Raphael Stevens

In the past, trips abroad often included personal luxury purchases for affluent Chinese consumers looking to take advantage of currency and tax benefits.
But years of zero-Covid measures have taught Chinese consumers they can get their fix of opulence on their own shores — and experts say this habit is here to stay.
The bleak overseas luxury shopping figures are also compounded by various travel restrictions imposed on Chinese travelers by other countries.

A salesperson showing the limited edition launched by Emporio Armani to welcome the Year of the Tiger at a duty-free store in Haikou, south China’s Hainan Province, January 15, 2022.
Zhou Huimin | Xinhua News Agency | Getty Images

Stocks of many luxury fashion houses reliant on Chinese consumers rallied on China’s reopening, but those customers may not necessarily be buying the goods overseas.
In the past, trips abroad often included personal luxury purchases for affluent Chinese consumers looking to take advantage of currency and tax benefits.

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Shares of LVMH have gained around 12% since early December when Beijing started rolling back its zero-Covid policies.
Similarly, Cartier-owner Richemont shares have gained about 13%, while Dior rose more than 11% from early December.

Domestic luxury consumption now a habit

The “revenge spending” that comes with the return of overseas travel will lead to an increase in consumption of luxury goods in 2023, Jessy Zhang, an analyst from Daxue consulting told CNBC. 
“[The Chinese’s] mentality is that they need to buy luxury goods in duty-free stores before returning home,” Zhang said.
But years of zero-Covid measures have taught Chinese consumers they can get their fix of opulence on their own shores — and experts say this habit is here to stay. 

A Bvlgari store in a shopping mall in Shanghai, China on January 12, 2023.
CFOTO | Future Publishing | Getty Images

“China’s domestic luxury consumption should far exceed that of overseas luxury consumption,” said Zhang, who estimates that in the long run, domestic luxury consumption will account for 70% of the Chinese luxury consumers’ spending, and a mere 30% from abroad. 
That would be the inverse of spending patterns before 2017, when over 70% of Chinese luxury spending took place outside of China, according to Zhang.
As a result, the world’s largest luxury market by 2025 will be shopping mainly “in-house.” 
“Even though domestic after-tax prices in China could be a disadvantage, the familiarity of the shopping journey, close relationships developed with local store assistants, and the wider range of brands and product offerings in Mainland China over the past years increase the attractiveness of domestic shopping,” said Kenneth Chow, principal at Oliver Wyman.
He added it is unlikely the share of overseas luxury shopping for Chinese consumers will recover to pre-pandemic levels of over 70%.
Additionally, places like China’s island province of Hainan, lined with all its duty-free shopping malls is a tax-free haven for many luxury shoppers. Sales there reported a more than 120% jump in 2020, and increased by about 85% in 2021, according to a report by Bain & Co.

People line up to enter Haikou International Duty Free City Complex on the opening day on October 28, 2022 in Haikou, Hainan Province of China.
Vcg | Visual China Group | Getty Images

“When I came to Hainan, I found out that shopping on the duty-free shops’ apps is too convenient, and it even comes with a direct mail to home option,” a local wrote on Chinese social media platform Weibo.
The increasing digitalization of shopping processes has also facilitated Chinese shopping online for luxury goods, Bain & Co said in a report.
Global luxury houses have also caught on and expanded their physical presence in China since the pandemic started, said Barsali Bhattacharyya, manager of industry briefing at the Economist Intelligence Unit.
“For example, LVMH reported a 20% increase in the number of stores in Asia (excluding Japan) between December 2019 and June 2022,” she said.

Compounded by travel restrictions

The bleak overseas luxury shopping figures are also compounded by various travel restrictions imposed on Chinese travelers by other countries.
European nations, which comprise many luxury shopping locations, recommended requiring travelers from China to show negative Covid tests. Likewise, Japan and South Korea also require Covid tests for travelers from China.
More Chinese consumers are also favoring short-haul trips over long-haul vacations, Oliver Wyman’s Chow said, adding that Hong Kong and Macao would be among the first to benefit from Chinese travelers —earlier than other luxury shopping destinations like Western Europe.
Still, Chow said it will be a “long journey” until international travel is back fully.
“Brands and retailers will need to spend more effort to attract them to shop overseas, and at the same time match their higher expectations.”

