- I recently had the opportunity to chat over lunch with real estate developer H.B. Gianos
, (who prefers to be called Bobby), President of East End Properties.
A visit to his website at www.oldetowne1640.com
will demonstrate Bobby's achievements in residential and commercial development as well as his current project, Southampton "Olde Towne," a four acre, seven parcel single family homeowner association development for which he plans to start construction in 2011. Bobby is also "partnering" with Peter Cardel of Cardel Development on the construction of semi-custom homes. The one currently under construction can be viewed at www.135wickapogue.com
Bobby Gianos, President of East End Properties. (Courtesy Photo: East End Properties)
I asked Bobby for his views on when the downturn in the real estate market started, and why.
"It started in April, 2008, with the collapse of Bear Sterns. That was the blinking red light. When Lehman went under in September '08, that's when the collision occurred. It completely froze the market. I started to see some movement in February '09 at a 30 percent average decline in prices as compared to before the market crashed."
What do you attribute the starts in transaction to, I asked.
"Wall Street. The Hamptons is a derivative real estate market of New York City
and the bedroom communities that surround it. There is always a time lag between what is happening in those areas with what will happen in the Hamptons. That's partly due to the fact that we are a second home community. People take care of their other needs first."
How do you see the demographics of the Hamptons market?
"I can only speak for the area from Southampton Village to East Hampton Village. I would say that 80 percent of the market is connected to New York City, 10 percent national, and 10 percent international. One of the major changes I see is that people aren't as fixed as they used to be on living in a particular zip code. It's product that meets their needs and price. The buyer we attract is a very sophisticated investor. They have made the decision that the market in the Hamptons had bottomed out, and now was the time to buy. Just as selling begets selling, buying begets buying. So the smart investor wants to buy at the lowest price point. The dinner
bell has rung. I have seen a surge of activity in the luxury, (over $10 million market), and the super-luxury, (over $20 million market)."
I asked Bobby, who are the people who are buying these properties?
"I would say mostly celebrities, hedge fund managers, and private equity investors. A lot of people with a lot of cash are filling the void left by institutional lenders who are not lending money."
What do you think motivates a prospective buyer to decide on new construction rather than an existing structure, Bobby?
"Well, first of all, only about 10 percent of buyers start out with the intention of buying new construction. What typically happens is that they start looking for a home they envision, but the location may not be right, or the house needs too much work, or its features are outdated. That's one of the reasons you see so many "knock-downs' in the Hamptons."
What is the market that you intend to appeal to Bobby?
"We are looking to be a low volume, more custom oriented, new architectural scheme developed for each project, focused on marrying today's automation and energy efficiency commensurate with the Hamptons character and history."
We have been talking about the luxury market, Bobby, what I would be interested to know is, as a developer/owner of housing designed for senior citizens, you are obviously aware that there is a need to house people who are not candidates for the luxury market, such as the school teachers, fire fighters, police officers, health care workers, vital to the community. What about them?
"There is no question that, as you say, these individuals and their skills are vital to the community, and one of the challenges the Hamptons faces, is the need to take steps to meet their needs for housing within the communities they serve."
Thank you Bobby for the interview - and for the lunch.
John will be teaching a 22.5 hours Real Estate Continuing Education class at Long Island University in Riverhead on June 13, June 15, and June 17. For information and registration contact Rosemary Malone at 631-287-8334 or by email at firstname.lastname@example.org.
John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU and NYU, and acts as a consultant to the real estate industry. www.johnaviteritti.com