luxury - All posts tagged luxury

The prices for real estate are going up everywhere – but in high-end New York. 

Real estate prices in major metropolitan areas popped this past year, with San Francisco, Miami and Chicago up 25%, 16%, and 11% respectively, according to the S&P/Case-Shiller Home Price Indices.  Barron’s colleague Jonathan Laing predicts a rise of 5% in the U.S. for the next two years. 

One anomaly, in these across the board price increases, seems to be New York City.  According to a recently released Brown Harris Stevens study, the average Manhattan apartment sales price declined by 2% in the fourth quarter of 2013, to $1,553,599, versus the same time last year.  Inventory (existing properties for sale) is about 20% below levels last year, suggesting prices should be tight.  They aren’t. 

Last month, Penta bounced around a few New York City watch boutiques, cherry-picking three men’s watches of vastly different styles and prices Santa should consider putting in your Christmas stocking.  There was plenty to drool over this season, but these three stood out above all the rest— a minute repeater from Audemars Piguet that sweetly sounds the minutes; a throwback inspired by antique 18th century clocks from the Swiss boutique upstart, F.P. Journe; and a watch redolent of commando machismo constructed by Officine Panerai. 

Simply must buy yourself or your spouse a diamond?  If you’re not up on gemology lingo, stumbling down New York City’s Diamond District on 47th Street can be an intimidating business.  That’s why Penta caught up with the diamond experts at Leviev, famous for breaking through the De Beers stranglehold on the diamond industry, to get the low-down on selecting the proper diamond. 

Carats are just one of the many items you need to take into consideration when buying a diamond.  Leviev’s most precious stones come to its manufacturing facility on 5th Avenue in New York City, where David Klein, Leviev’s president, oversees dozens of diamond cutters and polishers.  They work six days a week transforming the rough diamonds just out of the ground into the jewelry we see in their boutique windows. ( For more on Leviev, see our previous review of their yellow diamond heart-shaped pendant necklace.) 

In Leviev’s manufacturing facility, where they use high-tech gadgetry like lasers and 3-D imaging to maximize the number of stones and quality, a rough-cut diamond typically looses 50% or more of its original carat weight, as they slice and dice it into multiple diamonds.  They have to.  Stones come out of the ground inherently flawed and the artful cutting is a means to extract the most jewelry-suitable diamonds out of the rough and flawed rock. 

Is the ongoing U.S. government turmoil hitting the economy?  Apparently not – or at least not affecting the wealthiest Americans, who have opened up the taps, regardless of what is going on down in D.C. At least that’s our interpretation of the various surveys Penta rounded-up to take the pulse of the most affluent folks in the nation.  The findings indicate that well-to-do Americans have resumed pre-crisis spending levels and are optimistic about the future. 

The market for fine Italian violins, violas and cellos has consistently been hitting high notes over the past 20 years, robust pricing that has taken most musicians out of the market.  Just like any discovered asset class, well-timed entry points are key, and know that the best violins these days cost as much as a prime Hamptons home.  Still, for investors looking at asset classes that are proven to store wealth in all periods of tumult, purchasing top-quality 18th century violins might prove a valuable alternative investment. 

The real action in fine string instruments is at the high-end, and in particular Stradivarius and Guarneri del Gesu violins, cellos and violas.  In mid-2011, The “Lady Blunt” Stradivarius sold for a world record $15.9 million, four times the previous auction record for a Strad.  That’s a pretty stunning return.  The violin was first publicly sold in 1971 for $115,000, which, today, would be about $664,000 in inflation-adjusted dollars.  Industry experts put returns on Stradivarius and Guarneri del Gesu violins at about 10% to 12% annually; one study found these violins grew at an annual clip of 10.4% between 1980 and 2005.  Annual insurance costs generally equal around 0.25% of a violin’s value. 

Just acquired a Hudson River School landscape and searching for that perfect frame to set it off?  Earlier this year, Julius Lowy Frame & Restoring acquired a rare, 19th century frame by Stanford White, the New York Beaux-Arts architect who built homes for the wealthy and was infamously murdered after sleeping with the wife of a railroad fortune heir.  The Stanford White frame Lowy acquired was valued at $125,000, and it was the firm’s 25th White original, an important addition to their collection of over 5,000 antique frames, which they claim is the world’s largest. 

At Lowy’s townhouse on the Upper East Side in Manhattan, the company, specializing in antique works, does everything from restoring and reproducing frames, painting conservation, while also dealing in its extensive collection of antique frames. 

On the sixth floor, at its painting conservation lab, Lowy president Larry Shar showed Penta an original Charlie Russell watercolor, of Native Americans on horses, that was badly stained and had some minor abrasions.  The damage now undetectable, Lowy’s employees restored the work’s vibrant and sprawling landscapes. 

