focus group for the luxury buyer

All Rights Reserved ® Cittadella Focus Group Study

Adam Greenfader Real Estate Broker

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PPRREEPPAARREEDD && CCOONNDDUUCCTTEEDD BBYY

AADDAAMM GGRREEEENNFFAADDEERR



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Introduction

Cittadella, a luxury residential community in Mayagüez, is the process of

finalizing its strategic sales and marketing plan. As part of its plan, it undertook

three (3) separate focus group studies to help determine market acceptance of

its site and unit designs. Two separate site plans were presented and four

different home models. In addition, the project presented the main entrance and

the recreational facilities (see addendum).

The Cittadella focus group had several specific goals:

1) Determine if the “Hacienda” look and feel was well received by future buyers

2) Determine if the classical courtyard and balcony concept was deemed

valuable

3) Determine what key finishings and amenities were most desired by a luxury

residential buyer

4) Determine what lot sizes were deemed most luxurious

5) Determine what site plan configuration would be best received

Scope Of Market Study: The scope of this study is to identify current market trends and consumer

tendencies.



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Key Design Criteria: The key design criteria in this study are centered on specific architectural and

engineering elements that provide the greatest amount of value to the end user. As all

design elements have corresponding cost trade offs, we will try to prioritize said design

elements. The specific design elements fall into three main categories:

Community & site design

Exterior building design

Interior unit design & layout

It should be noted that AXYON participated actively in the design of the units with the

architectural firm of Carlos Lopez Atienza and Architect Jesus Trias. This participation

however had no material affect on the results of the focus group.



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Focus Group Research Sources This report and its conlclusions were compiled from the below noted sources:

1. Focus Group Questionnaire

2. Focus Group Discussions

2007 Economic Snap Shot

Since 2001, Puerto Rico’s economic growth (Average GNP) has been anemic - less than

2%. In 2006, consumer confidence reached its low point due to a government

shutdown. Significant living cost increases, a new sale tax, and the high cost of

petroleum have fueled a Puerto Rican exodus towards the mainland U.S. Real Estate in

particular has been affected by an inept land use plan (P.U.T.), a “moratorium” of

construction permits, and skyrocketing construction costs (15-25%).

The Real Estate crisis has been particularly tough on investment properties, 2nd homes,

and those projects in poor locations. Specifically, homes ranging from $350,000-

$700,000 have seen their absorption rates increase from 30 days to over 180 days

or more. Lastly, but not least, the majority of Puerto Rico’s financial institutions have

suffered dramatic losses due to accounting irregularities and the sub-prime loan fiasco.



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Methodology

The methodology of the study was both quantitative and qualitative. In all three

studies a similar format was followed; the guests were received in a casual

cocktail setting. They were presented “boards” of models and floor plans.

Thereafter, there was a short verbal and PowerPoint presentation. The

presentation highlighted the project’s location, architectural design, project

philosophy, and key goals. The guests were served appetizers and were invited

to share their observations with the Cittadella team.



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Each focus group study averaged from 3-4 hours. There were a total of 54

people who responded to the questionnaire. The first study was held in San

Juan, and the remaining two studies in Mayagüez.

Margin of error

There were several questions that individuals responded more than one

answer. There will therefore be discrepancies in the total number of responses

on some questions. Six questions were eliminated completely because of

erroneous or unclear answers.



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Caveat Emptor

Most focus group respondents will give you their wish list when asked

questions without price considerations. Once pricing becomes an issue, the

consumer is more discriminating about what he/she is willing to pay for.

In the Cittadella study the price point issue was avoided. When asked about

value, the respondents were told “very luxurious homes.” They were given a

price per square foot range of $300-$500 S.F.

Target Market

The target market was selected from a group of individuals who reside in

Puerto Rico. The average age of the respondents was approximately 47 years.

There were more 36 male respondents and 18 females. The numbers reflect

both a quantitative difference as well as a cultural bias. A significant percentage

of couples filled out the questionnaire together but signed it with the male

partner’s name.

