Marketing to the rich
Make sure you throw one hell of a party
Tony Wong – Toronto Star
Michael Lee-Chin is talking animatedly about his first big real estate purchase.
It was an experiment of sorts. In 1985 he invested $50,000 in property and $50,000 in art. He eventually sold the real estate, flipping the land several years later for a $2-million profit.
“Back then nobody wanted real estate,” says the charismatic billionaire. “I did great with the property. But I don’t think I can sell the art for what I bought it for.”
The not-so-subtle lesson: Buy real estate.
It’s a well-worn tale, but the audience is lapping it up. One hundred invitees are seated in the ornate living room of an Oakville mansion this weeknight to meet Lee-Chin, the marquee speaker whose name adorns Toronto’s Royal Ontario Museum Crystal.
It’s an exclusive club. The group are drinking wine and Red Stripe Beer – a nod to Lee-Chin’s Jamaican heritage – while dining on finger food at what is likely the priciest single piece of real estate in the Greater Toronto Area. The 32,000 square foot Oakville waterfront mansion was bought for an estimated $35.5 million three years ago.
The guests are invited to hear Lee-Chin and other speakers, including famed art collector Ash Prakash talk about their investments.
But the venue is the real star of the night.
With so many luxury projects in Toronto, marketers have had to go to extreme lengths to attract the kind of busy high-net-worth customers who can afford their products.
It’s stealth marketing taken to another level: Have a cocktail and, by the way, look at the nice condo.
With the plethora of luxury projects from the Ritz Carlton to the Four Seaons and the Trump residences being marketed in the GTA, luxury buyers have been spoiled for choice. Marketers have been forced to up the ante. A good cheese platter won’t cut it. But a billionaire will get their attention.
“This isn’t marketing in the traditional sense,” says developer Marc Hewitt, who donated the venue and the food and wine for the night. “Our clients may not be influenced by a billboard or a newspaper ad.”
Peer group influence, on the other hand, is key: After all, keeping up with the Joneses, the Guptas and the Lee-Chins is hard work.
“You often see people who know each other and bumping into each other at our events and it also gives them a certain comfort level to know they’re socializing with like-minded people,” said Barbara Lawlor, president of Baker Real Estate Inc., the sales team behind the Ritz Carlton residences. “This is also a gentler approach, where you’re at a cocktail party and not attacked by some high-powered sales pitch.”
The Ritz has hosted many special events for buyers, including fine scotch and wine tastings and flying in celebrity chefs. A cocktail party at Roy Thomson Hall featured the Canadian Tenors. While guests listened to music, they could also sit in one of the $228,000 Bentley automobiles on display.
“This is a great example of marketers fostering tribes, grouping together consumers who have a certain passion for something,” says Jay Handelman, an associate professor of marketing at Queen’s University in Kingston. “You’re not just blatantly pitching a product, you’re also providing an emotional connection to the product by selling them a lifestyle. It’s about mind and emotion.”
Lawlor first used the event marketing approach at One Post Road in 1998, a collection of 45 condominiums in Toronto’s Bridle Path neighborhood where the penthouse cost $2.5 million. She teamed up with a wine company – her first attempt at cross branding – and threw a party in the sales centre.
“One Post Road, was the one of the first big luxury projects, so we had to think out sidethe box,” said Lawlor. “Since then, things have gotten a lot more extravagant.”
As developments have gotten pricier, marketing budgets for events have increased substantially say realtors. Much of that money has been diverted away from what would have been traditional advertising.
“It takes a much longer time for a buyer to make a decision with luxury properties. There is a bit of a wooing process,” said Lawlor.
Back at the Oakville estate, a steady string of cars, from Porsche SUVs to Mercedes S class sedans, were directed to park on the grass, not far from the outdoor pool with the view of the lake.
Inside the mansion, many guests had gravitated to the kitchen, where skewers of plump scallops and hors d’oeuvres of beef tartare seemed to attract the most attention.
“What do you think?” one lady, a black Hermes Birkin on her arm, asked another.
“It’s beautiful. I love the water, but it also feels a little isolated at night. I’m not sure I could last a winter here.”
First lady: “Yes, But did you see the view from the washroom?”
