Q1 & Q2 2023 Market Report

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TABLE OF CONTENTS

2 INTRODUCTION

6 VISION

8 WHAT SETS US APART

10 EXECUTIVE SUMMARY

12 THE HAMPTONS $10M + MARKET

28 MANHATTAN $10M + MARKET

44 SOUTH FLORIDA $10M + MARKET

60 INVITATION

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Waldorf Astoria, Miami, FL

2 Residences

$43,000,000

EXECUTIVE SUMMARY

So far this year, reports on ultra-luxury real estate reflect a tendency we’ve seen before, where pundits treat the market as a monolith without considering its nuances or cyclical nature. Fortunately, at Bespoke, our unique perspective has allowed us to see what others don’t. Given all the noise about $10 million+ real estate at large, this Market Report is uniquely important today as one of the few— if not only—voices of clarity and insight into the market.

While the first half of 2023 has witnessed a year-over-year dip across the Hamptons, New York City, and South Florida trades, there are certain clear signals that point to an overall trajectory of market stabilization, a silver lining amid generally uncertain economic conditions. Among all three markets, properties with longer investment horizons, like move-in ready homes with little work needing to be done have performed well, particularly compared to homes that intend to be resold in the next few years, like land/teardown properties. That’s been made evident by the strong performance of the turnkey segment and the $20-$30 million price segment, in all regions. This is a notable shift from buyers’ intentions before the pandemic, where land/teardown properties, particularly in the Hamptons, accounted for over nearly a third of all $10 million+ sales in the first quarter of 2020

Breaking down the markets individually, comparing the Hamptons and South Florida markets has been useful, as they were both secondary markets that boomed during the pandemic and slowed starting in 2022. In the Hamptons, turnkey trades had a 13% increase in trade dollar volume despite a 25% decrease in the number of trades between the first half of this year compared to the same time last year.

The $20 to $30 million segment, meanwhile, had 50% more sales than the same time last year, from 4 to 6 trades, suggesting that buyers who may have been looking in the $15-$20 million range were willing to pay a premium for the perfect move-in ready home, pushing transactions over the $20 million mark.

South Florida saw the same trend, with buyers in Miami and Palm Beach favoring new singlefamily homes and inland properties over condos and waterfront properties. The main reason for this is simply the absorption of waterfront that occurred during the pandemic. The first half of 2020 saw 51 $10 million+ ocean and waterfront trades combined; that number quadrupled in the first half of 2021, with 204 trades (that year ended a total of 334 ocean/ waterfront trades).

Unlike South Florida and the Hamptons, New York City trades peaked in 2022, as buyers who flocked to secondary markets returned to the city with the effective end of the pandemic. Still, like the other two markets, buyers are favoring premium trades with long investment horizons. For example, new development trades dipped in quantity, they saw a 12% increase in dollar volume in the first half of this year compared to the same time last year. This suggests a sustained demand for premium homes, despite highly limited inventory in the market as a whole.

Join us as we dive into the data of the $10 million+ alpha markets.

HOPE YOU ENJOY.

Cody Vichinsky

FOUNDING PARTNER & PRESIDENT, BESPOKE

THE HAMPTONS $10M+ MARKET

315 Rose Hill Road, Water Mill, NY

Waterfront Living on Mecox Bay

4.21 Acres+/- | 15,095 SF+/- | 290’ of Frontage

8 Beds | 8 Full and 3 Half Baths

Bespoke Exclusive. $29,500,000

Total $10M+ Trades in Q1 & Q2 YoY

55 TRADES

46 TRADES

29 TRADES

The first half of 2023 had 29 $10M+ trades, putting 2023 on pace to beat prepandemic averages.

The data shown below includes the 9 locations surveyed within the Hamptons $10M+ real estate market for Q1 & Q2 YoY.

2021 TRADES 2022 TRADES 2023 TRADES

$2.7B+

The $20-$30 million price segmented increased by 50% YoY, due to demand for premium, move-in ready homes.

The data shown illustrates the total sales quantity and volume within the ultra-luxury real estate market surveyed within the Hamptons for Q1 & Q2 YoY.