In order to adequately test the luxury product, high net worth individuals were

required. The high net worth individuals (annual incomes of $200,000 +) were

individually selected by the Cittadella team. For discretionary reasons, no direct

income questions were asked in the study.

However, all of the individuals who participated in the study were selected

based on three key factors:

1) Homeowners

2) Leaders in their respective industries

3) Capable of acquiring luxury homes.



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It is important to note that in the last two focus group studies a majority of

participants were medical doctors.

Conclusions

There appears to be a very strong approval for the proposed product. When

asked, “how much do you like the architectural style of the homes presented?”,

over 75% said “Very Much.” Similarly, the clients responded favorably to the

questions about the interior courtyard concept and large balconies.

When asked, “What is the number #1 reason you would move to a Luxury

home community?”, an overwhelming majority of respondents selected that the



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ambiance was most important (56%) -more important than the home design

or the services offered.

In discussing ambiance, many respondents emphasized green areas, walking

trails, the recreational facilities, green spaces, and ample lots with large set-

backs to the street. Several slides during the presentation depicted park scenes

and street examples. In conversations with the respondents, these slides were

received very favorably.

In terms of house and lot sizes, 48% prefer homes that are 3,000-4,000S.F and

54% lots that are 2,000-4,000M2. The above noted responses are based on

the designs and photographs presented. It is our experience that open floor

plans with efficient space planning “appear” larger than homes with more

classical designs. Similarly, most of the respondents are seeking lot areas that

provide privacy – privacy from both the street and the adjacent neighbor. There

was no clear consensus if landscaping by the developer was a high priority.

As for single or two stories home models, the majority of respondents fell into

categories typical of their age and demographics. When asked, “How many

floors (levels) do you want in your next home?”, the majority (70%) responded

that they wanted a single story home. There seems to be a clear desire not to

walk up stairs in the 48+ age group.

In the last focus group, a supplemental question with picture was added to

reinforce this question (see question below # 32). The picture was added to

highlight that an elevator would be included in the two story home and that

there would be additional backyard space because of the two story model

configuration. The results were consistent with previous questions – single

story homes received 83%. The three car garage today is standard. Many of

the respondents want four garages. When asked, “How many cars do you want

to park inside your garage?”, over 81% choose either 3 or 4 cars.



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There is also a trend towards increased services. There appears that the luxury

consumer does not want to hassle with maintenance and installation of a/c and

appliances. When asked “How would you prefer to have your luxury home

delivered?” , over 69% said “Ready To Move-In. ” This trend seems to

contradict the status quo or industry standard of delivering homes without

appliances and A/C systems.

As for community size, smaller still seems to be more luxurious. The majority of

respondents want to live in communities that are between 50 and 200 units.

In sum, it appears the consumer has high acceptance of the product. The

architectural style was well received. The respondents want maintenance free

living – both during the acquisition process as well as afterwards. There seems

to be a desire for large lots and homes that are at least four bedrooms.



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16%

28%

17%

28%

11% Under 35 36-40

41-47 48-55

56+

HHOOMMEE BBUUYYEERR QQUUEESSTTIIOONNNNAAIIRREE

The below noted questionnaire was filled out by 54 respondents after a brief presentation of the proposed Cittadella Projects. The respondents were told that their answers were confidential and that they would be able to confer with their spouses. The majority filled out the questionnaire in 10-15 minutes. We have included below both the original question, the answers received, and when appropriate a graph to highlight the answers. We have also taken the liberty to add comments to some of the answers. 1. What is your Gender? 18 Female 36 Male 2. What is your age range? 9 Under 35 15 36-40 9 41-47 15 48-55 6 56+ 3. What is your marital status? 40 Married 7 Single 7 Living with a partner 4. What kind of home do you own (principal residence)? * 35 Detached Single Family 10 Multi-Family (condo, mid-rise, walk-up) 5 Other N/A * Note: many clients own multiple homes and apartments.



