Demand for luxury homes will continue in '98.

Looking ahead into 1998, the demand for luxury and family-size homes will continue to strengthen given the following indicators: year-end bonuses on Wall Street, which surpassed last year's record-high, will help fuel the 1998 market; more luxury living spaces are becoming available in new neighborhoods; and parents are opting to raise their families in New York City.

With broad-based economic stability and a general sense of long-term optimism on Wall Street, I foresee that Manhattan residential sale prices by the end of 1998 will beat the record-high sale prices of the "Go-Go Eighties."

In 1998, we'll see more luxury home purchases then ever before. Residential developments in maturing and new areas, such as the Sugar Loaf Building in Tribeca and 17 John Street on Wall Street, will fetch high prices by delivering value-added features and amenities. These include professional kitchens, marble bathrooms, spacious living rooms, doormen and building workout facilities. The new generation of high-net worth business professionals want - and is happy to pay for - the lifestyle luxuries that define success.

For many of our Wall Street clients, who are smart and fast when it comes to buying a residence, the home is the ultimate sign of success, and they are looking to indulge in an opulent home set in the poshest neighborhoods. In fact, luxury homes purchased by Wall Streeters, who have now benefited two years in a row from record-breaking yearend bonuses, made up over 34 percent of all sales recorded through the end of 1997, and the number of transactions above $1 million dollars has risen more than 36 percent to date.

New Residential Neighborhoods Will Emerge

In 1998, we will see more new residential developments and price increases in renovated areas such as the Far West Village (former Meat Packing District), Harlem and Flatiron North. And it's not just the young who are moving into the emerging residential neighborhoods. The lack of available homes in mature areas is driving more conservative home-shoppers to search with an open mind. Clients once fiercely dedicated to their "uptown" neighborhoods are now open to exploring other locations. Similarly, upscale clients who previously would only consider moving into another pre-war co-op are now considering Downtown lofts, which beckon with sophisticated designer amenities and finishes.

Technology is Changing the Broker/Client Relationship

The Corcoran Group kicked off the new year with the installation of computers with Internet and e-mail capabilities on every broker's desk in all six offices. The move to our new headquarters on the 11th floor of the Barneys building at 660 Madison Avenue facilitated the company becoming cyber-conscious. 660 Madison is one of the new line of "smart" buildings in Manhattan. Equipped with built-in T1 and fiber optic connections, it provides us with the fastest Internet connections available to support our cutting-edge web site, which we are continually upgrading to make the search for or sale of a home quicker and easier.

On The Corcoran Group web site, prospective clients receive a 360-degree view of an available home, find out what's available in what neighborhood, look at floor plans, calculate their budget against the required mortgage, and even do searches for homes according to location, budget, type of apartment and size requirements.

With more people using the Internet to obtain property listings, and more residential real estate firms developing web sites, we will soon experience a revolution in the broker/client relationship. When ont web site was first created in April 1995, The Corcoran Group sold about one home every six months. That number has grown to more than four per month, locally and internationally. In 1997, total sales have reached well over $13 million. Because of the web, our brokers are now working with more educated, market-savvy clients who know what's available, what they can afford and what they want.

Of course, the hottest issue in real estate is still co-ops converting to condos, a phenomenon driven by clients' preference for a condo over a co-op. Even with complicated tax issues and other obstacles associated with a conversion, several co-op buildings are exploring the possibility of converting to condo as a way to increase properly values.

The Manhattan residential market has long shared a direct relationship with Wall Street and the quality of life in New York City. Crime is down, schools have improved and the stock market is up, along with salaries and bonuses, so the demand for real estate will only increase. That's what we're seeing now and throughout 1998.