2022

Continuing the pattern we’ve seen since late 2021, the overall $10 million+ Hamptons market has seen a dip in trade quantity and total sales volume in the first half of this year compared to the first half of 2022, with a 36% decline from 46 to 29 trades year-over-year. Nonetheless, the first half of this year is already on pace to outperform pre-pandemic rates; in 2019 there were 47 trades for the entire year.

A consistent theme in our previous Market Reports that continues to hold is lack of quality inventory. At the onset of the pandemic, trade quantity jumped 121%

year-over-year between 2019 and 2020, then continued to grow in 2021 by another 22%, to 127 trades for the year. This rush was due in part to the mass migration out of the city, and in part by historically low interest rates. For those who bought in those years, selling today would mean re-entering the market likely at a higher interest rate than they currently have. This is well demonstrated by the behavior of land/teardown buyers; in both the first half of 2020 and 2021, there were 14 trades; by 2022 there were 10, and the first half of this year saw only 5

Turnkey trades grew by 13% compared to the same time last year, for a total of $463 million in trade volume.

By contrast, turnkey trades stayed relatively consistent between 2021 to 2022, and have fallen the least in 2023, from 24 to 18 trades. Turnkey buyers’ investment horizons are often longer and recreational in their intent. Such buyers are willing to pay a premium for a move-in ready home, particularly if it fits a host of their individual preferences. Despite a 25%

decrease in quantity between the first half of 2022 and 2023, turnkey homes are the only category that has shown a 13% increase in dollar volume, for a total of $463 million in trade volume, compared to $408 million in 2022

“Land/teardown buyers had a shorter investment horizon,” says

Sam Kelly,

31 The Bridge, Bridghampton, NY Residences at The Bridge

3.8 Acres+/- | 5,204 SF+/-

5 Beds | 6 Full and 1 Half Baths Bespoke Exclusive. $29,995,000

Senior Portfolio Manager at Bespoke.

“If they are debt financing a property today, interest rates compounded with still-high construction costs has moderated the scale of upside, and therefore their transactions have subsided until something in the market gives,” he continues. “Unlike the rapid buying of 2020 and 2021, buyers are more patient and

are willing to pay a premium for the perfect property that aligns with their criteria to a tee. Hence the increase in dollar volume on turnkey and the strength of the $20-$30 million price segment.”

So far this year, Bespoke alone facilitated trades like 31 Two Mile Hollow Road, whose last ask was for $29 million, 535 and 553 Flying Point, whose last ask was $25 million, and 289 Parsonage Lane, whose last ask was $23.5 million.

With more patient buyers has come the reemergence of bidding. To be sure, it is not a reflection of lack of demand, which we believe is sustained given the speed at which homes are listed and sold. “While some buyers bid on a few other properties, they acted quickly and decisively when they found the one they were willing to pay a premium for,” says Cody Vichinsky, co-Founder and President of Bespoke.

“The trades we have facilitated, especially in the $20 million+ segment, make sense from an investment and lifestyle perspective in a market like we’re seeing today.”

Given the sustained demand, we expect about 35 or so trades for the rest of the year, with slight increase in the third quarter compared to the second, and an even stronger increase in the fourth quarter, in line with traditional yearly trade cycles. This would put the market on par with trades in the third and fourth quarter of 2022, which saw a total of 32 $10 million+ trades, and 78 for the whole year.

Hamptons Quarterly Transaction Quantity

Hamptons Quarterly Transaction Volume

Hamptons Yearly Transaction Quantity

Halfway into 2023, the Hamptons is at 39% of the average annual trade quantity since 2016, we are on track to perform just shy of the annual average due to a strong trade volume for the second half historically.

Unlike the rapid buying of 2020 and 2021, buyers are more patient and are willing to pay a premium for the perfect property”

SAM KELLY | SENIOR PORTFOLIO MANAGER, BESPOKE

Total $10M+ Trades in Q1 & Q2 YoY

106 TRADES

158 TRADES

121 TRADES

There were 121 trades in the first half of 2023, setting Manhattan squarely on pace with its historical averages of 252 trades for the whole year.

$10M + TOTAL MANHATTAN SALES BY LOCATION

The data shown below includes the 5 locations surveyed within the Manhattan $10M+ real estate market for Q1 & Q2 YoY.

$6.5B+

The average trade price increased from $15.5 to $17.8 million year-over-year.

The data shown illustrates the total sales quantity and volume within the ultra-luxury real estate market surveyed within Manhattan for Q1 & Q2 YoY.