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0

5

10

15

20

25

30

Motivation To Move

Ambiance of luxury community

Unit layout and bedroom distribution

Support services

8%

61% 29%

2%

3bed / 2 bath

4 bed / 3 bath

5 bed / 4 bath

5 bed / 5 bath

7. What is the number #1 reason you would move to a Luxury home community? (Choose only 1)

30 (56%) Ambiance of luxury community (Landscaping, recreational facilities, amenities) 17 Unit layout and bedroom distribution 6 Support services (concierge, housekeeping, gardening, spa)

8. How many bedrooms and baths do you want in your Home? 4 3bed / 2 bath 32 4 bed/3 bath 15 5 bed/4 bath 1 5 bed/5 bath or larger



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70%

28% 2%

Single story

2 floors

2 floors +

0

5

10

15

20

25

30

Home Size

2,000SF or less

2,000-3,000SF

3,000-4,000SF

4,000 + SF

9. How many floors (levels) do you want in your next home? 38 Single story 15 2 floors 1 2 floors + 10. How many square feet would you like in your new home? 2 2,000SF or less 20 2,000-3,000SF 26 3,000-4,000SF 6 4,000 + SF



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0

5

10

15

20

25

30

Home Size

900 M2 or less

900-1,900M2

2,000-4,000M2

4,000 M2 +

19%

37%

44%

2 Cars 3 Cars

4 Cars +

11. How many square meters (M2) would you like in your new lot? 1 900 M2 or less 19 900-1,900M2 29 2,000-4,000M2 4 more than 4,000 M2 12. How many cars do you want to park inside your garage? (choose 1 only) 10 2 cars 20 3 cars 24 4 cars or more



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94%

6%

Yes

No

0

2

4

6

8

10

12

14

16

18

20

Recreational Facilities

Basketball and Tennis Courts

Pool

Racquetball Court

Gym

Walking trails

Spa

Entertainment Center

13. Would you pay for your A/C system pre- installed in your home? 50 Yes 3 No 14. What A/C system would you prefer in your new home? (Choose 1 only)

34 Split units in all rooms 13 Central A/C in home 5 Install my own system 15. Please select the 1 recreational facilities you most desire in your new residential community? (Please select one only)

16 Basketball and Tennis Courts 12 Pool 2 Racquetball Court 16 Gym 20 Walking trails 5 Spa 10 Entertainment Center (billiards, ping-pong, Club house)



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48% 52%

Developer includes high quality brands

Buy my own appliances

0

5

10

15

20

25

30

Ceiling Height

8 feet

9 feet

10 feet

10 feet +

16. How often do you use the recreational facilities in your community? 21 Every week 9 Every month 10 Once in a while 7 Never 4 N/A 17. How would you prefer to acquire your home appliances (stove, refrigerator, washer dryer) in your new

home? (Choose 1 only)

26 Developer includes high quality brands 28 Buy my own appliances 18. What would be the minimum ceiling height that you would accept in a new home? (Choose 1 only)

2 8 feet 14 9 feet 29 (53%) 10 feet 9 More than 10 feet

Note: Many clients wrote-in that 10 feet is a luxury. 19. How would you prefer to have your luxury home delivered? (Choose 1 only)



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6%

24%

70%

Shell Condition

Puerto Rico Standard

Ready To Move-In

3 Shell Condition (exterior windows and plumbing/electrical rough-in only) 13 Puerto Rico Standard (high quality bath & sanitary equipment only) 37 Ready To Move-In (premium appliances, A/C units, bath & sanitary equipment) 20. How important is having a double master (large guest bedroom) in your home? (Choose 1 only) 5 Very important 23 Important 15 Somewhat Important 11 Not Important * Note: that half the respondents think that a double master is important or very important.

