Extreme Home Marketing

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Questioning the Razzle-Dazzle

The market portfolio—meaning unsold property—of SHVO Marketing is worth about $7 billion. By 2008, Shvo expects that number to hit $15 billion. There's a waiting list for 650 Sixth Ave., which opens in early 2008. The Jade, where the apartments range from $500,000 to $4 million, opened last July and was 60% sold by September. It's 80% sold now, even as New York's real estate market returns to less turbulent levels of sales activity and price appreciation.

What works? Shvo believes his buildings are so inimitable that they are protected from the market fluctuations and competition that affect developments competing solely on price, location, or amenities. Living in a Shvo building can be likened to joining an exclusive club. "People want to say, 'I live in the Jade building,' 'I live in the Armani building,'" Shvo says. "What else can they say? 'I live in the Sub-Zero building'?"

But others Realtors aren't sure that savvy buyers want so much razzle-dazzle. Steve Kliegerman, executive director of development marketing at New York real estate brokerage Halstead Property, still thinks buyers are interested in the basics first. "Today's buyer is very well-informed," he says. "Their time is valuable. They want info and they want it quickly—they don't want to sit through a 15-minute video before they even see a floor plan."

Wooing Realtors with Lavish Gifts

Finding a stronger identity for your building—and your company—was a trend that developed as real estate prices skyrocketed and the business grew more profitable, sucking more players into the game in the early part of the decade and raising the benchmark for luxury living. In 2002, New York brokerage Corcoran acquired the longtime luxury real estate marketing company the Sunshine Group to bulk up its marketing operations. SHVO Marketing was formed in 2004. "You're definitely seeing more of a focus on marketing because there's more competition," says Kliegerman. Halstead recently underwent corporate rebranding to give it a more modern appeal.

Even in places where home prices appreciated at slower rates than on the coasts, like Chicago, luxury developers are spending big time to attract top Realtors with lavish parties and gifts. "Developers' marketing budget has certainly increased," says Nancy Nagy, senior vice-president and branch executive for luxury brokerage Koenig & Strey GMAC's Gold Coast office, which is marketing new projects from Trump International and Mandarin Oriental in downtown Chicago. At one recent party for 2520 Lincoln Park, a new luxury tower by Chicago architect Lucien LaGrange, every Realtor got an orchid to take home. "It was really lovely," Nagy recalls.

Marketing has become even more critical as the housing market cools in much of the nation. Though certain parts of Manhattan remain somewhat immune to national market forces thanks to the high concentration of wealth and low incidence of speculation, the city saw the average sales price for condos rise only slightly to $1.386 million in the first quarter of 2007, from $1.384 million in the first quarter of 2006, according to Halstead Property. New York apartments were on the market for an average of 98 days in the first quarter of 2007, 11% longer than a year ago.

Asking the Right Questions

Is more sophisticated marketing the cure-all to an ailing real estate market? Will the next generation of buyers want the lifestyle—or the fancy amenities? What if Jade Jagger's Ibiza-London-New York fusion goes out of style, and you're stuck with an apartment and no sexy broker to help you sell it? What then?

That's the question that broker Allan Domb thinks people need to ask before falling for heavily branded buildings. Domb controls 75% of Philadelphia's luxury condo market and currently has 475 condos for sale. He says he has been the nation's top producing residential broker several times in his 27-year career. "I think they're completely delusional," he says of real estate marketing companies like SHVO. "Five years from now, how am I going to sell an apartment like that?"

For certain, Philadelphia is a different market than New York, with lower prices and fewer buyers from out of state and overseas (Domb says most of his clients are native Philadelphians). Here, Domb's strategy has always been to focus on quality and service, and let the market take care of the rest—but he insists that his approach is more sustainable than Shvo's, in any market. "It still comes down to location, location, location," he says. "They sell with your eyes closed. If you need beautiful women models to sell real estate, then something's wrong." Domb estimates his total marketing budget is about $1 million, and claims that last year he had one of his projects 100% reserved without placing a single ad or printing a brochure.

Shvo, meanwhile, is hoping his customers will be smart enough, when the time comes, to hire a broker that sells lifestyles as well he does, beautiful or not. "If Chanel sells a bag, they can't control how somebody wears it after that, that's true," he admits, once again alluding to his muse, luxury retail. "Fortunately for me, I only get paid for what I deliver."

Click here to see a slide show of slick new marketing techniques being adopted by the real estate industry.

Click here to join a debate about housing.

Roney is Real Estate writer for BusinessWeek.com.