165

Perry Street, #PH, West Village, NY

Penthouse Renovation Opportunity

3 Levels | 11,425 SF+/-

6 Beds | 7 Full and 1 Half Baths

Bespoke Exclusive. $29,000,000

In New York City, the overall theme this year has been sustainable recovery from Covid lows. In the first half of 2023, Manhattan saw 121 $10 million+ trades, compared to 158 during the same time last year. But despite this dip, the city is performing in line with its own historical averages, including trades before the pandemic. Between 2016 and 2022 the city

saw an average of 252 trades. Therefore trades in the first half of 2023 have met 48% of this historic average, demonstrating stabilization and recovery in the market.

Analyzing the market broadly, New York City trades declined for similar reasons as the other two markets covered in this report: high interest rates coupled with

low inventory due to the rapid rate of trading in late 2021 and 2022 has led to a absorption and a slowdown in the market.

But there is more nuance, as certain sections that are uniquely markers of a stabilizing market fared better than in previous years. New development

experienced an 11% increase in dollar volume, from $766 million to $852 million, despite a decrease in the trade quantity. The increase in average price from $13.4 million to $18.9 million illustrates a similar trend to the successes seen in the Hamptons: that buyers in today’s ultra-luxury markets are prizing

premium homes that fit a very specific set of individual needs. This is further demonstrated by the fact the that the $20 to $30 million price range saw a 71% increase in trade quantity, the $30 to $40 million price range remained consistent with last year, and the $40 million+ saw a 100% increase, from 2 to 4 trades.

The buyer profile has also evolved, with local families who have committed to New York City during uncertain times are now looking to expand their footprint. “In terms of square footage alone, we have seen apartments trade faster than ever before, suggesting a growing demand for the highly limited supply of spacious living properties with outdoor space and parking,” says Andrew Azoulay, Senior Portfolio Manager at Bespoke. “This is seen especially in downtown areas like Tribeca, where fewer contemporary buildings have space historically built in as an Upper East townhouse, for example, might.” One example is Sixty Collister, facilitated by Bespoke, which sold with the highest price per square foot every paid in Tribeca. The premium prices that buyers have been willing to pay for the larger apartments signals that Manhattan is still very much a primary residence for many, a key insight for further new developments coming to market.

Outside of the new development segment, the average price of the whole market increased from an average trade price of $15.5 million to $17.8 million between the first half of 2022 compared to the first half of 2023, led in part by the two additional

$40 million+ properties that transacted, with a 53% increase in dollar volume from $123 million to $193 million.

In terms of neighborhoods, the Upper West Side continued to struggle with a 55% decrease in trade quantity compared to the same time in 2022, with 15 trades, only three more than 2021’s lows. The Upper East, by comparison, had 54 trades in 2023, only three fewer than last year, reflecting its continued historical demand in the $10 million+ market. Once again the Upper East Side led the Manhattan market in terms of both quantity and volume, whereas the Tribeca and West Village group experienced a decrease in trades due to the absorption during the pandemic. Similar to the Hamptons, they are experiencing quick inventory turnover, provided the properties are priced accurately and are move-in ready, as they remain scarce in supply.

Midtown West, which has consistently been one of the fastest growing ultraluxury neighborhoods thanks to rapid new developments like Hudson Yards, continued to outperform itself with a 76% increase in sales volume, from $202 million to $357 million.

Given these many signs of a stabilizing market, we predict that the rest of the year will see a flat if not slight growth in trade quantities and volumes, with about 130 or so trades expected through the end of the year, only slightly less than the 120 $10 million+ trades that took place in the third and fourth quarter of 2022

The Upper East had 54 trades in 2023, only three fewer than last year, reflecting its continued historical demand in the $10 million+ market.

Manhattan Quarterly Transaction Quantity

Manhattan Quarterly Transaction Volume

Manhattan Yearly Transaction Quantity

Halfway into 2023, Manhattan’s trade volume is at 48% of the average annual trade quantity since 2019, with a projection outperform the annual average trade quantity in the second half.