21. How important is additional storage space in your home? (Choose 1 only) 25 (47%) Very important 23 Important 4 Somewhat Important 1 Not Important * Note: store continues to be a hot button. Many respondants like the additional covered parking for storage.

22. How important is a walk-in closet in every bedroom? (Choose 1 only)

21 Very important 16 Important 14 Somewhat Important 2 Not Important 23. How important is having a Jacuzzi bathtub in your master bedroom? (Choose 1 only)

13 Very important 9 Important 13 Somewhat Important 15 Not Important * Note: Many older couple report not wanting a Jacuzzi but prefer alternative bathing such as an out door shower or hot tub in the

master balcony.

24. Please select the top 1 home finishing for your new home? (Choose 1 Only)



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21%

25% 8%

2%

21%

8% 5%

10%

Floor tiles

Security features

Interior wood doors and frames

Lighting

Energy saving features

Granite counter tops

Bathroom sanitary equipment

Kitchen cabinets

55%

45% Yes

No

13 Floor tiles 15 Security features 5 Interior wood doors and frames 1 Lighting

13 Energy saving features 5 Granite counter tops 3 Bathroom sanitary equipment 6 Kitchen cabinets

25. Would you pay more to live in a community that has concierge services? 28 Yes 23 No 26. What service would you want available “pay per use” in your community? (choose 1 only )

4 In-home chef

4 Child care (babysitting)



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6%

7%

29%

2%

25%

8%

16%

5%

2%

In-home chef

Child care (babysitting)

House keeping

Vehicle cleaning

Handyman

Spa treatments

Personalized security guard

Medical care

Driver

53% 36%

11% 0% Very important

Important

Somewhat Important

Not Important

18 House keeping 1 Vehicle cleaning

15 Handyman 5 Spa treatments 10 Personalized security guard

3 Medical care 1 Driver

27. How important is energy efficiency (Green Building) for you new home? (choose 1 only ) 28 Very important 19 Important 6 Somewhat Important Not Important 28. How important is it for you to have an electrical generator & cistern included in your new home? 43 Very important 4 Important 6 Somewhat Important Not Important



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81%

8% 11%

0% Very important

Important

Somewhat Important

Not Important

75%

21%

4% 0%

Very Much Much

Somewhat Not

29. How much do you like the architectural style of the homes presented? 40 Very much 11 Much 2 Somewhat Not 30. How much do you like the interior court yard concept? 36 Very much 12 Much 4 Somewhat 1 Not



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68%

23%

7% 2%

Very Much Much

Somewhat Not

36%

39%

19%

6%

Very Much Much

Somewhat Not

31. How important is the front porch (gallery) concept to your definition of luxury? 19 Very important 21 Important 10 Somewhat Important 3 Not Important



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0

2

4

6

8

10

12

14

16

18

20

Community Size

50 or less

51-100 units

101-200 units

201-300 units

300+ units

34. What is you ideal community size? 7 50 or less 20 51-100 units 19 101-200 units 5 201-300 units 1 300+ units THIS SECTION IS PRESENTED AS COPIED DIRECTLY FROM THE RESPONDENTS ANSWERS. 35. What would you like to change in order to make the community and home designs even more attractive?

- No piscina en Casa Club., o tiendas en casa club, proveer varias canchas de tenis y gazebo en ellas.

- Cambiar según lo presentado, no lo haría. Pero entiendo que mantener la vegetación

siempre al día sería un éxito. Haría un poco más pequeñas las dimensiones para mejor comunicación.

- More green areas.

- El proyecto es muy bueno, se debe incorporar la topografía al mismo y el uso del

peatón deber ser primordial.

- Design is incredible for the high-end consumer.

- Seguridad, facilidad comercial cercana y mantenimiento areas comunes.

- Make amenities where the members of the community can relate to each other. Security is very important.

focus group for the luxury buyer

Documents

focus group research

separate focus group

group discussions

group questionnaire

specific design elements

key design criteria

real estate crisis

scope of market study