“City of Angels”
One area heating up after a slow period is the very high end of global real estate deals, says Jay Belson, CEO of Estate 1 in Beverly Hills, California, who develops luxury homes in the Beverly Hills, Bel Air and Holmby Hills areas of Los Angeles.
Jay Belson estimates that his average deal provides a $10 million profit. They buy a property for $10 million, largely based on location and view, build a home on it for $10 million, and then sell it for $30 million.
That seems expensive but not in the context of global luxury real estate, Belson says. Prices in his area are now about $2,500 a square foot, but compared to New York, Shanghai and other big cities, Los Angeles is a bargain. “They are used to seeing much higher prices elsewhere. To them, it’s a steal” he says.
“The category we buy is A+location, A+lot, and A+view. What we are creating is a state-of-the-art property for the ultra wealthy. Our client is a global billionaire who is looking to park cash here. They will come in once or twice a year”
In big cities, buyers are accustomed to townhomes, condos penthouses, and brownstones. In Los Angeles, they seek a couple of acres of real land with a view of the ocean. “We don’t get a lot of volume, maybe one or two a year. And it takes a lot of attention. But if you pay attention, you will be the one doing the sales. When the buyer comes to town, they come to look at your project,” he says.
It’s a home, but largely an investment, and a conservative one at that, he explains. “It’s a safer investment than some of the more volatile currencies in the world” There’s always some hot spots for these buyers somewhere in the world, and “when that happens, all the global-high-end investors buy there. New York was a hot spot, now it’s Los Angeles, particularly for Asian money”
It is expected that over the next 3 to 5 years it will continue to be a great time for luxury development in Los Angeles.
I have been a realtor and real estate land specialist for more than 15 years creating opportunities for land-owners and Buyers brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales (at) westsideland (dot) com and information can be obtained from westsideland.com