San Francisco is undergoing a property frenzy driven by the tech sector and Chinese capital, writes Stephen Short
Chinese capital and the tech sector are driving the San Francisco market wild
Perhaps it was just a matter of time. After all, San Francisco’s Chinatown is the largest outside Asia and the oldest in North America. It’s also Bruce Lee’s birthplace and home to the Chinese Hospital, built by Tung Wah Dispensary in 1925. Now some of China’s most prolific developers—china Vanke (US$81.8 billion in assets) and Gemdale (US$21.9 billion)—are investing heavily in San Francisco high-rise sites.
At the top of the ladder, soaring above the waterfront at the epicentre of culture, technology and innovation, is Lumina, on Main and Folsom streets. A two-tower project of 656 modern residences, it features a one-of-a-kind duplex penthouse designed by Bernardo Fort-brescia of Arquitectonica. The curvilinear configuration captures iconic views of city landmarks such as the San Francisco Bay Bridge, the Ferry Building and the downtown financial district. Lumina’s backer is China Vanke.
The duplex penthouse—at US$49 million, the most expensive property of its kind in San Francisco—features dramatic, double-height living rooms of shimmering walls of glass in two locations. The downstairs space comprises five entertaining rooms, while upstairs reside five en-suite bedrooms, a gym/massage room and a family lounge. With 360-degree views, this glass palace captures the elegance and vibrancy of today’s San Francisco.
“The vertical proportions of the grand rooms in the Lumina duplex penthouse come from old world architecture,” says Fort-brescia. “There’s nothing that replaces the sense of a grand space. It’s part of the psychology of comfort and elegance.”
China’s 10th-largest developer, R&F Properties, also has an aggressive acquisition strategy for the Bay Area. Through its US entity, Fulton Street Ventures, it recently bought a high-rise site at 325 Fremont Street for US$28.5 million. Only a stone’s throw from the Lumina towers, the site has approval for 118 luxury flats over 25 floors.
Wealthy Chinese make up the third-largest share of wealthy foreign homeowners in the United States, behind Canadians and Britons, according to a Sotheby’s International Realty report in September. From April 2014 to March this year, Chinese buyers—including home hunters from Hong Kong and Taiwan— spent US$28.6 billion on US residential real estate, more than any other non-us group, according to the National Association of Realtors in June. That’s a 30 per cent increase on US$22 billion the previous year. Almost 70 per cent of the purchases made by Chinese were all cash, compared to 55 per cent for other foreign buyers and 25 per cent for acquisitions by Americans.
Within the US, Chinese buyers are strongly focused on the West Coast, with 35 per cent of sales to Chinese buyers during the 12 months to March 31 this year being in California, association figures show. Key cities across the country include San Francisco, Los Angeles, Seattle, New York and Houston. San Francisco also just topped Knight Frank’s latest Prime Global Cities Index, which tracks luxury real estate in key global cities. The city’s annual price growth in the first quarter was the highest in the 35-city index.
San Francisco’s future is riding a combination of the tech and start-up wave, low interest rates, restrictive building regulations, limited land and a plentiful supply of foreign buyers. Apple alone employs more than 20,000 people in the San Francisco Bay Area. Imagine housing demand if tech engines such as Pinterest, Shyp, Zynga, Airbnb, Dropbox, Snapchat and Uber go public. The city’s major health institution is now called the Priscilla and Mark Zuckerberg San Francisco General Hospital and Trauma Centre after the couple’s US$75 million donation, and Apple’s Tim Cook unveiled Apple Music at the city’s Worldwide Developers Conference in June.
WEALTHY CHINESE MAKE UP THE THIRDLARGEST SHARE OF WEALTHY FOREIGN HOMEOWNERS IN THE UNITED STATES
Such demand has been driving individual markets around Silicon Valley too, in towns like Atherton, Los Altos and Palo Alto—the larger houses in such markets are spectacular and in high demand based on their proximity to major tech employers and access to institutions like Stanford.
The multimillionaire financier Robert Friedland just sold Locksley Hall, a fivebedroom, seven-bathroom property in Belvedere, for US$47.5 million. The sale breaks the record for the highest reported single-family home sale in the San Francisco Bay Area property market by US$12 million, and the highest reported sale in Belvedere by around US$22 million.
Ruth Porat, former CFO of Morgan Stanley and now Google, just spent US$30 million on a new three-bedroom home on Cowper Street, Palo Alto (originally built for a descendant of Levi Strauss), the most expensive purchase ever in Palo Alto.
Evidently the builders of the Golden Gate Bridge were prescient when they hoisted the structure’s towers in 1937—standing as they do today like two giant hashtags, exaggerating the size of the tech stampede: #sfgoldrush. Bring on the luminaries.
luxury eyrie Lumina’s duplex penthouse offers compelling views over the city and San Francisco Bay day and night
Home sweet Home Natural light floods both the kitchen/family room and the master bedroom of this mid-century property at 2635 Broadway, Pacific Heights, a highly desirable San Francisco district renowned for famous residents