The top property this year is 20 percent more expensive than last year. Experts say wealth creation and an increase of the millionaire class are driving ultra-luxury prices.
By Camilla McLaughlin
Once a seemingly preposterous suggestion, the idea of a billion-dollar house moved much closer to reality this year as more than one property came on the market in the $200 million range. The most expensive has a $250 million price and a very appropriate moniker: Billionaire.
During a broadcast featuring a $10 million Beverly Hills property listed by Joyce Rey, Barbara Walters once quipped, “One day there will be a billion-dollar house.” At the time, even the idea of a $100 million home seemed outrageous. Yet, less than three decades later, there are 10 homes in the U.S. for sale at $100 million or more. More are in the pipeline in California alone, including a supposed $500 million estate under construction in L.A. Entrée to today’s ultra market calls for a net worth in the $500 million bracket, and well over $1 billion for the highest price points.
When the first issue of Ultimate Homes was published in 2005, the top property in the country was a $76 million, 60-acre waterfront estate in Bridgehampton, New York. When research began for the new publication, which set out to document the 850 most expensive homes in the U.S., there was little information about real estate at the highest price points — even marketing information was shared discretely. Just figuring out where to begin, what price point would be the threshold for the 850 was a challenge. In the end, it was $7.8 million. Over the years, we’ve enhanced the process, but still meticulously search properties all over the country. Today, you might see similar lists, but most skim the surface, cherry-picking the most publicized properties. For Ultimate Homes this year, $25 million is the jumping off point for the ultra-high-end.
In 2006, the $100-million mark was broached with a $125 million Palm Beach estate, which eventually sold close to $100 million. Since then, prices have risen incrementally. In recent years, price increases have amped up, with the top Ultimate price doubling from $125 million in 2012 for Fleur de Lys in Holmby Hills, California, to $250 million in five years.
Quite often ultimate prices are characterized as wishful thinking or a publicity grab, but the post-recession rise is also a response to the creation of wealth. “Real estate is not only a good investment, but also a perk of wealth,” says John Brian Losh, publisher of LuxuryRealEstate.com.
The ranks of the ultra wealthy have grown as have prices for art, yachts and other assets. “There was a time when we could tell you all the millionaires and billionaires in the world. That’s our business at Christie’s. Our list now is not quite up to date, because there was a whole slew of new ones created yesterday. And with the great creation of wealth we have had people who can buy whatever they want, and increasingly wealthy people are putting their assets into residential real estate and in commercial real estate,” observes Zachary Wright, executive director, Western Region, Asia Pacific, Christie’s International Real Estate.
In 2014, there were a number of record sales, including an East Hampton estate for $147 million; Copper Beach, a Greenwich, Connecticut, estate for $120 million; and a $100.5 million duplex in New York’s One 57 tower. In the last year, two $100 million deals and another at $90 million shattered records in Los Angeles. The Playboy Mansion, last year’s top Ultimate Home at $200 million, sold for $100 million, as did last year’s No. 4, a new 30,000-square-foot extravaganza built on the site of an estate once owned by Barbara Streisand. Owlwood, a famed Carolwood Drive estate with a storied history that epitomized ultra luxury, sold for $90 million.
Breaking the $100 million threshold is significant, say L.A. brokers. “All you need to do is have one property sell at a stratospheric rate and it pushes the ceiling,” says Paul Boomsma, president of Luxury Portfolio International and COO of LeadingRE.
“The sky is the limit. Once we hit the $100 million mark, we broke the glass ceiling — and we’re seeing people comfortable with spending more than that,” says Rick Hilton, chairman and co-founder of the Beverly Hills firm Hilton & Hyland.
The impact of these sales extends beyond the West Coast. “They’ve boosted the market in the U.S. with the sale of the Playboy Mansion. It will reflect back to our marketplace. L.A. is a larger marketplace, but people love Florida,” observes Carmen D’Angelo, co-owner of Premier Estate Properties in Palm Beach. This year, more uber buyers are looking north of Miami. “A lot of property on the oceanfront has been selling well this year,” says D’Angelo, noting record sales on Hillsboro Mile. When it comes to estate properties, he says, the market begins at Fort Lauderdale and extends up the coast.
Two waterfront properties in Florida are once again Ultimate stars. Gemini is an ocean-to-Intracoastal compound in Manalapan, Florida. Loggias, and open stairway and balconies open the main residence to acres of gardens. This property might not be an island, but with water on two sides, including more than 1,000 feet of beachfront, the sense of serenity and privacy that accompanies an island is here.
When Joyce Rey, executive director of Global Luxury for Coldwell Banker Real Estate, and Stacy Gottula initially listed Palazzo di Amore in 2015, there were no comparable homes to reference value. “We hadn’t had a $100 million sale at the time,” says Gottula, who joined The Agency in 2016. And there weren’t any estates on 25 acres. The property initially came on the market at $195 million, with an eventual price reduction. After a year off the market, Palazzo di Amore is back on at $129 million, a price Gottula says is very competitive, particularly considering last year’s record sales. “We are priced to sell in a great marketplace to sell this estate,” she says.
