Editor’s note: This item is republished with permission from Global Edge Marketing Ltd. The original post can be viewed here.
Bernard Hornung, an independent property consultant specializing in foreclosed and heavily discounted residential and commercial properties in London for cash-rich buyers, first made a name for himself selling holiday rentals in Sotogrande for the 1997 Ryder Cup, which was hosted by Valderrama. He sold US $6 million rentals in less than a week, and his clients included George Bush Sr. and members of the British Royal Family.
He went on to become sales director at Sotogrande, arguably Spain’s most famous luxury resort. At the peak of the boom he was selling over €80 million of property a year. Those days are over. He now focuses his time selling real estate to the super-rich.
Global Edge founder Ashley Rigg caught up with him to ask his advice on how agents & developers should go about selling to this highly sought-after demographic.
Ashley Rigg: Hi Bernard, thanks for taking the time to speak to me today. How’s business?
Bernard Hornung: Business is good. We have a small number of high-value clients who trust us implicitly. We are just in the process of finalizing an £80 million sale.
AR: A little out of my price range! How would you define the super-rich as opposed to the merely rich? How rich do you have to be?
BH: There is no precise definition, and wealth is relative your own personal circumstances and what you want to do with your wealth. The important thing about the super-rich is that they are not constrained or limited financially.
AR: If you had to put a number on it?
BH: Over a £100 million I would say. Most people can live without any constraints with wealth in excess of £100 million.
AR: I’d probably get by. Might have to cut down on a few non-essential items though! Joking aside, it seems like a different world to me. How would you say the super-rich differ as overseas property buyers to the average holiday home purchaser?
BH: I do not believe they are that different. People have similar aspirations, but the expectations of rich people are certainly higher. There is a greater need for privacy and security. The over-construction we have seen in many areas of Southern Spain has certainly been a major turn off.
AR: What’s the single most important thing about selling to the super-rich?
BH: It’s all about unique experiences. When you’re selling to people who have everything, you need to remember that a destination is a place worth leaving home for, and that is the challenge.
AR: What are the best of examples of this on the market today?
BH: A good example is La Varzea Polo Club, where I was commercial director. We built the only full facility hire Polo Club in Europe. The logistics of Polo are very complex. A high-goal player needs a stable of around 20 horses. Our facility allowed people to just turn up and play for €300 a day. We provided everything. It was totally unique and people were prepared to travel long distances for this unique experience.
AR: That’s a really interesting example. Most developers I’m familiar with targeting the luxury market build a golf course and spa, but this on its own wouldn’t be enough to attract the super-rich?
BH: That’s true. At La Varzea we actually decided not to build a golf course as the area already boasted a championship course and several professional standard courses. As a developer you need to think about your natural surroundings and how you can utilize this to deliver something that nobody else can.
AR: For example? …CONTINUED
BH: I think that the rehabilitation of the Gorongosa National Park in Mozambique is one perfect example of a unique project. The development is set on a Safari which saves endangered species. The super-rich can feel environmentally responsible when they are spending their money. It is very compelling.
AR: What are the most effective marketing strategies for targeting the super-rich? They must be a difficult group to reach?
BH: The super-rich are not necessarily that difficult to reach, but you do need to go beyond traditional methods of marketing. I favor public relations and the judicious use of resort attractors at high-profile events. Recently the response from display advertising has been disappointing. The best resorts are sold by word of mouth and experience marketing. Social networks are very powerful.
AR: By resort attractor you mean a famous personality?
BH: Certainly, Royal Ascot is famous because Her Majesty The Queen graciously attends each year. Getting the right people involved from the beginning is key.
AR: So the best use of marketing budget is to invest in creating a unique experience, getting the right people involved and using PR to your advantage?
BH: I would also recommend using client referral schemes. Satisfied customers are your best ambassadors and sales force. I always offered my own clients incentives if they made referrals. They delivered a more powerful message than I or any other marketing or advertising campaign did. It was very hard work and I ended up writing to all these referrals individually. They trusted me implicitly and many have continued to keep in touch and have invested in a number of different propositions I have offered them.
AR: What role do IFAs play?
BH: There is a small number of IFAs specializing in this area; for example, Savills Private Finance. They can form an important part of your sales strategy. The key is to get them involved early and use their brand to add value.
AR: How is the luxury end of the market holding up in the economic downturn?
BH: At the moment the super-rich are not buying in any significant volumes and the price of many outstanding properties is crashing towards 10 percent of the original asking price. This is a very volatile market and vulnerable to these extreme price differentials. The super-rich have the choice to lock up or sell for peanuts if they lose interest. I witnessed this before some 20 years ago. Only prime sites in the best resorts deliver enduring value.
AR: Has there been a shift into buying resale property?
BH: (For) completed property — certainly; the rich like many other people have lost faith that off-plan resorts will ever be completed. The top end of the market has also suffered because of too much high-density development. There are still examples of developments that get it right. I’ve always admired La Zagaleta even though it was a competitor during my time at Sotogrande.
AR: Finally, what advice would you give to an agent or developer looking to break into this market today?
BH: Learn humility. Remember that whoever you are, you are a servant. Always deliver on what you promise and if you look after your character your reputation will look after itself.
AR: It’s been pleasure talking to you. Thanks very much for your time.
BH: You’re very welcome.
Copyright © 2009 Global Edge Marketing Ltd.
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