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Quest Means Business
US Wants Israel To Transition to More Targeted Phase; Major European Central Banks Hold Interest Rates Steady; Witnessing Health Crisis in Gaza; Soaring Interest Rates Impact Real Estate. Aired 3-4p ET
Aired December 14, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:29]
RICHARD QUEST, CNN INTERNATIONAL HOST: All right. A minute -- an hour to go before the close of trade on Wall Street, and we got the results from the
Fed and others. I know that's interesting, isn't it?
Look at that. You had good gains before and then, ooh, it's all in a bit bare shaped (inaudible), but this, of course, is on the third. Now, we'll
be talking more about how it all going -- how it all panned out, why there was that dip just after 2:00 o'clock.
The markets and the main event of the day. The White House seems to be sending signals to Israel. It wants the war against Hamas to shift to a
lower-intensity phase within weeks.
There is a whole plateau, a whole beach between a hike and a cut. Those are the words of Christine Lagarde of the ECB. We have that.
And we also have .
(BEGIN VIDEO CLIP)
QUEST: How important is that view?
SCOTT DURKIN, CEO, DOUGLAS ELLIMAN: That sells the apartment.
(END VIDEO CLIP)
QUEST: That view -- Central Park, the apartment, 30 million bucks on today's (inaudible). We'll be looking at the property industry at the top
end.
Live from New York on Thursday, it's December the 14th. My goodness, where has December gone? I'm Richard Quest, and I mean business.
Good evening. We begin tonight with the story. Washington wants Israel to scale back its operations in Gaza.
The US National Security Advisor Jake Sullivan has been talking with the Israeli prime minister and other top officials in Israel. The phrase
they're talking about is a targeted phrase. Here's what the US National Security Council Spokesman John Kirby said today.
(BEGIN VIDEO CLIP)
JOHN KIRBY, US NATIONAL SECURITY COUNCIL SPOKESMAN: What Jake to talk to him about was progress in the war and where the Israelis think it's going
to go. He did talk about possible transitioning from what we would call high-intensity operations, which is what we're seeing them do now to lower-
intensity operations sometime, you know, in the near future.
(END VIDEO CLIP)
QUEST: Natasha Bertrand is at the Pentagon, and is an expert at decoding Kirby's speak. Is he basically saying -- you know, they didn't quite read
the Israelis -- the rag act (ph), but they said, tone it down and do it soon?
NATASHA BERTRAND, CNN NATIONAL SECURITY REPORTER: Within the next few weeks, that's when they want to see all of this kind of wrap up the ground
operation in Gaza, at least the large-scale operation, as well as the intensive airstrikes. They want to see this end really by the end of
December, early January at the latest.
Now, whether the Israelis are willing to abide by that, that is a different question because, of course, the US still says, look, this is their
operation, this is their decision. So we are advising them to shift to a lower-intensity phase of this war, one that is more targeted, one that
includes perhaps more focus on high-value targets instead of trying to root out the entirety of Hamas inside the Gaza Strip, which is extremely
difficult and causing a number of thousands, in fact, of civilian casualties.
QUEST: Right.
BERTRAND: But, you know, this is part of the message the US is sending right now, that it's just been too much up to this point.
QUEST: Okay. But how much -- look, clearly, the US has enormous influence, arguably considerable power. But in this case, I mean, could the US be
overplaying its hand, because Netanyahu has basically said, we ain't finished until Hamas has gone, et cetera. Is there a risk that the US would
demand something, because that's what it is by any of the title? And Israel would say, no, not yet, no, sorry, goodbye.
BERTRAND: I think it's definitely possible especially given the comments we have seen from Netanyahu, which have been in pretty stark defiance of some
US requests, including, of course, the notion that the Palestinian Authority is going to be in charge of governing the Gaza Strip after the
war. He has outright rejected that, as have members of his government.
And so, I think the leverage that the US really has, of course, is the weaponry, the equipment that they continue to send the Israelis. And the
administration official or lawmakers, I should say, here -- members of Congress, they have called for the US to place conditions on the weaponry
that they are sending to Israel, to cut it off if they do not abide by some of the more, you know, demands by the United States to be more cautious
when it comes to civilian lives.
[15:05:24]
But the US has signaled that they're not willing to do that. So right now, it really seems like it is purely rhetoric with no .
QUEST: Right.
BERTRAND: . actual red lines on the weaponry and support they're providing -- Richard.
QUEST: And, Natasha, I'm grateful. Thank you.
