London Homes Get Super-Sized
Game Change
Nick and Christian Candy, the 30-something property developer brothers behind One Hyde Park, London’s priciest apartment complex, snapped up a 10,000-square-foot home in Chelsea in September for about $121 million. The house was sold with building permits in place for it to be extended to 30,000 square feet; work is expected to start next year and once complete it could be listed in excess of $242 million.
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Property developers Christian and Nick Candy
Next Wave
British developers appear to be vying to produce London’s largest house. In October, estate agents Savills launched Cornwall Terrace, a 21,346-square-foot mansion close to Regent’s Park onto the market at about $160 million. Another pair of property siblings, the Reuben brothers, have unveiled plans to redevelop the In and Out Club on Piccadilly, a former gentleman’s club. It is slated to be remade as a 53,426-square-foot home with a provisional price tag of $322 million.
Real-Estate Moves
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Luis Travieso
In August, a 30,000-square-foot, 10-bedroom spec home in Indian Creek Village, Fla., sold for $47 million.
Outlook
These homes will be a litmus test of the passion the global super rich have for supersize homes in prime central London. The price of properties costing more than £10 million (about $16 million) has escalated 50% since 2007, far outstripping the mainstream market. Another boost: After months of speculation, the British government ruled out plans for a so-called “mansion tax”, though there will be an annual levy on properties worth £2 million or more purchased by offshore companies. But while the prime market is strong, appetite at the very top end may be slowing: According to Savills, there were 22 sales of homes priced £20 million and above in the first 11 months of this year, compared with 35 such sales during the same period last year. The 27,000 square-foot Heath Hall, on the market for more than $160 million, has lingered on the shelf since early 2011.
—Ruth Bloomfield
Mark Zuckerberg‘s Mortgage
Game Change
Facebook FB -1.76% co-founder Mark Zuckerberg reportedly refinanced the $6 million mortgage on his Palo Alto home last spring, getting a 30-year adjustable-rate mortgage starting at 1.05%. San Francisco real-estate agent Rick Teed isn’t surprised by the low rate; the average rate on a one-year adjustable-rate mortgage was 2.53% for the week ending Dec. 13, according to mortgage-finance company Freddie Mac FMCC -2.88% .
Mark Zuckerberg’s refi made headlines this year.
Next Wave
“Everybody wants the A-paper clients,” says Mr. Teed of Teed Haze at Sotheby’s International Realty, referring to the credit quality of the clients. “If you’ve got $50 million or more, the banks want the banking relationship, the loan is secondary.” Most high-net-worth individuals do get mortgages up to the amount of interest that they can deduct, according to Jim Wilson, senior vice president of wealth management atMechanics Bank MCHB +13.20% in Walnut Creek, Calif. Mr. Wilson sees his clients trending toward the 30-year fixed-rate mortgage to lock in the historically low rates and says requests for refinancing “are up across the board” in the past six months. The 30-year fixed-rate mortgage averaged 3.32% for the week ending Dec. 13, according to Freddie Mac. (See Jumbo Jungle, M6, for more on the rise of jumbo mortgages this year.)
Outlook
“We are still at very low levels (in terms of interest rates), and I don’t see a lot of room to move downward,” says Mr. Wilson, noting that people regularly ask him at what point rates will go up and he says “eventually, but not in the near future.” Lenders gave out $148 billion in jumbo mortgages in the first nine months of 2012, up 23.3% from the same period in 2011, according to Inside Mortgage Finance, a trade publication.
—Sarah Tilton
One-Bedroom Sells For $20 Million in Los Angeles
Game Change
In November, the 10,000-square-foot home of late Hollywood producer Richard Zanuck sold for $20.1 million—one of the biggest sales ever in Beverly Park, a gated community in Beverly Hills. The property has a tennis court, a movie theater, a gym, two guest houses and one very unusual feature—only one bedroom in the main house.
This home sold for $20.1 million—one of the biggest sales ever in Beverly Park, a gated community in Beverly Hills.