According to CEO Alex Wilcox, private jet operator JetSuite has been doubling its sales annually since its founding four years ago and is expected to close the year at about $50 million in revenue.  The industry is growing rapidly, he said, with high net worth individuals wanting to own their own jets.  But jet ownership is not necessarily cost effective, considering that JetSuite’s light jets burn about 130 gallons of gas per hour, Wilcox said, plus factor in the cost of hiring a crew, lodging it in a hangar and routinely servicing the plane.  Chartering, jet club membership, or factional share ownership of a private jet often makes more economic sense than outright ownership. 

Wilcox believes, naturally, that there is tremendous opportunity for light jets and specifically JetSuite’s chartering services. “ We think of ourselves as Southwest Airlines 20 years ago, few people had heard of them and they just sneaked under the radar and grew,” he said. “ Then one day everyone woke up and they were the biggest in the industry in terms of passengers carried.” 

An ambitious flight plan for a four year-old company working in an industry where some argue there is overcapacity.  Penta hitched a ride back to New York City with Wilcox and president Keith Rabin, after a short flight aboard JetSuite’s CJ3 jet in Teterboro, New Jersey.  JetSuite has nineteen planes; 13 four-seat Embraer Phenom 100s are based on the West Coast, and six CJ3s on the East Coast.  To meet increasing demand, JetSuite will add two more CJ3s to its fleet this year and may reach twelve by the end of 2014. 

Any way you cut it, $2.5 million buys a lot of car.  You can snap up 10 fully loaded Mercedes-Benz SLS AMG GT roadsters, for instance, or five top of the line Lamborghinis. 

Or one Bugatti Veyron 16.4 Grand Sport Vitesse. 

Penta’s interest in that one was piqued earlier this year when we heard that the new model had just been driven at 254 miles per hour, a world record for open-top, street-legal sports cars.  We could hardly wait for a test drive. 

Bugattis, after all, aren’t just fast and expensive.  They are also heavily steeped in lore.  In 1909, Ettore Bugatti, a decorated car racer, began production of an entirely new class of automobile for the ultra-rich—race cars suitable for driving on regular roads.  In little more than 10 years, the brand won a Le Mans and became a symbol of haute sophistication. 

During the thrall of a New York City heat wave, Penta pounded the pavement to answer a seemingly simple question: What does $1 million buy in a necklace these days? 

Not as easy as it sounds.  After rounds of phone calls and a significant amount of wrangling, five boutiques in New York agreed to open their drawers, with Harry Winston and Cartier declining to participate.  We have cherry-picked one piece from each boutique.  Click on the photos to get a larger image of each necklace. 

Last fall, Geneva auctions sold twenty-two Patek Philippe watches that collectively fetched $18 million.  Among them was Eric Clapton’s bejeweled watch (Ref.  2499/100) with a perpetual calendar, which takes into account monthly variations like leap years, and three subsidiary dials, including one with a moon phase surrounded by the days of the month.  The watch went for $3.6 million, its value increasing 14 times since its original production in 1989.  No doubt that was partly due to the rock guitarist’s legendary status, but the watch speaks for itself – only one other such Patek Philippe watch with a platinum casing exists in the world. 

Patek Philippe is known for producing its models in limited production numbers, and doesn’t reveal how many watches the firm produces.  It can take up to two years – from the moment of purchase until the watch is finally shipped – before a customer receives his timepiece.  There is method to this madness.  Patek Philippe doesn’t want its production to fall into the hands of rare-watch speculators, who flip the timepieces for a profit, and so this drawn out process of delivery allows for lengthy background checks to ensure the buyer is a genuine collector. 

Patek was founded in 1839 by two Polish immigrants.  From humble beginnings, the company eventually became a watchmaker with “It.”  Queen Victoria purchased her diamond studded pendant watch at London’s Universal Exhibition in 1851.  When the watchmaker fell on hard times in 1932, brothers Charles and Jean Stern purchased the firm.  It has remained wholly-owned by the Stern family since then, with the fourth generation President Thierry Stern currently at the helm. 

About Penta

Written with Barron’s wit and often contrarian perspective, Penta provides the affluent with advice on how to navigate the world of wealth management, how to make savvy acquisitions ranging from vintage watches to second homes, and how to smartly manage family dynamics. 

Richard C. Morais, Penta’s editor, was Forbes magazine’s longest serving foreign correspondent, has won multiple Business Journalist Of The Year Awards, and is the author of two novels: The Hundred-Foot Journey and Buddhaland, Brooklyn.  Robert Milburn is Penta’s reporter, both online and for the quarterly magazine.  He reviews everything from family office regulations to obscure jazz recordings.