German officials -- I beg your pardon? Two new central bank decisions are giving investors hope since interest rates having peaked. The Bank of
England held its benchmark rates steady today at 5.25%. The ECB also paused at 4%. ECB President Christine Lagarde said rates might stay there for some
time to come.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: I think everybody in the room takes the view that between hike and cut, there's a whole plateau,
whole beach of hold. You know, it's like, I don't know, solid liquid gas. You don't go from solid to gas without going through the liquid phase.
(END VIDEO CLIP)
QUEST: So now we all know. Eurozone inflation, look at that. You got the UK slightly elevated -- more elevated actually, and you've got the EU
inflation, but both are still above target.
Now, UK inflation has also been coming down not as fast as you can see, 4.6% throughout the November reading on this inflation next week.
There are those who see it now as only a matter of time, probably sooner rather than later, that the central bank start cutting rates. You'll
remember we talked about this with the IMF deputy managing director, the pivot had its no.
Well, the message from this week's central banker is, don't get ahead of yourselves on pivoting.
(BEGIN VIDEO CLIP)
LAGARDE: We did not, we did not discuss rate cuts at all.
ANDREW BAILEY, GOVERNOR, BANK OF ENGLAND: There is more to do. So I'm encouraged by where we are, but we have got more to do to get to that
target, and that's what we will do.
JEROME POWELL, CHAIR, FEDERAL RESERVE: We'll have a ways to go. No one is declaring victory. That would be premature. And we can't be guaranteed of
this progress. So we're moving carefully and making that assessment of whether we need to do more or not.
(END VIDEO CLIP)
QUEST: And yet, the chief UK economist at UBS said he expects the Bank of England to cut rates in May. Many European traders think the ECB will go
earlier in March.
Vanguard has said it expects US rates to come down in the second half of the year, but then, of course, remember the dot plot -- and what we saw --
could be three rate cuts in the US next year.
Paul Romer is going to make sense of it all, a Nobel prize-winning economist who joins me. I mean, there is this inherent contradiction
between saying there's more to be done, but we're not going to raise rates further, and anyway, we're cutting them next year.
PAUL ROMER, ECONOMICS PROFESSOR, BOSTON COLLEGE: No, no, there's not. That makes no sense, Richard. I mean, think about a plane which is descending.
You know, that the -- it's in a steady descent, and you don't keep pulling back the throttle while it's descending, you wait until you get to the
place where you're going to level off. But you also start to bring the throttle back in before you get to the level where you're going to level
off, which is what the Fed needs to steep -- keep doing.
You know, I've been on their show for -- I've come on for a year now and I've been saying, look, inflation is steadily decreasing. I hope now that
the Fed has said it, you'll finally recognize it's steadily decreasing.
QUEST: All right, all right.
ROMER: And we get -- we're going to, say, okay, that's enough and we got to start leveling off.
QUEST: Okay. But can you level off? Can you level off and still have inflation come down to target of 2%? Because what they are all saying is
we're not at target.
ROMER: Yes. But again, I don't think you're listening. Just think about a plane. It's steadily decreasing, 1,000 feet per minute, okay?
You're going to level off at 10,000 feet is when you get to 12,000, 11,000. You don't cut the throttles before you get to 10, you actually start
putting the power back in so you can level off again. So we're -- I think we're at about 3% inflation right now.
[15:10:00]
The trailing, you know, 12-month average is 4%. It's been coming down at a rate about 15 basis points per month, so that means if the average every 12
months was 4%, that was four months -- 4% six months ago, is 3% now. We're going to be at 2% in six months, so it's time to get ready.
QUEST: How fast should cuts come? Now, we saw -- you know, we've seen dot plots. We've seen what the Fed thinks. How fast do you think the plane
should start its descent?
ROMER: Oh, I think they should start looking at cutting -- they -- you know, if you look at the number of increases that they put in place, they
should start cutting at the next meeting. And remember, when inflation comes down, the difference between your interest rate that the Fed is
setting, inflation gets bigger. So the real rate is getting bigger.
Rates are still actually going up. So I think they should've cut at this meeting. They should certainly start cutting at the next meeting.
QUEST: Talking to the other major world central bank, the ECB, now Christine Lagarde is, to a certain extent -- well, she is in the same
position of saying more work to be done, but the common view is the ECB will go earlier than the Fed.
ROMER: Well, you know, I have not studied European inflation as closely as the US inflation. But what .
