Tatiana Kashyrskaia
Elite residential property is not only about showing off one’s well-being. It is a part of a luxurious lifestyle. This is a relatively narrow market as few people can actually afford to spend millions of dollars on residential property. Mansions, townhouses, penthouses, castles…
The year of 2012 was famous for some big-scale purchases of residential property in the UK, Singapore, the EU and other place around the world. But this time we want to talk about the US market of elite property and its records.
Let’s have a look at what property do billionaires buy and where.
US Market: New York Rocks
Forbes has recently published the list of the 10 most expensive deals in the US housing market made in 2012. 6 of them concern New York. New York is the city with the most expensive residential property in the USA (and the entire world). Elite dwelling property in Manhattan costs dozens of millions of dollars (starting from 40 million).
Number 3 and 4 on the list - penthouses bought by Dmitry Rybolovlev, a Russian billionaire, and his daughter Ekaterina - cost $90 and $88 million correspondingly. According to Eugene Olkhovsky, ’s leading expert, the deal raised the price bar in Manhattan. After the deal (was made in February 2012) the owner of Extell Development raised the prices in May.
2 adjacent apartments at 740 Park Avenue, a luxury apartment building on Park Avenue in Manhattan, were bought for $52.5 million each by Howard Marks (the owner of Oaktree Capital Management). The 2 apartments include 8 bedrooms, 10 bathrooms, 2 libraries and 2 living rooms. This was the record-high price for this type of apartment.
And finally, another apartment at Parc Cinq, Manhattan, was sold for $54 million. It includes 3 kitchens, a gym and an audio recording studio. It apartment was bought by David Geffen, one of the three founders of DreamWorks SKG.
In November 2012, Ken Griffin, the founder of Citadel bought a penthouse in Chicago for $15 million. It contains, 4 bedrooms , 5 bathrooms and a terrace. The apartment is located on the 66th floor of Park Tower. This is the highest price on apartments in Chicago, which is 7 times as low as the one in New York.
A lot of billionaires from Middle West prefer more spacious facilities because of their relatively lower prices. In particular, John Paulson, President of Paulson & Co., bought two adjacent ranchos in Colorado. They cost $135 million but the billionaire bought them at a 65% discount.
Miami is another city that is popular with welfare people when it comes to buying luxurious residential property. The housing prices in Miami have always been lower than those in New York. High prices are formed at the expense of the sizes of the land and the buildings built there.
In March 2012, Edward Lampert, Chairman of Sears Holdings Corporation, bought a villa (1600 square meters) in Indian Creek (a wealthy village in Miami-Dade County, Florida) for $38.4 million. In August 2012, an unknown Russian billionaire bought an even bigger villa in the same village for $47 million.
Miami and the suburbs are getting more popular with the rich. Miami used to be a plain American resort. Now it has turned into a place for the nouveau riche (especially foreigners). There is no income tax in Florida. Therefore, some rich businessmen move to Florida in order to ease the tax burden. Still. The demand for luxurious residential property is higher than the supply. So the prices are growing. More people consider residential property in Miami as a bargain and a good long-term investment.
And finally, the biggest deal of 2012 is the purchase of an entire (98%) Hawaiian island by Larry Ellison, Chief Executive of Oracle Corporation, for $600 million. The island is a home for Lanai City, a resort complex. The island occupies 364 km2. Its population is 3193 people. There is a mountain 1027 meters above the sea level.
Experts say that Larry Ellison’s purchase is an investment for centuries. They compare him to Carlos Slim, the world’s richest person, who has recently bought from Caixabank a whole portfolio of housing assets (€428 million). In essence, he has bought a working business.
Obviously, fixed property is a perfect solution for long-term investment. However, the assets should be bought at reasonable prices and need wise and efficient management.
Tatiana Kashyrskaia
