Money Matters

Despite the nation’s economic woes, Southwest Florida residents and visitors continue to purchase luxury items.

"Our feeling is that the Cartier client is very aware of what’s going on nationally, globally—all the factors, whether it’s the housing market or an election year," Naples store director Glenn Guiler says. "The true luxury-lifestyle client has known about these things and been anticipating them."

Luxury retail is experiencing annual growth of 20 percent to 30 percent, compared to growth of less than 5 percent in the general retail market, according to The Luxury Marketing Council. In 2006, sales of luxury retail goods were estimated at $194 billion globally, representing about 16.9 percent of all retail sales.

But as the year continues, shoppers might be more careful. Nationally, some publicly traded high-end retailers are reporting declines in sales.

"They are watchful, waiting," says estate planner Michael Kilbourn of Kilbourn Associates in Naples, whose clients have $10 million to $50 million in assets. "Even the wealthier clients are concerned with the marketplace."

Paul Belfore, executive vice president of Naples Capital Advisors Inc., says his clients aren’t trying to curtail spending. The presidential campaign, not the economy, is the focus of conversation among his clients, who have at least $1 million in investable assets and $2 million net worth. Their concerns are who will win the White House, which party will control Congress and how that could impact their tax situation.

"They don’t have the same issues that the general blue-collar [worker] might have," Belfore says. "They have not changed their spending patterns to anything that we notice."

Jaguar Land Rover Aston Martin Bentley of Naples opened last year and is ahead of sales projections, says Steve Terry, a partner in Automotive Manage-ment Services Inc., the dealership’s management company.

"This market is faring much, much better than almost every other market we’re in," he says. Factors helping to sustain sales are the large population of car collectors in Southwest Florida and the introduction of sought-after new models, which could affect sales more than economic factors might, Terry says.

Cartier had "modest" goals when it opened in Naples in September 2006. It declined to provide sales figures, but, Guiler says, "We have been nicely exceeding our goals. There’s no runaway, super-great success story. We’re just taking a very seasoned, slow and steady course of trying to reach out to the Naples customer."

In real estate, sales are down of homes priced at $1 million and up, and buyers are taking longer to make decisions, say builders and agents.

"We spend an awful long time talking through some of the concerns and some of the issues and getting them totally comfortable," says Mark Wilson, president and CEO of London Bay Homes. "With that, they’re still moving forward."

Sales of single-family homes priced at $1 million and higher dropped from 307 in 2006 to 260 last year in Lee County, according to MLS data provided by Fort Myers-based Denny Grimes & Co. Inc. Ten of those sold for more than $2 million. On average, houses sold for 66 percent of original list price, Grimes notes.

"People may be buying an $800,000 house instead of $1.2 million," he says. "Except for that maybe one-tenth of 1 percent of the buyers [for whom] money doesn’t matter anymore, most people are finding what they want [and] buying down a little bit."

As of late February, there were 984 homes on the market in Lee County for more than $1 million, which represent 45 months’ worth of inventory, Grimes says.

In Collier County, 357 single-family homes priced at $1 million and higher sold in 2007, compared to 388 in 2006, according to MLS sales data provided by London Bay. However, homes priced $5 million and higher got a boost in 2007, up from 28 the previous year to 40—the most annual sales in more than five years.

London Bay’s revenue dropped from a record $73 million in 2006 to $67 million in 2007. The company builds homes from $1 million to $10 million.

The outlook is optimistic this year, Wilson says. London Bay received four contracts in one week in February and has had substantially more people visiting its models. Prices are down 7 percent to 10 percent, he adds.

While some buyers are sacrificing certain optional features and finishes, other potential buyers are making the most of the market, according to Wilson. They’re saying, "‘I’ll have what I want and, furthermore, I’m buying it at prices that are very good, thanks very much.’"