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Two Los Angeles developers hope to find buyers who will pay between $50 million and a $100 million for a condo.
No single LA condo unit has ever sold for more than $22.5 million.
A behemoth duplex in Beverly Hills comes with a price tag of $75 million.
Two penthouses at another building are being packaged for $100 million.

Two developers in California are looking to lure a buyer willing to do something no other buyer has ever done before in Los Angeles history – pay between $50 million and a $100 million for a condo. 
A deal anywhere near those asking prices would shatter a record in the City of Angels, where no single condo unit has ever sold for more than $22.5 million, according to public records.  

A rendering depicts the penthouse terrace and pool at the Four Seasons Private Residences Los Angeles which is on the market for $75M.
Martyn Lawrence Bullard and CRTKL

A behemoth duplex-apartment located at 9000 West 3rd Street in Beverly Hills comes with a price tag of $75 million. 
One LA, as the penthouse is called, hit the market back in July. It spans the top two floors of the Four Seasons Private Residences Los Angeles, part of an ultra-luxe condo project by the Genton Development Company that includes 59 units across 12 stories.

Rendering depicting the finished penthouse atop the Four Seasons Residences Los Angeles.
Martyn Lawrence Bullard and CRTKL

It’s the first stand-alone Four Seasons residence in North America and it sits across the street from its namesake hotel. According to the building’s website, the crown-jewel residence delivers almost 13,000 sq ft of indoor living area and nearly 6,000 sq ft of outdoor space.

Rendering of the primary bedroom at the penthouse known as ONE LA.
Martyn Lawrence Bullard and CRTKL

The penthouse, which appears fully furnished in renderings used to market the unit, is actually being sold “white-box,” meaning a buyer would take possession of unit as an unfinished shell. That means no kitchen, no baths, no millwork, no fixtures. It’s so empty that Billy Rose, co-founder of The Agency RE and co-listing agent on the deal, can be seen with his team in a marketing video riding bikes through the vast raw space.
At the current asking price, the unfinished unit is over $5,700 a sq ft. Rose told CNBC finishing costs vary widely depending on a buyer’s taste, but $8 million is a ballpark estimate. Some buyers, he said, actually prefer the blank canvas delivery so they can customize the residence to their personal taste. 

A 19-person IMAX theater is one of the luxe amenities offered at the Four Seasons Private Residences Los Angeles.
Martyn Lawrence Bullard and CRTKL

The building’s amenities include in-residence dining and housekeeping, a private 19-seat IMAX theater with access to first-run films and private screenings, a fitness center designed by nutritionist and celebrity trainer Harley Pasternak, a pool with private cabanas, and Four Seasons staff at your beck and call, according to the website.

A double shot of luxury

The other ultra high-priced penthouse that’s reaching for LA’s most rarified air is located at 8899 Beverly Blvd in West Hollywood. It has a $50 million asking price that can be super-sized to $100 million.
The 10-story, 40-unit building, designed by architecture firm Olson Kundig, was developed by Townscape Partners. The top floor is divided into two similarly sized penthouses, one on the east and the other on the west.  
According to broker Fredrik Eklund of Douglas Elliman, who reps the development and recently took CNBC on a tour of penthouse east, the four-bedroom, five-bath residence spans about 6,450 sq ft, with 14-foot ceilings. It has motorized glass panel walls that slide away for access to another almost 1,500 sq ft of outdoor space on the wrap-around balcony.  
Unlike One LA, unit PHE is being delivered finished. it’s currently staged with furnishings by ASH Staging. They are not included in the $50 million asking price, which comes to over $7,700 a square foot.  

The view from 8899 Beverly Blvd’s unit PHE where glass panels walls slide away and open to a wraparound balcony.
ASH Staging

The developer has yet to officially list either of the two top-floor penthouses, but has been testing the market’s appetite for PHE since at least April. That’s when the developer started marketing the unit with a $50 million price-tag in a so-called whisper campaign – a term that usually describes the word-of-mouth marketing used to shop around an off-market residence.
In this case, Townscape Partners and Eklund have been whispering pretty loudly about the deal to the press for months. The team is simultaneously shopping an even pricier off-market deal that pairs both of the top-floor penthouses as a combo with a $100 million ask.

