The development of luxury real estate has taken a huge upswing in recent years, so the way from Paris to Dubai is not as far as it seems. At least if you look at our last show “Luxury Going Global” from the Paris Fashion Week, and “Global Land Grab - Building Sustainability” from Dubai, the upcoming edition of Global Players.
There is quite some truth in what Wolfgang Reitzle said in his 2001 book (”Luxus schafft Wohlstand”, Rowohlt): Luxury creates prosperity, at least where rich people act in a sensible manner, spend their money and reinvest it. The real estate market is one of those sectors where this is most obvious: the building boom is speeding up urbanization and has created a tremendous amount of new jobs - especially for people from structurally weak regions. So the luxury of the lucky few really rich people is spreading to some of the less well off, who can find employment in the sectors benefiting from luxury spending, like the construction and service industries.
The next step we have to take from there is from more prosperity is towards more sustainability. Green building is more than a buzzword and will hopefully prove as sustainable as its first offsprings like the Hearst Tower in New York or the Bahrain World Trade Center and other projects that are yet to be realized.
One of the focus points of luxury spending, real estate and the green building boom is Dubai. Join us there on our upcoming edition of Global Players and find out what the real future of real estate holds not only in the booming Gulf region, but worldwide.
A crisis of confidence. Therapists needed. Sleepless nights. These are headlines that could be used to described the state of hedge fund managers and investors today. In researching for the next edition of Global Players on the world of luxury, I have run across numerous interviews with hedge funds managers. And the stress and fear factors are high. In August hedge funds marked a 2.5 percent decline, the biggest monthly loss since 2000. This may not seem like a lot considering the billions that these funds have raked in over the past years, but the negative direction is destabilizing nonetheless. Managers and investors speak of a loss of euphoria. The good times are over, they say. I get the feeling that a whole group of very privileged people have just been forced to swallow a big reality pill. Here in the newsroom, we had to chuckle when we read the account of one hedge fund move and shaker who sent a “representative wearing lots of jewelry” to look at a mansion on the market. Asking price $48 million. The ring-laden person found the price to be “magnificent!” A few weeks and one big credit crunch later, the house is still magnificently on the market.
Our next edition of Global Players comes to you from Paris, where we’ll take you behind the spotlights and catwalks of Fashion Week, mingling with the designers and purveyors of some of the planet’s most sought-after wares. Like no other sector, the luxury goods industry has profited from the recent strength of the global economy. For manufacturers of expensive clothes and handbags, jewellery and other indulgences, expanding markets have led to double-digit profit growth. Sales worldwide were an estimated €135 billion last year, up from €80 billion in 2000. New players such as hedge funds are driving prices to unheard of heights. But in widening appeal and expanding access lies risk as well as reward. As big-name brands promise growth of at least 10 per cent a year and open shops in emerging markets from Eastern Europe to Asia, they face accusations of trading class for mass.
But changing markets and players are also raising new issues:
- How much is too much when it comes to pricing luxury goods?
- Does the mass market threaten the high end?
- Does outsourcing production to low wage countries tarnish quality and image?
- Are large luxury conglomerates more resilient than mono-brands or do their multiple labels risk “cannibalizing” each other?
- How well positioned is the luxury industry to withstand a potential downturn?
Those are some of the issues I will be discussing with my guests.
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This edition of Global Players comes to you from Europe’s financial hub: London. A crisis is squeezing the US housing market and the spillover has started to affect the international financial markets. The coverpages of English papers are feature the topic day in, day out. The recent meltdown and the first job losses reported in the US in many years point toward a worldwide recession. Is this the price of globalization?
For the first time, we see Japanese investors holding “slices” of US homeowner debt - perhaps without even knowing about it! An influx of capital from newly affluent threshold economies helped create an “easy money” atmosphere in which investors were tempted to take risks - and financial institutions were tempted to satisfy them with sophisticated new instruments that sought to transform high risk debt into triple A securities, the equivalent of bankers’ alchemy.
“Moral hazard” plays a big role in the intricacies of financial markets: if you give affected homeowners or investors - or banks - an assist, do you simply encourage them to be even more foolhardy?
To find out more about all these issues, do join us and tune into the next edition of Global Players!