QUEST: Yes.
ROMER: . inflation has been falling for more than a year in the United States. But if you compare, like, the Europe before inflation rates, 11 out
of the last 12 months have had a lower inflation rate than the one before. So there's no question that we're on .
QUEST: Right.
ROMER: . the decline now. I don't think it's as clear cut in Europe.
QUEST: The -- you know, typical of us pesky journalists, we're not a -- if one crisis is over, we immediately need to know about the next. So .
ROMER: Right.
QUEST: . where -- if we've had the terminal rate at the top, where do you think we're going to bottom out, whether it be '24, '25? Where are we
headed to at the bottom today?
ROMER: Yes. I think that's not clear. And I want to be clear here. I am not a forecaster. I'm just reporting what I see in the data now. We won't know
about how low rates will need to go until we start cutting rates.
I think it's quite possible that rates will level off at a level, which is higher than they were, because we went through a very unusual period with
nominal rates that were, you know, virtually zero. So it may well be that we get to nominal rates of, you know, 2%, 2.5%. And we might level off
there, and that would be fun.
QUEST: Paul, for an aviation geek like me, your analogy was absolutely spot on, and we're delighted to have you, as always, on QUEST MEANS BUSINESS.
Thank you, sir.
ROMER: My pleasure.
QUEST: German officials now say four alleged members of Hamas have been arrested in Europe. The German prosecutor says three of them were arrested
in Germany, one in the Netherlands. They are suspected of plotting terror attacks on Jewish institutions.
Police in Denmark say they arrested three terror suspects, that's a separate case. A fourth suspect in that case was arrested in the
Netherlands.
Alex Marquardt is with me. A lot of people have been arrested, but I'm guessing the issue is, you know, they were arrested before they were able
to.
ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: They were, and certainly that's the good news here. We're getting a lot of information
from different countries and a lot of overlapping themes here, Richard, so it might just be easiest to break it down.
In Germany, you had those three people who were arrested, a fourth in the Netherlands who are all part of one plot, according to the German
prosecutors. They say that the three who were arrested in Germany had long- standing ties to Hamas, of course, the Palestinian militant group based out of Gaza, and that these were also participants, they say, in Hamas's
operations abroad.
And then separately, we believe, you had the statement from the Danes, from the Danish PET security service, saying they, too, detained four people,
three at home in Denmark, a fourth person in the Netherlands. They did not mention the word "Hamas," but these are terrorism charges. These are
terrorism arrests. They do mention Jewish places and sort of alluding to, we believe, a potential attack on Jewish places in Denmark or in Europe.
That part is not clear.
But then you have the Israel in all of this, and Mossad and Shin Bet, the local security service, they are thanking the Danes. They're not mentioning
Germany at all, but they're thanking the Danes for stopping a plot to kill innocent civilians in Europe.
Israel making clear they believe that the Danish arrests were Hamas- related. They call them "terrorists acting on behalf of the Hamas terrorist organization," these arrests thwarting an attack. The goal -- to kill
innocent civilians on European soil.
[15:15:13]
Richard, this would be a rather remarkable change for Hamas. This is not like Al-Qaeda or ISIS, which calls for attacks around the world and carries
out attacks or known to carry out attacks in Europe and elsewhere.
Hamas has been very, very focused on Israel. But here, you have allegations by both the Germans and the Israelis, and now you have Hamas militants
trying to do exactly that in Europe on European soil potentially against Jewish targets -- Richard.
QUEST: Can you -- just to -- if I can ask you to pivot just momentarily, this seeming warning from Sullivan and now talking about with -- to Israel
to back off or at least start to ratchet down, will Israel listen?
MARQUARDT: That is the million-dollar question. And we haven't seen anything from top Israeli officials today indicating that that's going to
be the case.
Now, I will tell you that I spoke with an Israeli official several weeks ago who told me, at the time, that they intended to go on with this high-
intensity phase for a few more weeks, and then switched to a lower- intensity phase. So in that sense, the US and the Israelis seem to be in sync. But from what we heard from Netanyahu today, he said they're going to
go until the end. He didn't say when that's going to be.
Yoav Gallant, the defense minister, said it could take more than just a few months to wrap all this up. But that could be sort of at this lower-
intensity scale where it will be more targeted operations.
What is clear, Richard, though, is that the US would very much like what we're seeing right now, this heavy bombing that has led to so much death
and destruction. US would like to see that end very soon in the coming weeks.