Next Wave
Though a 10,000-square-foot home with one bedroom is an anomaly, brokers say the Los Angeles market has been robust for luxury one- and two-bedroom homes. There are now six one-bedroom homes listed for more than $1 million in the Los Angeles metro area on Zillow, an online real-estate tracker, including a 1,237-square-foot one-bedroom penthouse in a high-rise on the edge of Beverly Hills that is on the market for $2.175 million. There are five two-bedroom homes currently listed on Zillow for more than $5 million in the area.
Outlook
Jeffrey Hyland, who is president of brokerage Hilton & Hyland in Beverly Hills, says his firm has seen business increase by 60% this year, from $1 billion in 2011 to $1.7 billion in 2012. “There’s a real scarcity of inventory in L.A. right now, with a tremendous number of buyers,” he says.
He adds that smaller homes have sold well in part because many of his firm’s clients would rather buy a turnkey house than build from scratch. “Who’s got three years to spend on building? There are a lot of people who would rather give that time to their own business than to a house.”
Still, there are exceptions: Josh Altman of Hilton & Hyland, the agent who represented the buyer in the Zanuck estate deal, says the new owner will tear down the property, building a new home with eight bedrooms.
—Lauren Schuker Blum
Larry Ellison Buys Lanai
Game Change
In June, Oracle ORCL -0.47% co-founder Larry Ellison purchased 98% of the Hawaiian island of Lanai, valued at more than $500 million, for an undisclosed price. The sale included the two Four Seasons resorts on the island, two golf courses and more than 88,000 acres of land.
Next Wave
Locals will be closely watching Mr. Ellison’s plans—particularly because his moves will significantly impact the approximately 3,200 residents who live on the land he now owns. Some residents told local media outlets that they were relieved when Mr. Ellison bought the property; its former owner, businessman David Murdock, had seen major losses on Lanai’s operations and proposed creating a giant wind farm, an idea that deeply divided the island’s residents. Documents related to the sale filed with Hawaii’s Public Utilities Commission noted that Mr. Ellison can make “significant investments” in the island that will “directly benefit the people of Lanai.” Mr. Ellison has yet to speak with Lanai officials or residents directly, leading some locals to worry about what Mr. Ellison plans to do.
Outlook
There’s talk of Mr. Ellison making some “big natural energy plays,” says Matt Beall, a real-estate broker in Hawaii. Mr. Ellison did not respond to requests for comment. He told CNBC in October that he wants to turn the island into a “little laboratory” for sustainable living.
—Alyssa Abkowitz
$59-Million Sale Fuels Bubble Fears in Hong Kong
Game Change
Hong Kong’s property market vaulted to new heights in 2012, spurred in part by cash pumped into the city from buyers from mainland China, which has recently instituted measures to cool the housing market there. When a 6,683-square-foot apartment on the ninth floor of a Frank Gehry-designed Opus building sold for $58.7 million in October—a record for the city—it fanned fears of a property bubble and left observers wondering whether the market would be able to sustain its heady growth. The government took action to curb the frenzy 10 days later when it slapped a 15% tax on any nonlocal buyers; previously there was no tax on non-locals.
Next Wave
Despite the new government tax, agents say demand for superluxury apartments is still strong, and developers haven’t yielded on asking prices. Property prices have jumped more than 20% over the course of this year, to more than double what they were in late 2008. One 5,500-square-foot, three-bedroom house in the city’s tony Mid-Levels neighborhood is asking $77.4 million. Another with a private elevator and garden located on the coast of Deep Water Bay on the island’s south side is listed for $80 million.
Outlook
In a space-starved city with limited top-tier luxury options, prices are expected to hold steady for superluxury residences (those over 6,000 square feet), though brokers expect a slight dip in the broader luxury market: Real-estate firm Colliers projects prices to drop about 10%. Meanwhile, the cost of top-tier luxury rentals—which have already gone up some 15% this year compared with 2011—are expected to rise still further next year for superluxury properties, though rentals in the broader luxury property market may dip slightly, according to Colliers.