The primary bedroom in Penthouse East at 8899 Beverly Blvd.
ASH Staging

The combination residence would position its owner at the highest vantage point in West Hollywood. As a pair, the penthouses deliver eight bedrooms, 10 baths and four kitchens – each includes a main kitchen and an adjacent staff kitchen.
According to Eklund, the package deal brings the total interior footage to somewhere around 13,000 sq ft with an additional 6,000 sq ft outside. Building amenities include an over 12,000 sq ft outdoor area with pool, fireplaces and dining area. There’s also a fitness area and a yoga studio, and a fine-dining restaurant is coming soon.

Penthouse PHE’s primary bath.
ASH Staging

On the subterranean level there are so-called car stables, a term Eklund uses to describe the building’s luxury garage. The parking area includes moody lighting, herringbone-patterned tile flooring and parking spots tucked behind sliding doors made of wood and steel. 
The broker told CNBC a pair of parking spots here cost $750,000, but as part of the penthouse deals the developer would throw in a few spots for free. It would also include a garage-level penthouse-only private lobby with views of the garage, plus seating and elevators that can whisk penthouse guests directly to the top floor. 

The so-called auto stables on the garage level at 8899 Beverly Blvd.
DroneHub Media

Too expensive even for LA?

The $100 million question here is: Will either of these developers find a buyer willing to spend anywhere near that kind of dough on a condo? 
The all-time highest price ever achieved for a single-unit condo sale in LA was at The Century Condos in Century City, where a 9,300 sq ft penthouse closed for $22.5 million, or a little over $2,400 a sq ft, back in 2015, according to public records analyzed by Jonathan Miller, president of Miller Samuel Appraisers and Consultants. 
The Century, which was completed in 2009, stands 42 stories tall with 140 units, and was designed by Robert A.M. Stern Architects. The development also holds the record for highest priced condo sold last year when “Friends” actor Matthew Perry reportedly sold his almost 9,300 sq ft condo for $21.6 million, or just over $2,300 a sq ft. 
Believe it or not, the same building broke another record in 2010, when legendary TV producer Aaron Spelling’s widow, Candy Spelling, spent a record breaking $34.8 million on two contiguous units, which she later combined. Her mega-deal spanned 15,500 sq ft at a price per sq ft of almost $2,250. 

A rendering of the rooftop terrace at ONE LA.
Martyn Lawrence Bullard and CRTKL

At the current asks, a prospective buyer of either One LA or the penthouses at 8899 Beverly Blvd would have to take a gigantic leap from the records established at The Century. While Miller told CNBC real estate markets don’t typically make drastic moves like this, this sort of thing has happened before in LA.
The example he points to is a sliver of the town’s single-family housing inventory known as ultra-luxury spec-mansions. Over the past decade, these homes suddenly achieved sales that broke through the $50 million mark and sustained it. Now the once unimaginable price-level is breached regularly in the high-end spec market.
“It’s a subset of the greater market that doesn’t have a linear or direct connection to what was the luxury market before,” said Miller.
According to Miller, a sudden spike in a housing subcategory like spec homes can happen when developers convince buyers that they’ve created a new real estate product that’s so different from what existed before that it should command a significant premium.

The full-service pool area at the Four Seasons Private Residences Los Angeles.
Martyn Lawrence Bullard and CRTKL

“It’s the beginning of a new dataset,” Miller said.
Rose calls LA’s new super-luxury condo inventory “2.0,” a wave of apartments he describes as more modern, luxurious, and amenity-packed than any condo inventory that came before it. He believes those are some of the reasons the units should command higher prices over the previous wave, which Rose believes includes the record breaking sales at The Century Condo.
So far Rose’s 2.0 theory is supported by a recent sale at the The Pendry Residences, another luxury condo project in West Hollywood, where a 2,700 sq ft unit sold for $13 million and breached $4,800 a sq ft. That is now the highest price per sq ft ever achieved for a condo in LA. This record is more than double the price per sq ft reached in each of those three top sales at The Century Condo.

