PROP­ERTY: IN­STANT PARTY OP­TION

The US$100 mil­lion-plus spec home is a rel­a­tively new cat­e­gory in the lux­ury prop­erty mar­ket. What’s driv­ing that mar­ket is a com­bi­na­tion of charis­matic Los An­ge­les prop­erty devel­op­ers ea­ger to outdo each other, and a raft of spec­tac­u­larly wealthy and you

The Peak (Hong Kong) - - Contents - STORY KAVITA DASWANI

The US$100 mil­lion-plus spec home is a rel­a­tively new cat­e­gory in the lux­ury prop­erty mar­ket. What’s driv­ing that mar­ket is a com­bi­na­tion of LA prop­erty devel­op­ers ea­ger to outdo each other, and a raft of spec­tac­u­larly wealthy buy­ers

Jeff Hy­land, ar­guably one of Los An­ge­les’ most pow­er­ful real es­tate bro­kers, knew that he was in the throes of a phe­nom­e­non while at a re­cent prop­erty event in Lon­don.

“Peo­ple were say­ing to me, ‘we don’t un­der­stand why the Los An­ge­les mar­ket is so hot,’” Hy­land says. “Mi­ami has a four year sup­ply. No­body wants to build in Paris.” (New reg­u­la­tions stip­u­late that low-in­come hous­ing needs to be in­cluded in lux­ury de­vel­op­ments.) “They think Los An­ge­les is on fire. I said to them: ‘you’re ab­so­lutely right.’”

Hy­land is co-founder and pres­i­dent of Hil­ton & Hy­land, which cur­rently holds the list­ings for some of Los An­ge­les’ prici­est and most at­ten­tion-grab­bing homes; listed at be­tween US$100 mil­lion and US$250 mil­lion. These are the houses that are among the most ex­pen­sive in the US and the ones peo­ple want to talk about – even if the vast ma­jor­ity of HNWIS can only ad­mire from afar.

“You can put up two hands and count the num­ber of US$100 mil­lion es­tates that are avail­able,” Hy­land says. “Each one is so unique that no two are alike. It’s a com­pletely dif­fer­ent set of rules. If you’re in the US$30 mil­lion range and can’t do the deal, you can go around the cor­ner and buy a sim­i­lar house. When you’re talk­ing about US$100 mil­lion and up, if you’re in love with the house, you’ve got no other place to go.”

Cur­rently, the most ex­pen­sive house for sale in the US is called, fit­tingly, The Bil­lion­aire, lo­cated atop a hill­side in the rarefied set­ting of Bel Air. Priced at US$250 mil­lion was built by Bruce Makowsky, a hand­bag en­tre­pre­neur who sold his busi­ness to trad­ing com­pany Li & Fung in 2008 for US$330 mil­lion. Makowsky went on to be­came a real es­tate de­vel­oper and founded BAM Lux­ury De­vel­op­ment, who re­alised that bil­lion­aires jet­ting about in US$150 mil­lion Gulf­streams or va­ca­tioned on $200 mil­lion yachts were still rel­e­gated to US$40 mil­lion man­sions.

Why, he mooted, isn’t there some­thing just for them? So ear­lier this year, he un­veiled the 38,000-square-foot mega­man­sion that is maore than just a house: it is ac­com­pa­nied by an en­tire life­style – the kind that bil­lion­aires like to live.

In­cluded in the sale price are 12 lux­ury cars and mo­tor­bikes (worth US$30 mil­lion), 150 art in­stal­la­tions and 7,000 movies loaded in the the­atre where the seats are cov­ered in Her­mès leather. You can sign the pa­pers, move in, and throw a din­ner party that night; the din­ing ta­ble comes set with Roberto Cavalli din­ner­ware worth US$3,500 per per­son. And you don’t even have to worry about bring­ing over the but­ler – The Bil­lion­aire comes with a staff of seven, with salaries cov­ered for two years from the pur­chase date. Makowsky and his team are head­quar­tered in a house next door (which used to be­long to El­iz­a­beth Tay­lor, of course), so if some­thing isn’t quite right, he’ll dis­patch an ex­pert over in a golf cart, post-haste.

