings, Park Shore and other Naples watefront communities have experienced a renaissance of sorts over the last 12-18 months with all indicators pointing towards a healthy luxury marketplace. Take a look and let Brad Johnson know if you have any questions or comments. He can be reached at 239.595.9278 or [email protected]
for a professional consultation.
PORT ROYAL MID-YEAR MARKET REPORT 2013
The Team at Gulf Coast International Properties
Timothy P. Savage and Michael A. McCumber, Principals
Port Royal Average MLS Closed-Sale Price
2011 - 2013 (1st and 2nd Quarters Only)
Gulf Coast International Properties is proud to present the Port Royal Mid-Year Market Report 2013. We hope that you will find this mid-year report informative and useful. As a Port Royal market leader, we continuously look for new ways to meet and exceed our clients’ expectations through our dedicated staff of real estate professionals. As a luxury real estate boutique, it is our world-class marketing program, uncompromising integrity and Port Royal real estate sales experience that set us apart. As a locally owned and operated firm, rest assured that the GCIP agent representing you has a vested interest in perpetuating the exclusive and luxurious reputation held by Naples and its residents. So please enjoy and we hope you continue to Live Exceptionally™.
The Mid-Year Market Report
Port Royal is one of the most exclusive waterfront communities in Southwest Florida and, as such, requires a unique perspective when it comes to market analysis. The area’s limited number of sales and diverse offerings require buyers and sellers to understand that values cannot be determined by facts and figures alone. With that mentioned, Gulf Coast International Properties aims to provide Port Royal’s current and future residents with basic data, general trends and insights as it pertains to the community. Please note, this report does not address specific owners, motivations, views, or other circumstances. We hope you will find this 2013 Mid-Year Market Report helpful and encourage you to consult with one of our professionals, whether you are a buyer or a seller, as it pertains to specific Port Royal properties.
The Luxury Buyer
According to a recent study of the world’s ultra-high-net-worth market, Candy & Candy, Savills and Deutsche Bank concluded that this group will grow by more than 20% while their wealth will expand more than 30%. Also, the buying habits of these individuals were bolstered, rather than harmed, by the last few years’ struggling economy. While the majority endured through an anemic recovery, this group thrived on appreciating capital, real estate, art and other preferred markets. This sentiment is supported by another study titled The Wealth Report by Knight Frank, which found that the “Super Rich” (net worth of $30m+) will double in size by 2022, increasing to 285,665 people.
What does this mean for the luxury buyer in Port Royal? We are seeing more of what is called a “trophy safe haven” purchase by the ultra wealthy — a term coined by Nick Candy, CEO of Candy and Candy, an ultra-prime real estate developer in London. Port Royal bears witness to this “trophy safe haven” trend over the last couple of years. While not indicated in MLS sales over the last two years, Port Royal has seen several properties closing in excess of $20m with two properties closing for more than $40m. Additionally, the wealthy are seeing real estate as a more attractive asset class, allowing them to acquire and enjoy their property while it appreciates simultaneously. Hence, we are seeing increased sales volume, higher average closed-sale price and reduced time on the market over the last twelve months. Finally, and perhaps most importantly with the luxury buyer, Naples still draws global appeal with the incredibly attractive lifestyle. Coastal Living Magazine recently named Naples as the “second happiest seaside town in the United States.” Life in Naples is good, and, when you couple this idea with the increasing wealth of the “ultra wealthy,” Gulf Coast International Properties anticipates that the luxury buyer will continue to gravitate toward Naples and, more specifically, Port Royal real estate.
Port Royal MLS Home Sales: January through May 2009-2013
(Source: NABOR)The 2013 Mid-Year Market Report
It is undeniable that Port Royal, over the last 12-18 months, has experienced a true “market revival.” As discussed earlier, the target buyer for Port Royal properties was more inclined to invest or buy in this waterfront community during this time period. In nearly every possible statistical category, the Port Royal market has improved; in some cases, significantly. For the first half of 2013, closed-sales dollars in millions, number of sales, average days on market, and perhaps surprisingly to many, average sale price all improved during 2012. The sales trend is undeniable. In fact, if you were to take a look at the big picture, the second half of 2012 and first half of 2013, when compared with all previous years in Port Royal, the total home sales of nearly $300m is second only to the 2005 total when factoring in non-MLS sales. Furthermore, the average sale price of $6m so far in 2013 ranks among the highest of all time for Port Royal — further indicating an improving luxury market. Additionally, if you were to take a look at the last 12 consecutive months, the average closed-sale price has increased to $6.5m for home re-sales. Closed sales above $10m in the first half of the year of 2013 (4 total transactions) are the highest on record in Port Royal and reflect the ‘trophy safe haven’ sentiment expressed earlier. Buyers are looking to invest in luxury real estate for the long term, again illustrating the demand and health of Port Royal as a market.
