Marina and Rafi Cohen, operators of Marina's Diamond Corp., a shop in New York City's diamond district, could barely pay the rent last year. Poor sales due to the financial crisis put them on the brink. Wall Street pros, eager to spend their bonuses on lavish jewelry, have traditionally made up much of the Cohens' income.
In 2009, bonuses -- and bling -- are back.
"2009 has been a better year for us," Marina said. "We've seen 20% increase in new customers. People would settle for rings and half carats in 2008, but now they're beginning to buy larger diamonds again."
To many of the city's luxury retailers and real-estate agents, the rebound of Wall Street bonuses means one thing: cha-ching. The trill of cash registers all over New York City is playing the tune of recovery.
The Cohens' experience reflects an industry-wide trend. The jewelry market is doing well in the U.S. after a year of poor returns. Specialty jewelers posted a 0.2% sales increase in September from the same time last year, from $1.869 billion last year to $1.873 billion this year, according to IDEX online, an international diamond exchange.
"We're forecasting growth in the U.S. in this sector for the holiday season," said Edahn Golan, editor in chief of IDEX. "Whenever there are fat bonuses, spending on luxury items rises." Golan is expecting 2.8% increase in jewelry sales over 2008's holiday numbers.
With bonuses at some firms set to hit record levels, real-estate agents hope that Wall Streeters will splurge on new apartments -- preferably with glittering views of the Hudson – to go along with all those diamonds. Confidence is edging up among real-estate agents from near rock-bottom levels from earlier this year.
"We're expecting a busy January because of pent up demand," said Jim Perez, senior vice president at Brown Harris Stevens, a luxury real estate brokerage that sells properties in Manhattan, the Hamptons and Palm Beach. "There were three times more deals this November than a year earlier."
Even so, Perez cautions that because more bonuses this year are set to be given in deferred compensation, he can't be entirely optimistic about sales.
At Stribling Real Estate, which sells properties in New York City, there is still uncertainty about the timing of the bonus impact on business, despite a strong third quarter, according to Ken Scheff, a Stribling executive vice president.
"Still, our agents know to be ready come the second week of January through Memorial Day," he said.
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