The fas­ci­na­tion around the prop­erty (as of this writ­ing it’s still on the mar­ket) will be re­peated when, next year, a house worth twice that much comes on the mar­ket in the same neigh­bour­hood. That prop­erty, called sim­ply The One, is presently un­der con­struc­tion by Nile Ni­ami, a Hol­ly­wood pro­ducer of straight-to-dvd films from the 1990s. Ni­ami may not have won Os­cars, but he has found a call­ing – and for­tune – in the al­lur­ing trade of real es­tate.

The half-bil­lion dol­lar house, pro­jected to be the costli­est in the world, is next door to homes oc­cu­pied by Jen­nifer Anis­ton and Elon Musk. It’s on four acres of prime res­i­den­tial prop­erty. The house it­self is about 100,000 sq ft,

(the mas­ter bed­room alone will be 5,500 sq ft – dou­ble the size of the av­er­age US home). Tan­ta­lis­ing de­tails con­tinue to emerge about the prop­erty, which is ex­pected to be fin­ished next sum­mer: a garage will hold 30 cars. An Imax the­atre will seat 45 of your clos­est friends, who can also stay over in three smaller homes on the spread. One swim­ming pool not enough? The house will have four, in­clud­ing in­fin­ity pools. There’ll be a night­club and casino too: it’s not so much a house as an en­tire per­sonal re­sort.

“We got lucky,” says Ni­ami. “Ev­ery­thing changed with re­gards to the zon­ing and per­mit process in that lo­ca­tion. There is no land avail­able any­where [in Bel Air] like that. You’ll never be able to build [this house] again. Any­body can repli­cate a US$300 mil­lion or US$500 mil­lion yacht. Not this. It’s like the Mona Lisa. No mat­ter how much money you have, you can ever have this house again.”

With the rise of this new, in­cred­i­bly priced seg­ment of prop­er­ties, there ap­pears to be a sense of who is out­do­ing whom in the Los An­ge­les mar­ket. Makowsky, prior to build­ing The Bil­lion­aire, had pre­vi­ously sold a US$70 mil­lion house to the cre­ator of Minecraft, Markus Persson, who beat out a very en­thu­si­as­tic Jay Z and Bey­oncé for the 23,000-square-foot prop­erty.

In 2014, that sale made big news in the lo­cal real es­tate in­dus­try. But that was then.

Last year, the owner of a

YOU CAN SIGN THE PA­PERS, MOVE IN, AND THROW A DIN­NER PARTY THAT NIGHT. THE DIN­ING TA­BLE COMES SET WITH ROBERTO CAVALLI DIN­NER­WARE WORTH US$3,500 PER PER­SON

pri­vate eq­uity firm bought Hugh Hefner’s leg­endary Play­boy Man­sion for US$105 mil­lion. A US$195 mil­lion home once owned by pub­lish­ing ti­tan Wil­liam Ran­dolph Hearst came on the mar­ket late last year. On the heels of that list­ing, a French chateau-styled home called The Manor, once the abode of mega-tv pro­ducer Aaron Spell­ing and his wife Candy, went on the mar­ket for US$200 mil­lion.

By com­par­i­son, Ni­ami’s other house – a sexy Bev­erly Hills spread he’s call­ing Opus –is a rel­a­tive steal at US$100 mil­lion, es­pe­cially given that it comes with a gold Lam­borgh­ini, a Rolls-royce, a pair of Damien Hirst paint­ings and a por­trait of Muham­mad Ali by Andy Warhol. Ide­ally, the prospec­tive buyer will be a fan of both. The pro­mo­tional video for Opus is heav­ily pro­duced and cer­tainly bears some of the marks of a Hol­ly­wood back­ground. Scant­ily clad women are seen ca­vort­ing around the Opus at night, of­ten in slow mo­tion.

De­spite the hefty price tag, Ni­ami says many well-heeled po­ten­tial buy­ers have dropped in to visit. These aren’t just gawk­ers ei­ther: you have to be pre-qual­i­fied to even get in the door. “We’re hav­ing so much in­ter­est in this house,” says Ni­ami. “There are maybe five show­ings per week from peo­ple who are qual­i­fied and can af­ford to buy it. They’re from all over the world – Amer­i­cans, a lot of Saudis, Rus­sians, a few from Hong Kong.”

