Real Estate
Billionaire buyers are snapping up properties with price tags of more than US$100 million, writes Nadine Bateman
Billionaire buyers are snapping up “trophy” properties with price tags of more than US$100 million
When the romans said that “a man’s home is his castle,” little did they realise their metaphor might be used to describe an era when houses could cost as much as royal residences once did. However, that time is now. Certainly, if you shell out US$100 million for a property, the least you might expect would be a turret or two—and possibly a moat.
That’s the staggering sum being paid with increasing frequency by the wealthy seeking ways to invest amid the prevailing global economic turmoil. For billionaires, these properties have acquired the status of assets such as a Picasso or a pink diamond. In its 2015 report about the global luxury real estate market, Luxury Defined, Christie’s International Real Estate reveals that more properties sold for at least US$100 million last year than ever before. The company’s CEO, Dan Conn, says such properties are “a new class of collectibles” and calls them “trophy” homes.
“The buyers of the world’s finest homes are frequently the same people who have substantial collections of notable art,” says Conn. “They are seeking privacy and security
in their principal residence, but all purchase with a view to how these homes will accommodate the other assets they have a passion to collect. They are viewed as rare and precious collectibles rather than a commodity, and they carry the added benefit that owners can enjoy them as a lifestyle asset, unlike a stock or a bond.”
The annual report by Christie’s ranks the world’s top locations for prime property and analyses more than 70 key regional markets. It has uncovered “new benchmarks at the ultra-high end” of the real estate market since 2010, which include sales in East Hampton, New York, for US$147 million; Côte d’azur, France, for US$146 million; Greenwich, Connecticut, for US$120 million; Hong Kong for US$104 million; and New York City for US$100 million.
Currently listed on the market are a number of similar properties, including Sycamore Valley Ranch in Los Olivos, California, at US$100 million—you may have heard of it, as it was formerly Michael Jackson’s Neverland Ranch. The vast 1,100-hectare estate features a 1.6ha lake with a waterfall, and magnificent views of the mountains and deep valleys in the famous wine region.
“Neverland Ranch, also known as Sycamore Valley Ranch, is so unique; we’ve had several offers,” says Jeff Hyland of Hilton & Hyland, a Luxury Portfolio International member and one of the agents listing the property. “An area of 4.2 square miles of privacy this close to Beverly Hills and Malibu is a drawing card in its own right. The ranch is such an exciting experience to present to buyers—i believe when it sells I will go through withdrawals.”
Hubs such as London, which attract investment from around the world, are also listing properties at the equivalent of US$100 million. Alex Newell, the managing director of real estate agent Hanover Private Office, says Mayfair, Knightsbridge, Kensington, Regent’s Park and occasionally Surrey are where English residences of this value are likely to be found.
“That asking price is no longer rare,” says Newell. He’s reluctant to reveal the exact number of properties his company is currently selling at that figure, citing client confidentiality, but says, “We frequently are placing offers for more than £50 million [US$75 million]. It happens on a biweekly basis.”
Owners of these prime properties generally don’t want photos and details of their homes in the public domain, and potential purchasers are often asked for financial statements before viewing to prove they’re not time-wasters. In these instances, the properties may be on what’s dubbed “whisper listings” in the industry—those that are for sale but not officially listed.
“With Sycamore Ranch, the owner specifically said the fewer showings, the better. I receive a request every week and turn down people who don’t show US$100 million of liquid assets on hand,” says Hyland.
Off-market sales are common in the super-prime market—and at this level, confidentiality is almost as important as the deal itself, according to Michelle van Vuuren, managing director of residential development at Sotheby’s International Realty in the UK. “Both vendors and buyers will find a more tailored service at the top end of the market. At UK Sotheby’s International Realty, we replicate the Sotheby’s auction house’s ‘white glove’ sales approach—in the same way they handle each jewel or piece of art with meticulous care, we follow this ethos when dealing with the sale of a property,” she says.
Moats and turrets may be included, but the key features of a property with such a hefty price tag tend to be far more practical. “Lateral space, build quality—architects and designers such as Robert Adam, Quinlan Terry, Norman Foster, Richard Rogers and David Chipperfield,” says Newell. He cites “must-have” features at this level as a large garden in central London, total privacy or a single property of more than 30,000sqft. Penthouses and large, detachable properties in exceptional locations are also highly sought after.
“Like pieces of fine art, the value of trophy real estate is a combination of rarity, provenance, condition and amenities. With
“I RECEIVE A REQUEST EVERY WEEK AND TURN DOWN PEOPLE WHO DON’T SHOW US$100 MILLION OF LIQUID ASSETS ON HAND”
real estate, we add location,” says Conn, whose company is currently representing a property in the Palm Beach area of Florida with an asking price of US$100 million.
The global figure for such properties sold last year is estimated to be less than 20. However, the number of billionaires continues to rise worldwide—and, with it, the demand for one-of-a-kind real estate. “Ultra-high-networth individuals have been acquiring trophy real estate assets across the globe for some time and we expect that this will continue for the world’s wealthiest investors,” says Conn. “With such a limited supply of US$100 million-plus homes available on the market at any given moment and a significant number of [the world’s wealthy] focused on this emerging asset class, we expect the sales in any year to be affected more by idiosyncratic purchaser preferences than the broader market conditions.”
The next big milestone—the half-billiondollar mark—is probably just around the corner. Hollywood film producer and property developer Nile Niami is reported to be setting an asking price of US$500 million for his latest project: a 100,000sqft property in Los Angeles that includes a 5,000sqft master bedroom, a 30-car garage, a 45-seat Imax cinema and a “Monaco-style” casino. But no moat.