Luxury Insights

New “world record home sale”

London flat brings $220 million, but will it close?

Well, it’s happened again.  There’s another “world’s most expensive home” sale.  A London penthouse in the prestigious One Hyde Park complex in London’s Knightsbridge has gone under contract for a whopping  £140 million – that’s about  US $220 million.  Although the buyer hasn’t been identified, there’s buzz that the soon-to-be-owner may be one of the wealthy Nigerians or Middle Eastern prospects with pockets full of oil money who have been inquiring lately about London’s trophy properties. 

Of course, the big question is whether or not this prime six bedroom property -- which covers two floors and comes complete with SAS-trained security guards -- will close, or as the Brits say, go to completion.  Several world record sales in the last couple of years have fallen though.  Last year’s $57 million Hong Kong apartment sale made headlines with its record $9,200 square foot price, but the deal collapsed this June.  The sale of Villa Leopolda on the French Riviera for $500 million also fell apart after the buyer, Russian oligarch Mikhail Prokhorov, backed out and sued to have his $55 million deposit returned.  The court ruled against him.

Not all trophy home transactions have failed to close.  In 2008, a flat in the redeveloped 8 St. James Square complex in London’s Winchester area sold and settled for $115 million to an Indian billionaire. 

If the One Hyde Park property closes, the buyer will enjoy a wealth of amenities from bullet proof windows, a panic room, and purified air to room service from the Mandarin Oriental Hotel next door. 

The project’s four towers are scheduled for completion in December.  Flats in the 86 unit complex start as low as $31 million. 

This sale and the reported flurry of international buyer interest in London’s trophy homes comes in the wake of rising prices in central London.  Cluttons, a survey and property consulting firm, reports that prices as of second quarter of this year were up 8.7% year-over-year, but still 10.9% below the September 2007 peak.   

Jumbo foreclosures continue to rise in most markets

USA Today reported this week that “foreclosures among borrowers with prime conforming loans have shot up 425% since January 2008” and  “jumbo prime loans not eligible for purchase by Fannie or Freddie have done even worse — foreclosures on those have increased nearly 600%. Jumbo loans are typically mortgages of more than $729,750.”

The article goes on to quote RealtyTrac research indicating that that although  the U.S. may be seeing signs of a peak in foreclosures in some of the hardest-hit markets, foreclosure activity rose in 154 out of 206 largest metropolitan areas in the first half of 2010.

Metro area foreclosure filings for the first six months of 2010

Asians snapping up London properties

Kevin Brass of the International Property Journal (IPJ) reports on a recent report by Knight Frank:

Asian investors are purchasing central London property in unprecedented numbers and now account for 20 percent of all new build sales, a new report concludes...

“While the market has returned to life, after it pretty much shut-down in 2008, current international investment demand is almost totally concentrated on London and is primarily coming from Asia,” said Knight Frank residential research director Liam Bailey.

Of the investor buyers last year, 49 percent were Asian, with Chinese and Hong Kong investors represented the largest group, 11 percent, followed by 10 percent from Singapore. Despite tales of free-spending sheiks and Russian oligarchs, only 3.5 percent of the buyers last year were from the Middle East; 3.1 percent were from Russia.

Source: International Property Journal

New Trend: L.A.'s super-rich assembling multi-property 'compounds'

"A decade ago, the idea of combining properties was extremely rare," Rappaport said. "Now in the ultra high end it's the norm to strategize about amassing multiple properties."

See the full article in the LA Times.  And another in the Wall Street Journal.

Most expensive homes for sale in America

Every year in their Ultimate Homes issue our friends at Unique Homes Magazine compile a list of the most-expensive homes for sale in America. 

The Ultimate issue will be hitting the newsstands and our mailboxes soon, and it looks like the editors at Unique Homes have some interesting observations about the market, gleaned from their work on this year's edition...

A Flight to Tangibles

With our banks and financial markets often offering less certainty, lower returns, and higher perceived risk, the affluent are increasingly looking for tangible assets in which to invest their cash. 