We knew that Jake Sullivan was going to come in here and talk about the need for Israel to be more precise and surgical. Now, the US making clear
what they would like to see, and they're not saying, we're telling you to do this. But what they would like to see is Israel to start winding this
down towards the end of the year and moving into a more low-intensity phase. But as you say, big question is whether Israel is going to listen --
Richard.
QUEST: I got a quick question I want to throw at you on -- predicated on that last down, sir. You just said, you know, we're not telling you to do
it, we're just saying we like you to do it. With the relationship between Israel and the United States, is that not de facto we're telling you to do
it?
MARQUARDT: It is, I think, increasingly depends which part of the US you're talking about. I mean, certainly, you're seeing more progressive Democrats
on Capitol Hill, saying that we need to put all kinds of conditions on weapons being sent to Israel.
There are parts of, you know, American society, they would like to see no weapons sent to Israel at all. But for the time being, we're talking about
the Biden administration, and President Biden himself basically saying no ifs, ands, or buts, we will continue to support Israel.
The US is in this unique position of being Israel's closest partner and, as a result, it does have a certain amount of leverage on Israel. And so, I
think it feels like it can apply this pressure, but it is not going so far to say you absolutely need to change course, otherwise, we will hold back
weapons, we will hold back funding.
But the administration certainly feels entitled to apply this pressure, saying we would really like to see it, like to see you guys winding down
this war in the coming weeks. So at least the kind of fighting we're seeing now.
QUEST: Alex, thank you, very grateful, in Tel Aviv tonight.
CNN has been given rare access inside Gaza. Clarissa Ward's report from a field hospital in southern Gaza after break.
(COMMERCIAL BREAK)
[15:21:27]
QUEST: A new US Intelligence assessment shows nearly half of the munitions dropped on Gaza have been unguided, so-called "dumb bombs." They're less
precise and pose a greater threat to civilians. They're also cheaper than the more expensive missiles.
CNN was able to get access inside Gaza and report independently -- the first western media to do so since the war began. Clarissa Ward has sent us
this dispatch.
(BEGIN VIDEOTAPE)
CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT (voice over): You don't have to search for tragedy in Gaza. It finds you on every street,
strewn with trash and stagnant water, desolate and foreboding.
WARD (on camera): So, we've just crossed the border into southern Gaza. This is the first time we've actually been able to get into Gaza since
October 7th, and we are now driving to a field hospital that has been set up by the UAE.
WARD (voice over): Up until now, Israel and Egypt have made access for international journalists next to impossible, and you can see why.
WARD (on camera): Since October 7th, the Israeli military says it has hit Gaza with more than 22,000 strikes. That, by far, surpasses anything we've
seen in modern warfare in terms of intensity and ferocity. And we really, honestly, are just getting a glimpse of it here.
WARD (voice over): Despite Israel's heavy bombardment, there are people out on the streets. A crowd outside a bakery, where else can they go? Nowhere
is safe in Gaza.
DR. ABDULLAH AL-NAQBI, UAE FIELD HOSPITAL: It used to be .
WARD (on camera): Right.
AL-NAQBI: . a stadium.
WARD (voice over): Arriving at the Emirati field hospital, we meet Dr. Abdullah Al-Naqbi. No sooner does our tour begin when .
AL-NAQBI: So our ambulance (inaudible).
WARD (on camera): And this is what you hear all the time now?
AL-NAQBI: Yes, at least 20 times a day.
WARD (on camera): At least 20 times a day?
AL-NAQBI: Maybe more, sometimes. I think we get used to it.
WARD (voice over): One thing none of the doctors here have got used to is the number of children they are treating. The UN estimates that some two-
thirds of those killed in this round of the conflict have been women and children.
Eight-year-old Jinan (ph) [was lucky enough to survive a strike on her family home that crushed her femur, but spared her immediate family.
(CLARISSA WARD speaking in foreign language.)
WARD (on camera): She says she's not in pain, so that's good.
(UNIDENTIFIED FEMALE speaking in foreign language, crying.)
WARD (voice over): Her mother, Hiba (ph), was out when it happened. "I went to the hospital to look for her," she says. "And I came here, and I found
her here. The doctors told me what happened with her, and I made sure that she's okay. Thank God."
(UNIDENTIFIED FEMALE speaking in foreign language)
WARD (voice over): "They bombed the house in front of us and then our home," Jinan (ph) tells us. "I was sitting next to my grandfather, and my
grandfather held me. And my uncle was fine. So he is the one who took us out."
