Mansion GlobalBECKIE STRUM
Aug. 4, 2017
Los Angeles’s luxury market is outperforming other prime property hubs, motivating some sellers to raise prices
Developer and high-end clothing designer Albert Elkouby re-listed his Beverly Hills megamansion this week and raised the price by $8 million to an eye-watering $80 million.
The 11-bedroom Baroque-style chateau with wet and dry saunas, a 40-car motor court and a three-bedroom guesthouse was listed last year for $72 million, according to listing records.
It’s the second time in as many weeks that a mega-million-dollar listing, and one of the most expensive in the Los Angeles market, got a price bump, as opposed to the much more common price cut. It’s a sign that the area’s thriving luxury market has made sellers (and their sales agents) confident, and in some cases overly so.
After all, data shows sellers are still dishing out discounts far more often than they’re raking in premiums on primo property.
Last week, Rockstar energy drink founder Russ Weiner also increased the price of his Beverly Hills spread by a similar percentage, raising the price on his $45 million compound to $49 million. The Agency, whose founder Mauricio Umansky is listing the home, did not return a request for comment about the reason for the price bump.
Sam Real, a broker with Nest Seekers International and the listing agent on Mr. Elkouby’s $80 million chateau, said the strong luxury market in Los Angeles helped motivate their decision to raise the price.
“The super high-end market here is very, very strong,” Mr. Real said. The seller has also put more work into the home since it was last listed in 2016, including pricey landscaping and finishing the master bedroom. The owner has spent north of $5 million alone on custom millwork throughout the home, Mr. Real said.
The broker proffered another reason why developers, brokers and sellers are getting bold this time of year in particular. Los Angeles sees an influx of ultra-wealthy Middle Easterners, specifically Saudis, Emiratis and other Gulf Arabs, who escape scorching temperatures back home and often nab mansions in Los Angeles while visiting. The season spans “from the beginning of August to the end of September,” he said.
These days, the City of Angels has one of the strongest and most expensive luxury markets of any major metropolitan area in the United States.
The city has even recorded bidding wars among mega-mansions and high-end condos this year—a seller’s dream that more often affects affordable sectors where there are more buyers and tighter inventory.
Around 16% of luxury, single-family home buyers paid above asking price in the second quarter of this year in Los Angeles, an indication that they had to duke it out with a competing buyer, according to data from real estate appraisal firm Miller Samuel. In the luxury condo market, nearly 18% of buyers paid above ask, the firm said.
Recently, wealthy Angelenos have ceded less on price than their fellow millionaires in New York City and Miami. Sellers chopped an average 10.4% off the price of their luxury homes in Manhattan; and 14.5% off mansions in Miami Beach. By contrast the average listing discount declined to 6.8% last quarter, according to Miller Samuel data.
The luxury market, defined as the top 10% of sales, has also seen expanding activity. There were 97 closings between April and June of this year, an increase of 54% from the first three months of the year and a 26% increase from the year prior, according to the latest market by Miller Samuel for real estate agency Douglas Elliman.
Still price reductions, rather than price increases, typify luxury sales in Los Angeles, said Jonathan Miller, chief executive at Miller Samuel.
“While the luxury market is clearly better than it was a year ago, it is only because sellers got more realistic,” Mr. Miller said. “There is no market evidence that super luxury properties that haven’t sold in a long time are more likely to sell when the price is increased—it simply means the seller is more detached from actual conditions.”
Case in point: the lavish, 17-bedroom Maison Du Soleil belonging to BCBG founder Max Azria. The fashion designer’s estate in Holmby Hills sat on the market for most of 2015 priced at $85 million but didn’t sell. He listed it again a year later with a price increase for $88 million.
One of the listing agents, Alla Furman of Hilton & Hyland, told The Wall Street Journal rising luxury sales prices warranted the price increase. But now it’s been over a year since the price bump, and the home has yet to find a buyer.
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