A seating area on the wraparound balcony of penthouse east at 8899 Beverly Blvd.
ASH Staging

Eklund believes his $100 million whisper listing can and will break a price record in LA. What’s happened already in New York helps. On Central Park, he said, trophy condos have surpassed $10,000 and even $12,000 a sq ft. 
“That happens a lot, so is Los Angeles undervalued still?  Long term, maybe,” Eklund said.
Over the last decade, multiple listing service data shows more than 140 units in New York have sold for $35 million, compared to zero at that level in LA. But Miller adds a giant caveat: the two condo markets are very different. While he said The Pendry sale is clearly a sign, this new market would need to deliver a lot more transactions to determine if it’s sustainable. 
In other words: developers of One LA and the trophy penthouses at 8899 Beverly are in uncharted territory. 
“This is a new market segment,” Miller said. “So we’ll have to see how consumers respond.” 

A seating area and fireplace inside 8899 Beverly Blvd’s penthouse east residence.
ASH Staging

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CNBC’s Jim Cramer said investors should consider adding J.M. Smucker stock to their shopping list.
Nordson, C.H. Robinson and J.M. Smucker qualified for the S&P 500 Dividend Aristocrats and will be added to the index on Feb. 1, the S&P Dow Jones Indices said earlier this month.

CNBC’s Jim Cramer on Tuesday said that investors should consider adding J.M. Smucker stock to their shopping lists.
“Even though this market’s had a real good run, and I think the bear is more or less dead outside of tech, I still think you need some downside protection because this is a tricky moment,” he said.

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Nordson, C.H. Robinson and J.M. Smucker qualified for the S&P 500 Dividend Aristocrats and will be added to the index on Feb. 1, the S&P Dow Jones Indices said earlier this month.
The index is made up of stocks listed in the benchmark S&P 500 that have raised their dividends for at least the past 25 years. The “dividend aristocrats” tend to be stocks with steady payments, defensive qualities and long-term growth.
Cramer said that while Nordson’s stock price is too expensive and management turmoil at C.H. Robinson makes its stock too “iffy,” J.M. Smucker sells for a reasonable price. 
J.M. Smucker stock is also a great choice for investors worried about how the Federal Reserve’s interest rate hikes could slow down the economy, he added.
“This is just a good, solid business that deserves to be considered in the top tier of packaged-foods companies, with the likes of General Mills and Campbell Soup,” Cramer said. “I don’t think it gets the respect that it deserves.”

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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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Clearfield Inc: “There’s an analyst that cut numbers and the stock fell apart. That was ridiculous.”

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CNBC’s Jim Cramer on Tuesday told investors that the market is in bull mode, so declines represent opportunities to buy on a dip.
Stocks rose on Tuesday, with the S&P 500 reaching its best January performance since 2019 on strong corporate earnings and softer-than-expected inflation data.

CNBC’s Jim Cramer on Tuesday told investors that the market is in bull mode, so declines represent opportunities to buy on a dip.
“If we’re in a bull market, and I think we are, you have to prepare yourself,” he said, adding, “We have to prepare for the down days now because in a bull market, they’re buying opportunities.”

Stocks rose on Tuesday, with the S&P 500 reaching its best January performance since 2019 on strong corporate earnings and softer-than-expected inflation data. The Nasdaq Composite saw its best January since 2001.
Cramer said the market’s ability to gain due to strong earnings reports suggests that it has more room to run.
“Bear market goes the opposite way — stocks open up, then get clobbered and you feel humiliated. Good earnings mean nothing except price target cuts,” he said.
The market’s gains come a day after stocks fell to start the week. Cramer said that Tuesday’s turnaround shows that high-quality names will eventually rebound in the current market.
“Even if it doesn’t reverse today, well then, there’s always tomorrow, so don’t think of betting against it,” he said.