—Te-Ping Chen
Launching the Trophy Condo Craze
Game Change
In January, former Citigroup C +1.74% chairman Sandy Weill sold his 6,744-square-foot penthouse at Manhattan’s 15 Central Park West for $88 million, setting a new milestone for the most expensive apartment ever sold in New York City—66% above the previous record sale, set in 2006. The buyer was a trust linked to Ekaterina Rybolovlev, the 23-year-old daughter of Russian fertilizer billionaire Dmitry Rybolovlev. The cost breaks down to more than $13,000 per square foot, about 10 times the Manhattan condominium average of $1,300 per square foot.
Next Wave
In the wake of Mr. Weill’s sale, prices for top-tier Manhattan condos have continued to climb, fueled in part by overseas buyers looking for places to park their cash and Americans looking for trophy properties. In June, casino mogul Steve Wynn paid $70 million for a 10,882-square-foot, 14-room condo at 50 Central Park South, above the Ritz-Carlton hotel—the second-most expensive price paid for a Manhattan apartment.
Outlook
Currently in contract for more than $90 million each are two duplex condos in One57, a high-rise still under construction across the street from Carnegie Hall. One of the apartments, spanning the 89th and 90th floors, measures nearly 10,923 square feet. The other, known as the Winter Garden, spans the 75th and 76th floors with 13,554 square feet. These sales are expected to close when the building is completed in 2013; it is expected to be the tallest residential building in the city, at 90 stories. Brokers say momentum at the high-end seems to be continuing, especially among wealthy foreign buyers, but some say that pricing at the very top end has gotten overeager, particularly as more new ultraluxury buildings come on the scene, adding to the competition. Through average asking prices per square foot at 15 Central Park West has continued to rise, sales volume has slowed in recent months.
—Candace Jackson
Chicago on the Rise
Game Change
Chicago traditionally hasn’t been a major luxury market, with few condos priced above $7 million. But the city hit a record sales price for a condo in November when a Park Tower penthouse owned by hedge-fund manager Richard Cooper sold for $15 million to another hedge-fund executive, Citadel founder Kenneth Griffin, according to public records. Mr. Cooper had bought the 7,900-square-foot home on the 66th floor as raw space in 2000 for $3.3 million. Mr. Griffin, who owns the floor beneath the penthouse, plans to combine the units into a two-floor penthouse, according to a source familiar with the sale.
Next wave
The condo sale has spurred luxury real-estate agents to rethink pricing in a market with very little high-end inventory. Chezi Rafaeli, who brokered the record sale, has a $32 million listing for a five-bedroom, nine-bathroom penthouse in Chicago’s Trump Tower, currently the most expensive condo listed in the city. Mr. Rafaeli says offers have been made, but none that the seller has seriously considered. The 12,000-square-foot triplex of actor Vince Vaughn in the Palmolive building, which previously reigned as the condo-sales record holder when Mr. Vaughn bought the property for $12 million in 2006, is back on the market for $16.8 million.
Outlook
With a shortage of inventory and the demand for high-end property increasing—particularly from foreign buyers who want to rent out condos at top dollar—brokers expect prices to rise 20% in the coming year. “The market is going to become extremely tight,” Mr. Rafaeli says. “It’s going to be very much like the mid-2000s.”
—Alyssa Abkowitz
South Florida Takes Off
Game Change
In August, a 30,000-square-foot, 10-bedroom spec home in Indian Creek Village, Fla., a wealthy private-island community across a bridge from Miami Beach, sold for $47 million, the highest price ever paid for a single-family home in Miami-Dade County. The buyer was a Russian who bought the home in the name of a U.S.-based limited-liability company, according to people familiar with the deal.
