It’s a Great Time for Billionaires to Splurge on Real Estate
In a market awash in luxury properties and buyers more skittish, brokers are working harder to close mega-deals.
(Bloomberg) -- It’s a billionaire’s delight: In a market awash in luxury properties and buyers more skittish about parting with their cash, brokers are working harder to close mega-deals. That sometimes means discounts, and even the super-rich like a bargain.
“Pricing was a little high, so we went through a correction,” said Alexander Ali, an external spokesman for Nile Niami, the movie-producer-turned-developer of multi-million dollar mansions in Los Angeles. With lower prices, Ali’s predicting that "a lot of homes close in the next month."
Consider this example of the Los Angeles market’s new dynamic, which has relied heavily on buyers from overseas.
Ali held an invitation-only open house for a six-bedroom mansion on Londonderry Place up the hill from Sunset Strip built by Niami. Exotic pool dancers and a camel showed up -- the event cost $100,000 -- but the asking price was still lowered by 36% to $34.95 million. The developer’s portfolio includes a $44 million home, which the local media reported was sold to a Saudi buyer.
"Two years ago, there was a lot of foreign investment, but because international laws changed, it impacted our housing market," Ali said. Back then, "you could get $100 million for a house."
Less Foreign Cash
You still can, but it has to be a perfect match of buyer and home.
Last week, the “Spelling Manor” in Holmby Hills sold for about $120 million, the highest price ever paid for a Los Angeles home. The 56,500-square-foot spread has 14 bedrooms and 27 baths, but it’d been on the market for about three years and had an opening asking price of $200 million, according to local media reports.
It appears sales like these will be a smaller slice of market, in part because of fewer lavishly-spending foreigners.
“The buyers of the 14 sales of $20 million-plus this year are mostly American, 64%,” said Jerry Jolton, a broker with Coldwell Banker in Los Angeles, referring to the properties sold. "The other buyers are from Qatar, Bulgaria, China, England and Saudi Arabia."
For the ultra rich, every cent counts. That’s the experience of Drew Gitlin of Berkshire Hathaway Home Services, one of the brokers with the listing for the Chartwell, a French chateau-styled mansion in Bel Air. The 10-acre property with a 12,000-bottle wine cellar now has a price tag of $195 million, down from $245 million two weeks ago.
“I dealt with a multi-billionaire calling me on his way to speak at Davos screaming at me about a $1,500 escrow bill,” Gitlin said. “This guy made $3 million a day, and that includes weekends. And I’m thinking, he’s flying over in his private jet, and the cost of the call is almost the amount of the cost of the bill.”
Warhols Within
Meridith Baer, whose company stages as many as 150 homes per month across the U.S., says buyers are looking less for bling or the perfect view than features that feel more refined and enduring, like a turnkey art collection.
"Staging a home in a way that will resonate with the upper echelon of buyers can mean the difference between the property selling quickly and it languishing on the market," she said.
New York’s upper end is trending toward spare but majestic.
Eight blocks from where Jeff Bezos recently dropped $80 million on a penthouse and the two units below it at Manhattan’s 212 Fifth Avenue, a $98 million condo has been on the market for about a month. The 19,815-square-foot spread -- dubbed "Le Penthouse," -- features an infinity pool facing the Empire State Building and a glass-walled jacuzzi on the private rooftop deck. But for the most part, it’s empty.
"We sell the unit as a white box," said Raphael Sitruk, the listing broker with Keller Williams NYC.
NYC VS LA
“In New York, people have imagination,” Ali said. “In LA, you need it to be completely finished and wrapped up in a bow for our buyers to get it.”
One such property is a $17.8 million home in Beverly Hills that Ali is marketing for broker Paul Wylie of Lamerica Homes.
Trending as "Warhol 90210" on Instagram, the house comes with a classic Andy Warhol Campbell’s Soup portrait, seven other original Warhol pieces from the Revolver Gallery in Los Angeles, and his 1974 Rolls Royce Silver Shadow. Without the art work and car, the no-frills version would cost $15.6 million.
Photos of its open house featured shirtless waiters wearing Warhol Calvin Klein boxers and “80-year-olds dancing with 20-year-olds in a Studio 54 vibe.”
To contact the reporter on this story: Hailey Waller in New York at hwaller@bloomberg.net
To contact the editors responsible for this story: James Ludden at jludden@bloomberg.net, Ian Fisher, Linus Chua
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