In terms of square footage alone, we have seen apartments trade faster than ever before, suggesting a growing demand for the highly limited supply of spacious living properties with outdoor space and parking”

ANDREW AZOULAY | VP OF BUSINESS DEVELOPMENT, MANHATTAN

MANHATTAN $10M+

SOUTH FLORIDA $10M+ MARKET

Total $10M+ Trades in Q1 & Q2 YoY

235 TRADES

189 TRADES

118 TRADES

South Florida saw a drop in sales volume and quantity compared to last year, with a total of 118 trades compared to 189 in 2022.

The data shown below includes the 2 locations surveyed within the South Florida $10M+ real estate market for Q1 & Q2 YoY.

$10.2B+

The market had an average of 235 trades between 2019 and 2022, putting the first half of 2023 on pace to meet its historical average.

The data shown illustrates the total sales quantity and volume within the ultra-luxury real estate market surveyed within South Florida for Q1 & Q2 YoY.

Consistent with the Hamptons market, South Florida saw a drop in sales volume and quantity compared to last year, with a total of 118 trades compared to 189 at the same time last year. Again, the story here is absorption, where there is very little inventory left in Palm Beach and Miami after the massive relocation of 2020 and 2021. While the market had an average of 235 trades between 2019 and 2022, putting the first half of 2023 on pace to meet its historical average, we nonetheless expect the market to underperform throughout the rest of this year given the typically slower deal flow of the third and fourth quarters.

That all said, we believe that these decreases are okay particularly in this market, and that they do not spell out anything ominous for it. More than any other market, we believe these rates tell a story of stabilization and market maturation, continuing with what we reported last year. In 2019 there were hardly enough trades in South Florida for it to even be considered an alpha market. Then in 2020 and 2021, there was a boom in $10 million+ trades, a 327% increase from 2019.

The fact that the market has dipped in 2022 and 2023, but has not returned to 2019 levels, suggests that UHNW buyers continue to seek out properties in Florida despite the pandemic effectively being over, and many are relocating full time there. This makes the market interesting, because while it shares similarities to the Hamptons market in its booming postpandemic history, it becomes more like the New York City market to the extent that buyers are purchasing with the intent of making their new property their primary residence.

This is best demonstrated by the continued year-over-year consistency of both single-family homes over condos and inland properties over waterfront ones. Single family home trades dipped 19% from 2022 to 2023, while condo trades fell by 63%. Inland trades went from 36 to 35 year over year, an immaterial difference, while oceanfront fell by 52%, from 52 to 25 Similarly, waterfront trades declined by 42%, from 101 to 58. This suggests intent of primary residency, because while an UHNW buyer looking for a secondary vacation property in the area might lean towards an urban condo, spacious inland houses are often preferred for full time living, particularly for families with children at home.

Still, this is not to say that water or oceanfront condos are only secondary homes, or that

water/oceanfront is a market lacking in demand; absorption is the problem here again. “There are a finite number of alpha properties facing the ocean or bay, and so the limited inventory has contributed to the increased demand for inland alternatives,” says Zachary Vichinsky, co-Founder and CEO of Bespoke. “Particularly on the islands, like Indian Creek and the Venetian Islands, the jump in waterfront land sales in previous years has resulted in new construction projects, which are only still being completed this year.”

Similarly to New York City and the Hamptons, properties that did transact in Miami proper were done so at a premium, and we expect that buyers will continue to pay premiums as long as waterfront properties remain scarce. For buyers who are looking to add value, we expect some to turn their sights north, to properties like 2000 Ocean. Just one mile north of Sunny Isles, there are upwards of billions of dollars of investments.

In general, like the Hamptons and New York City, 2023 trades have favored turnkey homes that transacted quickly, where buyers were willing to pay a premium for the perfect property that met all of their individual criteria. Land/teardown sales fared poorly in Florida, where short investment horizons were more greatly impacted by high interest rates.

Inland trades went from 36 to 35 year over year, an immaterial difference.

South Florida Quarterly Transaction Quantity

South Florida Quarterly Transaction Volume

South Florida Yearly Transaction Quantity

Halfway into 2023, South Florida is at 50% of the average annual trade quantity since 2016, but due to the historical drop off in the second half, South Florida is on track to underperform relative to historical average.

There are a finite number of alpha properties facing the ocean or bay, and so the limited inventory has contributed to the increased demand for inland alternatives.”

ZACHARY VICHINSKY | FOUNDING PARTNER AND CEO

SOUTH FLORIDA $10M+ MARKET

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