The Wall Street Journal has an interesting story this morning that looks at the booming state of the art market for masterpieces- "The Flight to Tangibles - Not for the first time, art is benefitting from economic gloom." 

Why is it that the art market appears to be immune from the turmoil in almost every other sector of the global economy?

"It is simple," says David Nahmad, one of the world's most famous art dealers. "A lot of investors are distrustful of equities. They are terrified of cash that pays 0% at the bank and is threatened by the 'great inflation' lying one to two years ahead..."

The key word in this analysis is "masterpieces". It is not that the art market is immune to asset bubbles and over-valuation. Speculative sectors, such as the contemporary Indian art market became in the 2000s, suffered a shake-out in the wake of the credit crunch. But buyers always seem able to stump up the cash when the best works of so-called "blue-chip" artists comes on sale.

Interestingly, the same is often true for real estate.

 

Sale of 'Le Belvedere' sets new record for 2010

More on the long rumored sale of the Bel Air mansion "Le Belvedere" in today's Los Angles Times article, "Bel-Air mansion fetches highest price this year for a U.S. residence."

In a nutshell:

Although he wouldn't release the sale price, seller Mohamed Hadid confirmed that it was in excess of the previous record of more than $46.5 million set this spring in Colorado, falling between $50 million and the asking price of $72 million. In Los Angeles County, sale prices can take more than a month to appear on the public record.

Designer-developer Hadid had listed the walled and gated estate 15 months ago at $85 million.

The 48,000-square-foot estate, called Le Belvedere, was bought in the name of a limited liability company, not an individual. "Even I don't know who bought it," said Hadid, who has built Ritz-Carlton hotels, office buildings and king-size estates nationwide during his 30-year-plus career.

Bitterroot, sweet auction

Congratulations to member Cindi Hayne of Montana, who's beautiful Spring Creek Ranch listing was the Wall Street Journal's house of the day on Tuesday. 

The 181 acre property in the Bitterroot Valley was originally listed at $13 Million, but is going to auction with a reserve of $4.5 Million.  It is expected to be the most expensive Montana home sold at auction. 

Think you might have a buyer?  Registrations are due July 5th.  Commission 2.5% of high bid amount, plus $20K bonus for registering the high bidder by June 20th.

WSJ: Luxury Home Sales Bounce Back

In today's Journal:

...a study for The Wall Street Journal by MDA DataQuick, a real-estate data provider, found that in some areas of the country, sales of homes over $2 million in the first quarter were actually on par with the levels of 2005, the peak year for existing-home sales volume nationwide.

In San Francisco, 49 homes sold for $2 million or more in this year's first quarter, according to the study, compared to 47 in 2005. In Manhattan, there were 402 sales of $2 million or more in the latest quarter, compared with 311 in the first quarter of 2005, according to the appraisal firm Miller Samuel Inc. Other areas with strong rebounds included New York's Hamptons, Menlo Park, Calif., and Beverly Hills...

What's the trend in your market?

Oprah creates a 'Family Office'

Financial folks are all abuzz over the news that billionaire media mogul Oprah Winfrey has just shifted the management of her fortune to her own “Family Office.”  As you’ll remember from training, a Family Office is the on-staff professional team that works exclusively to manage a family’s fortune.  Generally one needs at least $30 million in investable assets to justify employing a Family Office.  The less affluent use bankers and brokers.  Oprah’s estimated $2.4 billion net worth more than meets the minimum requirement.

According to an article in The Wall Street Journal, Peter Adamson, a noted family office financial manager with The Bass Family and Eli Broad on his past client list, has been hired to head Oprah’s  new financial team upon the recommendation of Oprah’s law firm. 

All this illustrates the importance of networking with the partners of your city’s top law firms, accounting firms and financial consultants.  These professionals often  have the clients you’d like to serve and are in a position to refer top notch real estate professions to their very successful clients who wish to be buyers or sellers.