(CLARISSA WARD speaking in foreign language.)
WARD (on camera): Don't cry.
WARD (voice over): But Dr. Ahmed Almazrouei says it is hard not to.
DR. AHMED ALMAZROUEI, UAE FIELD HOSPITAL: I work with all people, like adults, other children, something touching your heart.
[15:25:10]
WARD (voice over): Touches your heart and tests your faith in humanity. As we leave Jinan (ph), Dr. Al-Naqbi comes back with the news of casualties
arriving from the strike just 10 minutes earlier.
AL-NAQBI: We just got a stable (inaudible) right now two amputated young male from the -- just the bombing today.
WARD (on camera): From the (inaudible) we just heard .
AL-NAQBI: Yes.
WARD (on camera): . from the bomb we just heard?
AL-NAQBI: That is my understanding.
WARD (on camera): Okay.
AL-NAQBI: They all arrived to our (inaudible).
WARD (voice over): A man and a 13-year-old boy are wheeled in, both missing limbs, both in a perilous state.
(DR. AL-NAQBI speaking in foreign language.)
WARD (voice over): "What's your name? What's your name?" the doctor asks. The notes provided by the paramedics are smeared with blood. A tourniquet
improvised with a bandage.
Since the field hospital opened less than two weeks ago, it has been inundated with patients; 130 of their 150 beds are already full.
WARD (on camera): So, let me understand this, you are now, basically, the only hospital around that still has some beds?
AL-NAQBI: I guess so, yes, or maybe I'm very sure of that, because they are telling me one of the hospitals with a capacity of 200, they are
accommodating 1,000 right now. And the next-door hospital, I'm not very sure if it's like fits 200 .
UNIDENTIFIED MALE: Yes.
AL-NAQBI: . has maybe 400 to 500 patients. So, at one occasion, he called me. He said, I have three patients in each bed, please take them. I said,
send as many as you can.
WARD (on camera): I mean, we've been here 15 minutes, and this is already what we're seeing.
AL-NAQBI: And this is -- you heard it, you see it.
WARD (voice over): In every bed, another gut punch. Less than two years old, Amir (ph) still doesn't know that his parents and siblings were killed
in the strike that disfigured him.
(UNIDENTIFIED FEMALE speaking in foreign language.)
WARD (voice over): "Yesterday, he saw a nurse that looked like his father," his aunt, Nahia (ph), tells us. He kept screaming, "Dad, dad, dad!"
Amir (ph) is still too young to comprehend the horror all around him, but 20-year-old Lama (ph) understands it all too well. Ten weeks ago, she was
studying engineering at university, helping to plan her sister's wedding. Today, she is recovering from the amputation of her right leg. Her family
followed Israeli military orders and fled from the north to the south, but the house where they were seeking shelter was hit in a strike.
(LAMA (ph) speaking in foreign language.)
WARD (voice over): "The world isn't listening to us," she says, "Nobody cares about us. We've been dying for over 60 days, dying from the bombing,
and nobody did anything."
Words of condemnation delivered in a thin rasp, but does anyone hear them? Like Ghazni, Aleppo, and Mariupol, Gaza will go down as one of the great
horrors of modern warfare.
It's getting dark. Time for us to leave -- a privilege the vast majority of Gazans do not have. Our brief glimpse from a window onto hell is ending as
a new chapter in this ugly conflict unfolds.
(END VIDEOTAPE)
QUEST: Clarissa is with me now from Abu Dhabi. Clarissa, there's a lot of pompous questions I could ask about a sort of Middle East politics and
Israel, Hamas, et cetera, et cetera. But you talk there about other wars and how this will go into it.
You covered some of them. You've been at the table. How has what you experienced this time in this report left you feeling?
WARD: I think what drives people to a feeling of despair when covering this war, when watching this war is the sense of injustice, to put it frankly,
Richard, that there is nowhere for the people of Gaza to go. There is nowhere that is safe. There is no sanctuary.
And to see, as we did when we were driving in and out of Gaza, so many people on the streets, which is relatively unusual when there is heavy
bombardment going on, but you understood that they're on the streets because they don't have anywhere else to go.
[15:30:00]
And so they have to continue the daily business of trying to survive, to find food, which is in incredibly short supply; to find water; to find
shelter, so many of them sleeping rough now, the temperatures plummeting, the rain starting to pour.
