As the luxury real estate market cycles down, now is the time billionaires should catch the proverbial “falling knife,” Bloomberg reports.
“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.”
In May we noted how demand for the nation’s most expensive properties collapsed in 1Q19. The average sale price for a luxury home corrected the most in Boston (-22.4%), Newport Beach, California (-21.8%), and Miami (-19.3%), YoY in 1Q19.
Taking a closer look at the Los Angeles market’s new dynamic: foreign buyers aren’t showing up like they used to.
Ali said Niami held an invitation-only open house for a six-bedroom mansion on Londonderry Place. The event cost $100,000, included exotic pool dancers, open bars, fancy food, and even a camel show. The asking price of the mansion has plunged 36% to $34.95 million – with minimal interest as foreign buyer demand has evaporated. The developer’s portfolio includes a $44 million estate, which the local media said was sold to a Saudi client.
“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.”
Earlier this month, “Spelling Manor” in Holmby Hills sold for $120 million, a 40% discount versus the opening asking price of $200 million. The 56,500-square-foot mansion has 14 bedrooms and 27 baths, but it’d been on the market for three years and the seller panic sold at a massive discount after realizing demand was lackluster.
Bloomberg says, moving ahead, luxury real estate markets across the US should expect a decline in “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.”
Drew Gitlin of Berkshire Hathaway Home Services, one of the brokers with the listing for the Chartwell, a French chateau-style estate in Bel Air, slashed the listing by 20%, now $195 million, down from $245 million.
Meridith Baer, whose company stages mansions across the US, says the ultra-rich want 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,” Baer said.
Ali has listed a $17.8 million home in Beverly Hills for broker Paul Wylie of Lamerica Homes.
Trending on Instagram as “Warhol 90210,” the home comes with Andy Warhol paintings from the Revolver Gallery in Los Angeles, and his 1974 Rolls Royce Silver Shadow.
Throwing lavish parties, stocking mansions with turnkey art collections, and or even having Bloomberg write a piece suggesting that billionaires should catch the proverbial “falling knife” in mansions is more evidence that the luxury real estate market is cycling down with no bottom in sight.