One thing he can say con­clu­sively: the ul­ti­mate buyer will be young – think be­tween 30 and 50 years old. “We’re not get­ting

the 80-year-old guys,” says Ni­ami. “These are new mil­len­nium buy­ers. They’re un­der 50, and sin­gle. That’s our de­mo­graphic. They’ve made their money and they want to live the Cal­i­for­nia dream.”

The Cal­i­for­nia dream is, ul­ti­mately, what these high­net-worth buy­ers are buy­ing: the gilded, al­lur­ing vi­sion of a quin­tes­sen­tial Hol­ly­wood life. “Look at that view,” says Makowsky, sit­ting for a mo­ment on one of the cus­tom-made loungers pool­side at The Bil­lion­aire, and gaz­ing out at the per­fectly pris­tine morn­ing. Views from his house ex­tend to the city, the beach and the moun­tains. At the touch of a but­ton, the walls vir­tu­ally dis­ap­pear, the mu­sic comes on; a liv­er­ied waiter can be sum­moned to un­cork one of the thou­sands of bot­tles of wine in the wine cel­lar. “I mean, who wouldn’t want to wake up to this? Who wouldn’t want to live like this?”

Bro­kers say they are see­ing an en­cour­ag­ing in­ter­est in these ul­tra-high-priced homes from Chi­nese in­vestors, who are al­ready putting hun­dreds of mil­lions of dol­lars into the Cal­i­for­nian econ­omy by way of other hold­ings. So much so that Chad Rof­fers, chair­man of the New York-based Concierge Auc­tions, which spe­cialises in high-priced prop­er­ties world­wide, is plan­ning a six-week road­show tak­ing in Guangzhou, Shang­hai, Bei­jing and Hong Kong to “show 15 iconic prop­er­ties to a hand-cu­rated list of Chi­nese.

“THESE ARE NEW MIL­LEN­NIUM BUY­ERS. THEY’RE AROUND 50, AND SIN­GLE. THAT’S OUR DE­MO­GRAPHIC. THEY’VE MADE THEIR MONEY AND THEY WANT TO LIVE THE CAL­I­FOR­NIA DREAM”

– Nile Ni­ami, prop­erty de­vel­oper

“They are the newly-minted wealthy, or they have wealth that’s built up over time, and now they want to spend it or di­ver­sify,” says Rof­fers.

The peo­ple he typ­i­cally sells to have the power to buy prop­er­ties sight un­seen, us­ing lit­tle more than VR tech­nol­ogy. “That US$100 mil­lion-plus home, the home for the bil­lion­aire, that’s a new cat­e­gory,” Rof­fers says. “There are fewer prod­ucts there. And if some­one can buy a US$50 mil­lion or US$100 mil­lion house, they will build ex­actly what they want to build. But there is some­thing that is very ap­peal­ing about the spec house, one that is ab­so­lutely per­fect and is move-in ready.”

It might be easy to dis­miss some of the talk around this seg­ment. But in their 2017 Lux­ury Prop­erty Re­port, Christie’s noted that there were ten such prop­er­ties sold in 2016 for a to­tal value of US$1.32 bil­lion. This was up from five such homes sold in 2015. Cur­rently, 33 lux­ury prop­er­ties around the $100 mil­lion mark are listed for sale, up from 19 two years ago.

Rof­fers reck­ons that all the ac­cou­trements that come with this new clutch of nine-fig­ure

“I MEAN, WHO WOULDN’T WANT TO WAKE UP TO THIS? WHO WOULDN’T WANT TO LIVE LIKE THIS?”

– Bruce Makowsky, BAM Lux­ury De­vel­op­ment

ABOVE The­bil­lion­aire in Bel Air is cur­rently be­ing listed for US$250 mil­lion. OP­PO­SITE The­bil­lion­aire comes with 130 works of art.

THIS SPREAD The Play­boy Man­sion was sold for US$105 mil­lion in 2016.

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