Next Wave
In 2012 the high-end of South Florida’s real estate market soared, with a number of record-breaking sales after years in the doldrums following the housing bust and recession. Spurred largely by wealthy foreign buyers from Eastern Europe and South America, prices for prime real estate at the top end of the market surpassed previous boom-era highs. The previous single-family record was set in March, when another Indian Creek property, a 17,000-square-foot Italian-style home on 2.7 acres, sold for $40 million to hedge-fund manager Edward S. Lampert, who is chairman of Sears Holdings SHLD -0.32% . In the wake of the eye-popping Indian Creek sales, other homeowners began raising their prices as well. Leroy Schecter, chairman of Marino/Ware Industries, put his 21,746-square-foot Indian Creek home (located next door to Mr. Lampert’s) back on the market for $45 million—up from $35 million when he first listed it in 2007.
Outlook
Some brokers have increased asking prices in the area to keep up with blockbuster sales nearby. Others say they are nervous that the pace of ultra high-end sales might be unsustainable in the long term.
—Candace Jackson
John Paulson Bets Big on Aspen
Game Change
In June, hedge-fund manager John Paulson bought a 90-acre Aspen, Colo., ranch and an adjoining property from Prince Bandar bin Sultan for a total of $49 million—one of the priciest home sales in the area, ever.
Hedge-fund manager John Paulson bought this 90-acre Aspen ranch and an adjoining property for a total of $49 million.
Next Wave
After several down years during the recession, the Aspen home market rebounded last year. Prices went up for the first time this year, by about 5%, but are still about 20% down from their peak in 2008, says broker Andrew Ernemann, who publishes reports on the market and is the president of the Aspen Board of Realtors. Last year, 15 homes sold for more than $10 million; so far this year, 11 homes have sold in that range, but there are several sales on pricey homes set to close before the end of the year, bringing this year’s tally in line with last year’s.
Since Mr. Paulson’s purchase, Aspen has had only one sale over $20 million, but local brokers say the deal has persuaded wealthy buyers across the country to take a closer look at the ski town. “When someone like John Paulson spends that kind of money on a home here, it definitely encourages other people to buy,” says Aspen broker Maureen Stapleton of Sotheby’s International Realty. Ms. Stapleton says she currently has an 11,454-square-foot, six-bedroom home in downtown Aspen in contract that she expects to close for around its asking price of $23.5 million.
Outlook
Going forward, Mr. Ernemann expects the market to continue to climb back toward its peak, albeit slowly. “It seems that Aspen’s stock has been on the rise over the past few years, with the local economy continuing to improve,” he says. “I think we’ll see seller confidence start to return to the market, although I think all of this will be at a very measured pace. The market will continue the upward trajectory set in 2012, but it’s a slow, stable trajectory.”
—Lauren Schuker Blum
San Francisco Booms
Game Change
Earlier this month, a seven-bedroom, 7½-bath Italianate mansion on Broadway in San Francisco—often called Billionaire’s Row—sold for $28.3 million. The sale was the third-most-expensive single-family listing in the city’s history.
Next wave
Wealthy tech executives—some choosing the city over traditional Silicon Valley enclaves like Palo Alto and Atherton—helped spur a wave of luxury buying in San Francisco this year, with the IPOs of Facebook and Zynga ZNGA -1.16% fueling the spending spree. (Zynga’s founder Mark Pincus, for example, bought a $16 million home in Pacific Heights in August.) In 2012, there were 47 transactions over $5 million, compared with 27 in 2011, says Patrick Barber, president of Pacific Union, the exclusive affiliate of Christie’s International Real Estate in San Francisco. The stretch of Broadway Street along Pacific and Presidio Heights may have seen an even higher-priced transaction this fall: A neoclassical villa went on the market for $38.5 million, the priciest listing in the city. The property currently is in escrow. Sources familiar with the trade say it was a private transaction with an undisclosed sales price.
Outlook
Currently on the market are three parcels in Presidio Heights for $25 million; there’s also an eight-bedroom, six-bathroom home listed for $19.5 million near the Presidio. Brokers say rising prices are leading to more private transactions, where the property isn’t publicly listed for sale, because keeping it off the multiple-listing service could help the seller get a higher offer. Of course, San Francisco property has been susceptible to bubbles in the past, and some real-estate agents already are issuing warning calls of a real-estate bubble 2.0.
—Alyssa Abkowitz