And there is really no prospect that any of them can see for the establishment as was promised earlier on by the Israeli government, by the
U.S. government, of so-called safe zones for a meaningful and impactful uptick --
QUEST: All right.
WARD: -- in the amount of aid being channeled through into Gaza. And so you have this dual humanitarian catastrophe escalating by the day and, at the
same time, unprecedented civilian casualties with very clear information, as we now see.
You mentioned it, of dumb bombs being used that really fly in the face of Israel's claims that it is doing its best or doing what it can to protect
civilian casualties. And that's why I think you hear voices like Lama's, not even of anger, just a sense of giving up, the world's abandoned us, the
world has forgotten us and we just have to try to survive.
QUEST: Clarissa, in Abu Dhabi tonight, thank you.
This is CNN.
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[15:35:00]
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QUEST: Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS any moment. We'll be discussing how higher interest rates have been
impacting the property market.
And how the taking of a $30 million apartment with the CEO of real estate giant, Douglas Elliman. But we will only get to that after the news
headlines. This is CNN and here the news always comes first.
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QUEST (voice-over): E.U. leaders meeting in Brussels are giving the green light to membership talks with Ukraine, a move that Ukrainian president,
Volodymyr Zelenskyy, is calling a victory for all of Europe.
Hungary vowed to block the bid claiming that Ukraine had not met all the conditions needed to move the accession negotiations.
The Russian president, Vladimir Putin, has held his first extended news conference since the start of the war on Ukraine. It was a four-hour
marathon Q&A session. Putin said peace will only take place when Russia achieves its objectives, still calling the war a special military
operation.
Rudy Giuliani no longer plans to testify in his defense in a defamation trial in Georgia. An ex coworker and her daughter sued Giuliani after he
falsely accused them of tampering. He has already been found liable. The judge must still decide on the financial penalty.
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(COMMERCIAL BREAK)
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QUEST: The real estate market is especially rate sensitive. Here in New York, we are home to some of the world's priciest homes in the luxury
market. As you and I have talked about, that defies gravity.
Despite higher interest rates, look at what's available in some of New York's most expensive neighborhoods. Soho, Downtown is the third, There is
a six-bedroom, six-bathroom condo that's listed for $50 million.
In Tribeca, nearby, the second most expensive neighborhood, you can get five beds and six baths for $40 million. And the most expensive
neighborhood in New York at the moment is Hudson Yards, which, of course, is where our studios are based in Hudson Yards.
At Hudson Yards there is a four-bedroom penthouse going for $25 million. I took a look inside of one of those luxury Hudson Yards Towers back in July
with the CEO of Related, that built the thing. Even the lobbies are a sight to see.
(BEGIN VIDEO CLIP)
QUEST: Look at this.
UNIDENTIFIED MALE: This is even elevated from the elevated, right?
What you start to see here is the residential feel -- warmth, colors, feeling that you don't normally see in office buildings.
Here you start to get that residential feel. It differentiates these buildings from all the others.
(END VIDEO CLIP)
QUEST (voice-over): And look at the skyline shot from the roof. You can see there 432 Park Avenue. It's one of New York's most exclusive properties. In
that building, the CEO of the real estate group, Douglas Elliman, took me around and he reminded me that it's all about the view.
(BEGIN VIDEOTAPE)
QUEST: How important is that view?
SCOTT DURKIN, CEO, DOUGLAS ELLIMAN: That sells the apartment.
(MUSIC PLAYING)
QUEST (voice-over): This is one of New York's most exclusive buildings. The address is 432 Park Avenue on the city's East Side. It was once the home to
celebrities like Jennifer Lopez and Alex Rodriguez. The building is a trophy asset to those who live here. And for many that don't an eyesore.
QUEST: And we have three examples over here.
QUEST (voice-over): I got a tour of unit 66B with the chief executive of Douglas Elliman, one of the largest real estate companies. He told me that,
even with mortgage rates at the highest level in two decades, demand for these luxury apartments that go in the tens of millions are sky-high.
DURKIN: Our company sold two of these last month. I think one was for 40 and one was for 80. And we did not expect that in this kind of market. But
they are cash buyers. They'll always be there and they're not subjected to what the general public is subjected to.
QUEST: Apartments like this are always going to sell. There's enough very rich people who will always keep these.
[15:40:00]
QUEST: They're not worried about 7 percent interest rates, are they.
DURKIN: They're not worried about it because most of those people have private banking. If you have a large, a big -- a large relationship with a
private bank with a large amount of money, they'll find your mortgage at a very low rate.
