Business

Why Neverland Ranch is being eyed by Asian buyers

sycamore Image copyright Jim Bartsch
Image caption Michael Jackson's former home, Neverland, is now listed on Hong Kong's Luxify website

How do you sell an iconic celebrity home that's had its fair share of bad publicity?

That's the situation facing the owners of Neverland Ranch, the former home of pop star Michael Jackson.

They've had the well-known gated estate, now called Sycamore Valley Ranch, on the market since May. So now, after months without a sale, they're targeting Asia's super wealthy.

The asking price? About $100m ((£66m) according to a listing on Hong Kong-based Luxify, an online marketplace that specialises in buying and selling luxury items and connecting buyers to dealers.

It makes money by charging for listings and all its transactions are completed offline.

Launched in March, the privately-owned online firm now has offices in Singapore and London, but says about 70% of its 21,000 active buyers are based in Asia.

Which is why co-founder Alexis Zirah says he's confident he'll be able to sell Neverland - most likely to a Chinese buyer.

Image caption Luxify's co-founders Alexis Zirah and Florian Martigny sell new and second hand products and properties

"We are working online as well as offline to find the right buyer," he says. "You have to remember that Chinese people are the biggest foreign investors in the US property market."

Statistics from the US National Association of Realtors confirm that Chinese investors purchased $22bn worth of residential real estate in the 12 months to March, a 72% increase from the year before.

So it's no surprise Neverland is just one of a number of celebrity homes and famous castles listed on Luxify.

Last week, the online firm put up Michael Jordan's Chicago mansion, a property the basketball star has been trying to sell for several years.

Today's offer price for the 56,000 sq ft property? Just under $15m - or almost half the amount it was first listed for in 2012.

Pre-loved or new?

In addition to multimillion dollar homes, Mr Zirah and his business partner Florian Martigny list cars, jewellery, wine, yachts and collectibles, but more than half of their products are second-hand.

Image caption Hermes' famous Birkin bag sells for more than $8,000 new but for significantly less second hand

Buying pre-loved luxury items used to be taboo in Asia, but attitudes are changing quickly, especially as regional customers look for bargains online.

"This is completely new," says Mr Martigny.

"Two, three years ago, nobody in Asia was buying pre-owned luxury items," he explains.

"There is still stigma against it, but it's much less now," he adds as he shows off a second-hand Italian sports car that's listed for more than $3m.

Globally, the online second-hand luxury industry is still small, but according to a 2014 study by management consultants Bain & Company, it's growing quickly, twelvefold since 2007.

Bain & Company's Claudia D'Arpizio estimates the market for second-hand luxury clothing, accessories, watches and jewellery was worth about 16 billion euros ($17bn) in 2014.

"While this market threatens new product sales, it is simultaneously turning luxury goods into durables with an increasingly defined re-sell price, thus increasing their value," she says.

A rival report from McKinsey & Company estimates that luxury online sales grew by 50% from 2013 to 2014, reaching 14bn euros ($14.8bn; £9.93), representing 6% of the global luxury market for personal goods.

Designer discounted

Perhaps nothing else embodies the convergence of luxury, technology and the sharing economy as much as the rise of online second-hand sites like Luxify and Guiltless, another firm that's set to launch a consignment site - a marketplace for people to sell on their possessions.

Guiltless was founded in Hong Kong by 25-year-old Yen Kuok, youngest daughter of Malaysian billionaire Robert Kuok and is set to launch in Hong Kong and Singapore in January.

Image caption Guiltless founder Yen Kuok will launch her second-hand online site in January 2016

Ms Kuok started Guiltless after trying to sell her high-end clothes and accessories to consignment sites in the US, where she attended university.

"They were very keen, but they said they didn't take items from Asia," she says.

"In fact, they didn't take items outside Europe or the US. I was quite shocked."

Her site has since collected about 3,000 pieces - mostly dresses, handbags and shoes - of which 40% are second-hand. The rest are new items, usually from past collections.

Ms Kuok estimates the goods will be offered at discounts of between 30% and 80% off their original retail price.

"Even if people in Asia don't admit it, they are looking for a deal. They're looking for value for money," she says.

"In Europe, people carry an expensive handbag for life. In Asia, people want a new model every year."

Bargain handbag

Guiltless will launch with six full-time and six part-time employees and has plans to target shoppers like Vinnie Ong - a 25-year-old investment banker working in Hong Kong.

Ms Ong says her first luxury purchase was a pair of ballet slipper style shoes when she was 18 from designer Tory Burch.

After graduating from university and landing a well-paying job, her enthusiasm grew. She began to buy handbags from brands such as Celine, Valentino, Louis Vuitton and Prada.

Image caption Vinnie Ong now shops via online second-hand sites for her favourite brands

But after snapping up a pristine second-hand Prada handbag for about half its retail price, Ms Ong says she was quickly drawn to shopping on consignment websites.

"I was getting an almost-new item at a really great price. It was a very positive experience," she explains.

Ms Ong estimates that she has spent about $10,000 on handbags this year and says about half of them are second-hand.

"I will probably increase my luxury spending as I get older, in line with my spending power," she says.

Meanwhile, new and emerging business like Guiltless and Luxify are counting on shoppers around the world to do much the same.

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