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Santa Fe prosecutors have charged Alec Baldwin with two counts of involuntary manslaughter in the “Rust” movie set shooting.
The prosecutors allege that he was not properly trained to handle the weapon that ultimately led to the killing of cinematographer Halyna Hutchins.
Hannah Gutierrez-Reed, the armorer of the film, has also been officially charged with the same counts.

Actor Alec Baldwin arrives at the 2022 Robert F. Kennedy Human Rights Ripple of Hope Award Gala at the Hilton Midtown in New York on December 6, 2022.
Angela Weiss | Afp | Getty Images

Santa Fe prosecutors on Tuesday filed charges of two counts of involuntary manslaughter against Alec Baldwin for the fatal shooting on the set of the movie “Rust.”
They alleged the actor had not been properly trained to handle the weapon that ultimately killed cinematographer Halyna Hutchins.

Hannah Gutierrez-Reed, the armorer of the film, was also charged with the same two counts of involuntary manslaughter. David Halls, the assistant director of “Rust” who was also involved in handling the gun that killed Hutchins, signed a plea deal, suspending his sentence and granting him six months of probation.
“Today, we have taken another important step in securing justice for Halyna Hutchins,” New Mexico First Judicial District Attorney Mary Carmack-Altwies said. “In New Mexico, no one is above the law and justice will be served.”
Baldwin’s attorneys did not immediately provide a comment.
Baldwin had been “distracted and consistently talking on his cell phone to his family,” during what had intended to be a more than one-hour firearm-training session, according to a statement of probable cause that was filed in conjunction with the charges. Due to Baldwin’s distractions, the training he received was estimated to be 30 minutes, according to the DA’s statement.
In addition to being the star of the film, Baldwin was one of the producers, deeming him responsible for upholding the safety protocols and for hiring Gutierrez-Reed despite her lack of qualifications.

“Baldwin, by act or omission or failure to act in his position as a producer directly contributed and/or failed to mitigate reckless and dangerous actions during a very short time period,” alleges the DA’s office, which claims that at least a dozen “acts or omissions of recklessness” took place on the day of the shooting alone.
According to the probable cause statement, Baldwin has “asserted publicly that he is an ‘…expert…’ in the realm of firearms and filmmaking.”
“Reed knew Baldwin required more training,” which “could have prevented the fatal shooting,” prosecutors said, citing a statement Gutierrez-Reed issued in her deposition.
Hours before the shooting took place, half a dozen members of the film crew walked off the set to protest what they viewed as harsh, unsafe working conditions, according to a report from the Los Angeles Times.
Lawyers for Gutierrez-Reed pushed back on the probable cause statement, saying the district attorney “completely misunderstood the facts” and “reached the wrong conclusions.” They also said she was “denied and brushed aside” when she pleaded to provide more training with firearms.
“She was told by production to focus on props. Hannah asked Halls if they could us a plastic gun for the rehearsal scene and he said no, wanting a ‘real gun.’ Hannah asked to be called back into the church if Baldwin was going to use the gun at all and Halls failed to do that,” attorneys Jason Bowles and Todd Bullion said in a statement.
“Yet the district attorney has given Halls a 6 month probation misdemeanor and charged Hannah and Baldwin with felony offenses carrying at least 5 years in prison. The tragedy of this is had Hannah just been called back into the church by Halls, she would have performed the inspection and prevented this tragedy,” they added.
Authorities announced earlier this month they would file criminal charges in the case.
The documents filed in association with the charges state that Baldwin had not been properly trained for handling the weapon that killed Hutchins and injured Joel Souza, the film’s director, in October 2021.
Evidence from the Santa Fe district attorney’s office also claims that Gutierrez-Reed was unqualified for the role of armorer for the film, having “possessed no certification or certifiable training, or union ‘card’ for this practice, and that she admitted she was the armorer for only one film prior to this production.”
Baldwin and Gutierrez-Reed both face two counts of involuntary manslaughter. Both are felonies that carry $5,000 fines, but one includes an 18-month sentence while the other has a five-year sentence.
The two have been charged under a standard called “charged under the alternative,” meaning that a jury will decide which of the two manslaughter counts applies.

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