QUEST (voice-over): This unit is listed at $29.5 million. If you haven't got the capital, well, you can rent it at $79,000 a month, please. Other
buildings may have state-of-the-art amenities -- pools, bull rooms and private theaters. This has something that can be very hard to replicate.
DURKIN: That's something that is a wow factor. And that's your bragging right, full Central Park views.
QUEST (voice-over): So the view can enhance the price of an otherwise so-so apartment?
DURKIN: Absolutely. If we were 40 floors down, we wouldn't be asking 299250 for the apartment. In terms of millions, it would be dramatically lower.
Sometimes they can go half of what you are asking, especially Central Park West on Fifth Avenue.
QUEST (voice-over): An apartment this high is not without its share of problems. The residents have complained of plumbing issues, elevator
malfunctions; they say the building creaks in the wind. It's probably due to the height and narrowness.
DURKIN: It's like any other home. There are issues and this is not an old building and things have to be worked out. Surprisingly though, nothing
that we've seen has kept people from buying and selling. They tell their attorney, I want that apartment. This is a trophy building.
QUEST: So this isn't a case of a building with a reputation?
DURKIN: Well, if it has a reputation, it certainly has a great reputation. It has not stopped any of the transactions happening and the resells. This
one is just so incredible, look at these windows, window anywhere probably in the country, the size of it.
You're sitting in a window box. I think that in and of itself is what attracts people. There is a huge wow factor here and you have Park Avenue
as your address.
QUEST (voice-over): The overall real estate market has slowed dramatically. Home sales have fallen to their lowest levels of the year. This building
and others like it stick out.
(END VIDEOTAPE)
QUEST: Later on in the hour, we'll discuss Europe's housing market. I'll be joined by William Beardmore-Gray, senior partner at Knight Frank.
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[15:45:00]
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QUEST: Lemurs are unique to the African island of Madagascar and they are under threat. That experts say these striking animals will be extinct by
2035 because of deforestation and hunting.
Today on Call to Earth we follow a renowned conservationists into the forest, where his organization has been working with local committees to
protect the endangered animals.
(BEGIN VIDEOTAPE)
BILL WEIR, CNN CHIEF CLIMATE CORRESPONDENT: In the forests of Madagascar, you will find a uniquely biodiverse ecosystem. Thousands of plant and
animal species are endemic to this small island off the southeastern coast of Africa.
And most famous among them is a peculiar looking creature with large eyes, long tail and a hearty set of vocal cords.
JONAH RATSIMBAZAFY, LEMUR CONSERVATIONIST: We are here inside the forest and that is the sound of the largest lemurs, the Indris, they give a call.
Listen. Wow. Yes, we will find them. We will find them.
Lemurs are unique for Madagascar. We don't have the Statue of Liberty, we don't have diesel power, we don't have pyramid of Egypt but we have lemurs.
WEIR: Jonah Ratsimbazafy has dedicated over 20 years of his life to saving the small primates which are facing an uphill battle for survival.
RATSIMBAZAFY: And they can give a very loud call -- oh, oh.
WEIR: According to the International Union for Conservation and Nature, 98 percent of lemur species are threatened with extinction while nearly a
third are critically endangered.
RATSIMBAZAFY: It is very, very difficult to find them in the forest and that is when you have working hours to find them.
WEIR: Most of the lemurs' time is spent in trees where they live in small groups.
RATSIMBAZAFY: Lemurs are like fish. Fish cannot survive outside of the water and the lemurs cannot survive outside of the forest. But we only have
less than 10 percent of the lemurs left now in Madagascar. Deforestation, slash and burn, mining, these are the problems that the lemurs are facing.
WEIR: An award-winning primatologist, Jonah is a founding member of GERP, a conservation program that works with local communities to help protect
lemurs.
RATSIMBAZAFY: GERP started in 2015. It was really difficult because the community was not very welcome to us when we started, so they need proof
that we are there as their friends to support them.
And the goal is, how can we save the unique biodiversity while helping people in the spirit of collaboration.
WEIR: Trust isn't the only challenge he and his team encountered. Hunting and the pet trade are also issues of concern.
RATSIMBAZAFY: Conservation is always difficult when people get less access to food, lack access health care and lack access to education. And when
people are poor, it is hard for them to save the lemurs.
WEIR: But he says their education and advocacy driven approach is working.