Few agents have set more price records than Joyce Rey, who, along with Gottula, sold the highest priced property in the nation in 2010 for Le Belvedere, a Bel Air estate that upped the ante for Ultimate properties offering exceptional privacy, unheard of amenities such as a Turkish hammam, and a 280-degree city view. Rey and Gottula are teaming up once again to market Le Belvedere, which is back on the market at $85 million.
Prices for Ultimate properties in L.A. might seem astronomical, but compared to many global cities, they are a bargain. “On a square-foot basis, Los Angeles offers far greater value for money than competing cities across the globe,” comments Hilton, who is listing The Manor for $200 million. A few years ago, this much publicized property headed the Ultimate list. Now, the new owner has it back on the market after extensive updates. Still, the essential character of the estate is very much in place, but some rooms have been refocused for current preferences and the new interior is stunning. One of the largest homes in the country, its square footage surpasses the White House.
The $250 million price isn’t the only facet of Billionaire that generates attention. Newly constructed, it is among a growing number of lavish estates built on speculation. “In 2016, expensive spec homes dominated the highest end of the Los Angeles luxury market, comprising six of the 10 priciest transactions. In this rapidly expanding market, spec homes today are like nothing we have seen nor could have imagined,” says Jeff Hyland, president of Hilton & Hyland. Rather than the entire luxury market, developers are focused on the limited number of very wealthy individuals worldwide. “With a specific luxury buyer in mind, developers are taking custom building to new heights — and these properties are in demand. Between the valuable land they’re often built on and high-end finishes that cater to an elite individual, spec homes have proven to be ideal in their turnkey nature,” says Hyland, hitting on the one thing buyers in all price brackets want today — turnkey.
Billionaire could be viewed as the ultimate turnkey property. Orchestrated by luxury developer Bruce Makowsky, it is completely furnished, staffed and decked out with unparalleled amenities and features, including more than 100 curated art installations, two stocked wine cellars, and a $30 million collection of cars in a custom display gallery. Compare this to 20 years ago, when a Ferrari might be offered as an incentive and a way to boost value. Clearly, for new properties the amenities wars are on, with an ever-expanding amount of square footage devoted to entertainment, and over-the-top features. Bowling alleys are a must, as are outdoor movie venues, multiple pools, bars and extensive gym and work-out space.
Also changing is what the very wealthy look for in a home. Until recently, our top list was divided between estates on sizable pieces of land and condos in Manhattan that captured acres of real estate in their views. Today, nine of the top 10 are individual estates. Almost all in this group — as well as a number in lower price brackets — are as much a private resort as they are a home. “People want their own paradise now. They want their own tropical resorts,” says Wright.
In this way, newly constructed mega properties are very much like legendary estates that set standards for a lifestyle developers strive to recreate today. “Many of these homes were designed for large-scale entertaining, and to create ‘experiences’ for family and friends. Look back to what William Randolph Hearst set out to create, or the mansions that were built in Newport. At the time, those homes were also completely off the charts. We see history repeating itself, as many of these homes are also used only a portion of the year and are also often for entertaining on a very grand scale,” observes Boomsma.
Each of the historic estates that are this year’s Ultimate stars has a unique story and provenance. The one condominium residence, and only Manhattan property, among the top 10 is the penthouse in the Woolworth Building, which was built as the tallest building in the world and remains one of Manhattan’s striking icons. Under the baton of French designer Thierry Despont, the top 30 floors have been reimagined as individual residences. Original architectural details have been elevated with refined cabinetry and finishes and 15-foot ceilings. Capping the building is a seven-story penthouse priced at $110 million.
Owned by just three families in its 80-year history, Briar Patch, an 11-acre compound on Georgica Pond in East Hampton is on the National Register of Historic Places, a first for the Ultimate top 10. Two residences, including the Georgian Revival, 6-bedroom, 10,000-square-foot main house, were painstakingly restored and renovated over two-and-a-half years by the internationally renowned architect Peter Marino.
“La Dune” on Gin Lane in Southampton dates back to 1900 and has links to architect Stanford White. The almost 4-acre property has two extraordinary residences, multiple pools and 400 feet of bulkhead beach front. Rosa rugosa blooms slope down to a wide sandy beach in front of the Shingle-style, four-story main residence. The second residence, a wholly separate guesthouse, emulates the style of the main house. Amenities are extensive, including billiards and a theater.
Few estates compare to the architectural heritage of Il Palmetto, a 5.46-acre, ocean-to-lake Palm Beach estate. Notable architect Maurice Fatio built the Italian Renaissance-style villa that is the centerpiece of the property. The main residence is designed as a series of pavilions connected by cloisters. The property also has a second house located on the beach. Like Gemini, an underground tunnel connects both parts of the property, which also fronts on Lake Worth.
It’s important not to lose sight of the fundamental principal of real estate. In the end, says Losh, the market sets the prices. And how the market will react to current prices has yet to be realized.