The views at Edgemere are stunning indeed. Even from the loo.
Since the project started selling officially in January, developer Hewitt has sold six of 30 units. The waterfront properties are priced from $2.59 million to $6.8 million, spread over 12.5 acres with 1,000 feet of shoreline.
But the development in a suburb about 40 minutes west of Toronto isn’t necessarily at the top of mind for most luxury buyers. Getting them to see the site is the challenge.
“Everyone here tonight already has a nice home,” says Hewitt, who has also purchased one of his own units. “They may come to hear the speakers, but they’ll also stop to look at the project. Some of these buyers may not even know they’re buyers.”
Turning browsers into buyers is the trick. Luxury properties compete for discretionary income with other high ticket purchases. Jewelry, fine art, an Italian supercar or a cool condo – there are plenty of baubles to distract the high end buyer.
“At this level it’s about wants, not needs,” said Michelle Levy, a pioneer of real estate event marketing.
Levy, a socialite who grew up on the Bridle Path, was one of the first to merge real estate sales with high society parties and the world of philanthropy.
In 1999, she was hired by developer Minto Communities to help sell their penthouse – then going for the unheard-of price of $3.2 million in Yorkville.
Levy sat on boards ranging from the Art Gallery of Ontario to the Canadian Breast Cancer Foundation and invited her high-profile friends to a party in the then-unfinished penthouse. A string quartet played before a guest list that included actors Christopher Plummer and Gordon Pinsent, haberdasher Harry Rosen and National Ballet principal dancer Chan Hon Goh. The developer donated a scholarship to the Shakespeare Globe Centre of Canada, another board that Levy sat on.
“At the time it really wasn’t common to do this sort of thing,” said Levy. “The real estate community and the arts community hadn’t really come together. People thought I was out of my mind.”
Now the practice is much more commonplace. And inviting the right crowd can pay dividends. One of her guests purchased three units at a party she held for a Forest Hill condominium development, she said.
“At that level, everyone sort of knows everyone else, so they see who their neighbors are,” said Levy.
For developer Hewitt, that’s the hope, as he opens his doors to the select few.
It didn’t help that when he first started to develop the project, the financial crisis of 2008 hit hard, tanking the luxury market.
“It had a huge impact. Everyone was uncertain. I was uncertain,” said Hewitt, who is no stranger to the world of luxury real estate.
The builder was the former head of development for Emaar properties, the giant real estate corporation behind the Burj Dubai, (now called Burj Khalifa), which surpassed the height of the CN Tower when it opened this year. But it turns out – no surprise – unlike the hot (and now cold) money of the Middle East, Canadian buyers tend to be a cautious lot.
“They see this very much as an investment as well as a home,” said Hewitt.
The property was the former home of Mattamy Homes owner Peter Gilgan and is considered the finest stretch of waterfront in the city.
Gilgan paid $7.2 million for the land in 1992 and pumped an estimated $20 million in the property, launching Oakville as the gold coast of the GTA.
Hewitt hopes he has struck gold again: The area has produced some stunning returns over the years. The land was originally purchased in 1907 by Toronto jeweler James Ryrie, partner to Henry Birks for a mere $206.
One good sign for Hewitt is that so far the market seems to have bounced back. Edgemere recently picked up five awards, including the low-rise project of the year honors at the Building Industry and Land Development annual banquet. The prize is considered the Oscar of the development industry.
Meanwhile, sales of homes priced $1.5 million and above hit 269 units, up 263% from last year and the highest on record for a first quarter. That figure is also up 71% from the peak of the market in 2008.
The problem is, once you get into the $3 million and up range, where Hewitt is targeting, there are far fewer buyers. But then Hewitt just needs 24 more candidates out of the select 100 who have shown up tonight. And they seem receptive.
Many in the audience are engrossed with art collector Art Prakash, who is regaling them with tales of his $2 million record purchase of a Tom Thomson painting.
“By what you love. Canadian art is still affordable globally,” advises Prakash.
Prakash isn’t shilling condos. But the subtext is there. Windswept images of Precambrian rock are never out of vogue. Especially when they are framed by a stylish condominium on the lake.
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