Since we are seeing record sales numbers, which parallel the return of consumer confidence and global equity markets, it would appear that little would be able to change this momentum — except perhaps the relative lack of inventory.
Port Royal MLS New Construction Closed Home Sales: Full Year 2009-2013
The New-Construction Market: A Story of Health
A terrific way to evaluate the health of a real estate market is by how many new homes are selling in any given year; and, at what price. This indicates that buyers are willing to pay a premium of 10-20% to forego the sometimes-arduous building process and take possession immediately of a completed ‘spec’ home. These buyers are choosing to preserve their time over that 10-20% premium. The statistics are undeniable as we identify the upward trend based on recent data. Further, as the table above reveals, the price per square foot for new homes is also increasing, meaning not only are buyers paying a premium, but also that premiums are rising. 2013 is off to a quick start and we anticipate this to continue with nine, new-construction homes currently on the market with asking prices in this same price-per-square-foot range. Note that many of these new or ‘spec homes’ are a product of 2009-2011 market when lot values were attractively priced and coupled with motivated sellers.
The Saga of Inventory
In July of 2009, when there were more than 70 active homes listed in MLS, the inventory was a burgeoning concern and reflective of a struggling market. As of June 3, 2013, there are currently 50 homes on the market (excluding lots), or a decrease of more than 40% during the last four years. As the market improved during this time period, we have seen prices slowly rise while inventory declined, as reflected in Port Royal’s statistics. This obviously leaves the question: Are there any good properties left on the market?
While inventory is down significantly in the last four years, the combination of new construction homes, the Port Royal Club and attractive asking prices, relative to market highs, allows for current inventory to remain attractive. On a qualitative level, we see entry-level-priced properties sell as ‘lunch’ or ‘dinner’ lots, meaning; new buyers strategically purchase a property to gain entry into the prestigious Port Royal Beach Club. This allows buyers to join the club, retain another residence in the area and immediately enjoy all the attractive amenities that the club has to offer. Also, the new-construction homes are brought to market at a healthy pace that, while higher priced, remains appealing to buyers looking for the latest and greatest in design and construction technologies.
So Why Don’t Some Properties Sell?
Even in a healthy market, there are always properties that simply don’t sell. We always get these questions: “So, why has this been on the market so long? Why hasn’t it sold?” One of the first and most basic reasons is price. While the market is improving and prices are starting to rise, we still have buyers in the ‘deal’ mindset from the old, more buyer-friendly market of the prior 12-18 months that has largely diminished. We are finding that the homes that are selling are priced close to comparative sales, not only indicating seller interest in selling, but because the market has improved, bringing multiple offers. Second, some owners are cognizant of the new capital gains and healthcare taxes that can potentially take about 9% out of profits; therefore, sellers are holding out for longer. For those unable to sell by December 31, 2012, this has had an impact, especially with Port Royal’s luxury market status.
The Port Royal market has returned and is quite healthy. Report statistics point to a healthy equilibrium between buyers and sellers — with pricing slowly and smartly starting to rise and inventory thusly declining. Affluent buyers from around the globe are choosing real estate as a primary investment, both personally and professionally, which explains this comeback in the Port Royal market from the depths of 2008 and 2009.
From the perspective of Gulf Coast International Properties, we continue to advise buyers to move while prices are still favorable (even though they are rising). The available inventory is attractive despite the dip (it is Port Royal after all) and prices are still attractive relative to the highs of 2005-2006. We also advise sellers that when properly priced and marketed, selling quickly, even receiving multiple offers, can take place. Further, unlike the speculative and irrational exuberance of the ‘hay-day,’ we believe this market will continue to quietly improve as demand drives sales in one of the true gems of American living.
“I want to make Port Royal the finest place in the
world to live. And I believe I’m succeeding.”
- Quote from John Glen Sample, visionary developer of Port Royal
When John Glen Sample first envisioned Port Royal in the middle of the 20th century, he was quoted by a Miami Herald staffer Nixon Smiley as saying, “I want to make Port Royal the finest place in the world to live. And I believe I’m succeeding.” His incredible vision to carve man-made peninsulas out of wetlands lives strong today and nothing speaks to his claim more than Port Royal starting to thrive again while much of the country struggles. Port Royal is truly one of America’s great luxury waterfront communities, and we are seeing buyers take advantage of its unrivaled lifestyle opportunities once again.
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