Some L.A.-based luxury brokerages are stepping off the beaten path when it comes to expansion, turning their attention to international markets as they seek wealthy buyers for properties both at home and abroad.
Last month, the Agency opened an office in Punta de Mita, Mexico, its third outside the United States, while Teles Properties is launching a Cabo San Lucas branch in March and planning to open offices in the United Arab Emirates, Saudi Arabia, and Qatar in the next few months. Meanwhile, Partners Trust opened a Shanghai office in 2015. All three firms are headquartered in Beverly Hills.
Opening foreign outposts remains an unusual strategy for L.A.’s residential real estate firms. Still, the practice is growing in popularity as brokerages discover that planting roots abroad can help lure foreign buyers to the L.A. market and assist local clients looking for international property.
“As the economy gets more global, you start seeing clients coming from certain locations,” said Teles Chief Executive Peter Loewy. “For us, we want to have the best bang for our buck, going to locations we know best.”
Loewy said his firm has cultivated connections in the Middle East who are knowledgeable about real estate markets in California and interested in purchasing homes in the L.A. area.
“Most of the Middle East money is inbound to the U.S. – whether trophy properties in Beverly Hills or for kids going to school at USC or (Chapman University),” Loewy said.
Partners Trust is also betting on more overseas money flowing into the United States. The firm opened its three-person Shanghai office two years ago as a way to cater to Chinese investors snapping up L.A. real estate.
Nick Segal, chief executive of the firm, said the outpost is still coming into its own.
“It’s emerging. It’s not full force yet,” he said.
The Shanghai office has thus far sold just two L.A. condos, for more than $1 million apiece.
Deal flow
Local buyers are also increasingly investing in real estate overseas, which is the market the Agency is looking to capture.
“One of the key factors we’re looking at in terms of our expansion is expanding into areas where people from Southern California, especially Los Angeles, are vacationing,” said Chief Executive Mauricio Umansky.
The Agency opened an outpost in the Turks and Caicos Islands last year and one in San Jose del Cabo in 2015.
Umansky said the Punta de Mita office, which houses six agents, has sold two single-family homes and a condo so far in Mexico. He expects half of the firm’s business in Mexico to come from local buyers and half from U.S. residents seeking additional properties.
Teles’ Loewy said the firm’s Cabo San Lucas office would also cater to Mexican buyers looking for property in Los Angeles.
Despite increased interest in foreign operations, however, international offices remain an exception rather than the norm. Most brokerages opt instead to join one of a handful of international networks through which participating agencies send business to each other in exchange for a referral fee that’s typically 25 percent of commission, according to Scott Gibson, chief executive of luxury brokerage Gibson International.
The Brentwood-based firm is part of a network called Leading Real Estate Companies of the World, which counts 550 firms in more than 55 countries. Gibson said 5 percent to 8 percent of business for local agencies tends to come through such international networks.
“Because the rules are so different in each country … I can provide a far better service to my clients by not trying to be everything to everybody everywhere,” Gibson said. “I’d be far better off working with an established brokerage than trying to reinvent the wheel.”
Having an international presence can be especially important for luxury brokerages selling high-end homes to billionaires, said Charles Black, executive vice president of marketing for Hilton & Hyland of Beverly Hills.
Hilton & Hyland is part of Christie’s International Real Estate, a network of 138 real estate firms with 1,350 offices across the globe. It is partnering with French firm Michael Zingraf Real Estate, also part of Christie’s, to market Johnny Depp’s Plan de la Tour estate just outside Saint-Tropez, which is listed for $39 million. The actor splits his time between France and Los Angeles. If Hilton & Hyland refers a client to Zingraf who winds up buying the property, it would receive a referral fee.
“With high-ticket items, there are probably only 3,000 people who can afford it,” said Black. “And those 3,000 people do not only live in Los Angeles. They’re all over the world.”
Edit: A story in the February 20 issue headlined “Home Brokers Expand by Opening Doors Abroad” misidentified one of company’s new branch locations. They are located in San Jose del Cabo.