RATSIMBAZAFY: So the result is in the last seven years, zero fire, zero pressure and that is because of good relationship between GERP and the
local community. And this is a good example all over the country right now. And we want to use that model to the rest of Madagascar and why not to the
rest of the world.
WEIR: While he recognizes that the species is up against some challenging odds, Jonah continues to try and hope from the next generation.
RATSIMBAZAFY: I am not alone in this fight. I have the team, I have the students. Of course sometimes I want to be discouraged but when I see the
(INAUDIBLE) of the young people working, encouraging, don't give up. Let's do it. You can make it. And that makes me believe we can save our lemurs.
(END VIDEOTAPE)
QUEST: Let me know what you're doing to answer the call, the hashtag is #CallToEarth.
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[15:50:00]
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QUEST: Mortgage rates in Europe are actually falling despite the ECB saying it's not ready to discuss cutting the policy rate. Knight Frank says the
rate on a five-year fixed rate loan is slightly under 4 percent. The variable rate mortgage is running over 5 percent.
Knight Frank says that they'll likely go lower after today's decision. Mortgage rates remain higher than Europeans are used to, considerably so.
And Knight Frank warns that people who get variable loans are still taking a risk.
William Beardmore-Gray is a senior partner and group chair at Knight Frank Real Estate Group. He's with me now from Winchester in England. Good to see
you, sir.
A good example, classic example, I have a U.S. mortgage taken out 20 odd years ago, it's about 3 percent or something. I have a U.K. mortgage taken
out roughly the same time and that's now back over 7 percent because of it.
The need for rates to come down, to stimulate the housing market, would you agree?
WILLIAM BEARDMORE-GRAY, SENIOR PARTNER AND GROUP CHAIR, KNIGHT FRANK REAL ESTATE GROUP: Well, as you said in the opening there, Richard, the fact is
that what we now have is some certainty.
And that is the fact that people are now looking for rates to come down rather than go up again. It will give people a confidence next year to get
back in the market. As you said at the start, the five-year fixed mortgage just now below 4.5 percent. And that expectation that we are over the worst
is definitely being felt by buyers and sellers.
QUEST: How far have you seen the higher rates hit the market, would you say?
BEARDMORE-GRAY: It definitely had an effect. Anybody that's had to refinance a mortgage over the last 12-18 months has been feeling the pain.
But what I would say is that people are pretty well capitalized. Employment rates are high. And what we saw last year was a dramatic reduction in the
volume of transactions across the market. We saw about 25 percent less transactions last year.
[15:55:01]
QUEST: Right. If you now look ahead -- I was talking earlier to Paul Roemer about where rates are likely to end up. The ECB is likely to be the first,
the BOE probably second or third after the Fed.
Where do you think rates will end up?
We're not going back to zero, that much we know.
BEARDMORE-GRAY: Look, the long run rate in the U.K. for example is around 3.5 percent. And we've had -- we've got used to probably a false economy,
which is free money.
So if it were to end up after the long run average, it wouldn't be a surprise.
QUEST: Maybe not to you and I of a certain age. I think younger people may have a bit of a shock.
Finally, what properties sell best?
Obviously those are in good nick.
But are people looking for flats or houses?
I've always wanted a stately home so if you could find me a cheap one?
(LAUGHTER)
BEARDMORE-GRAY: Yes, you and me both, Richard. To be honest across the world at the moment, there is a shortage of living accommodation, whether
it's for students, for the likes of you and I, whether it's for health care, et cetera.
So any property at the moment which is sensibly priced is selling well.
QUEST: I'm glad to see you, sir, thank you very much for joining me, I appreciate it.
(INAUDIBLE). You know what we always say, location, location, location. That's what it's all about, which is why I seem to be sitting at one of the
most expensive parts of New York, Hudson Yards, as we told you earlier. I'll have a Profitable Moment for you after the break.
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QUEST: Tonight's Profitable Moment: I think everyone remembers the first piece property that they were perhaps fortunate enough to buy. Mine was a
flat in London that cost 40,000 pounds or $55,000. But then that was back in the mid-1980s so it was a long time ago.
They always tell you, what the accountants and the bankers still say, is, in time the amount you pay won't seem that great. That's partly you earn
more, partly the property market goes up, partly inflation and that's the key this time. Inflation devalues the original amount (ph).
It's an age-old strategy of inflation. So what people are paying now will seem less and people feel less, as inflation eats away at its value, the
reality is it's still a lot of money. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you are up to in the hours
ahead, I hope it's profitable.
END
