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The Super Rich Are Buying $100 Million Homes. For Some, One Isn't Enough.

The Wall Street Journal. logo The Wall Street Journal. 10/31/2019 Candace Taylor
a large stone building with a pool © Douglas Elliman Real Estate

Two decades ago, a $100 million home sale was almost unthinkable. Times have changed: Four homes in the U.S. have closed at or above $100 million this year alone, with at least one more expected to trade by the end of 2019.

The properties that have sold for nine-figure price tags—and the many more that have sought the landmark sum—paint a telling portrait of the uber-wealthy in the early 21st century, a time period when massive wealth has come to be increasingly concentrated in the hands of a few. What has emerged are a small number of staggeringly rich buyers who will pay once-unimaginable sums for the home of their choice.

“It’s gotten so extreme, the wealth of people,” said real-estate agent Jeff Hyland of Hilton & Hyland, one of the listing agents of Casa Encantada, a roughly 40,000-square-foot Bel-Air mansion asking $225 million. “People are worth $50 billion—what do you do with it?”

The population of billionaires across the globe hit a record of 2,754 in 2017, with their wealth surging 24% from the prior year, according to a report by data provider Wealth-X. There were 2,170 billionaires world-wide in 2012.

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Accompanying this surge are home sales at never-before-seen prices. Since the first nine-figure sales took place in 2007, roughly 20 homes and ranches across the country have sold for $100 million or more. At least five of those purchasers made their fortunes in tech, including Facebook’s Mark Zuckerberg, who paid about $130 million for roughly 700 beachfront acres in Hawaii with plans to build a home for his family, according to people with knowledge of the deal. Roughly seven of the homes were purchased by buyers in finance, mostly hedge funds.

For some of these elite buyers, one $100 million property isn’t enough. In 2012 Ken Griffin, founder of the hedge-fund firm Citadel, paid just under $130 million for an oceanfront compound in Palm Beach, Fla., where he plans to build two homes: one for himself and one for his mother, according to a person with knowledge of his plans. Then earlier this year, he spent about $238 million for a new Manhattan penthouse apartment overlooking Central Park.

Michael Smith, who made his fortune in liquefied natural gas, has purchased two beach homes on opposite coasts for $110 million each: one on coveted Carbon Beach in Malibu, Calif., and another in the Hamptons, the pricey playground where New York City’s elite spend their summers.

Stanley Kroenke, a real-estate developer who is married to a Walmart heiress, paid around $100 million for the Broken O Ranch in Montana in 2012, according to people with knowledge of the transaction. Two years later he paid over $500 million for the massive Waggoner Ranch in Texas, according to people familiar with the deal. Mr. Kroenke has renovated homes on both of the ranches.

Mr. Kroenke is an exception: Almost all nine-figure sales have occurred on the coasts, particularly in California and in New York. This comes at a time when billionaires are increasingly concentrated in a few locations world-wide, with 15 cities accounting for almost 30% of the global billionaire population, according to Wealth X.

Some of the owners didn’t respond to requests for comment; some declined to comment.

New York—which has seen two nine-figure sales to date—has the highest population of billionaires of any city in the world, the report found. The Los Angeles area, which moved up to seventh place from 11th place the previous year, has seen two nine-figure sales this year, with more uber-wealthy purchasers circling, real-estate agents said.

International buyers, particularly those from the Middle East, are more interested in Los Angeles than in the past, said Mr. Hyland, who predicted that the city will soon see its first $200 million sale. Another factor is the growing presence of technology companies in the area, which has led more tech entrepreneurs to purchase homes even if they don’t live there full time, Mr. Hyland said.

Pamela Liebman, CEO of the Corcoran Group, said uber-wealthy home buyers tend to congregate not just in the same cities, but in the same buildings or neighborhoods, in part as a way to ensure the value of their investment. “Even when you’re really wealthy, you don’t want to make a mistake,” she said.

All three of Los Angeles’s nine-figure sales—including the $100 million sale of the famed Playboy Mansion in 2016—happened in the Holmby Hills neighborhood, rather than in the better-known areas of Beverly Hills or Bel-Air. Local agents said that is because Holmby Hills, despite its name, tends to have larger parcels of flat, buildable land than other parts of the hilly city.

In New York City, the $100 million sales have only happened in super-tall, new construction towers in Midtown Manhattan on what is aptly known as “Billionaires’ Row.” In the Hamptons, nine-figure sales have occurred only on the beachfront in the sought-after village of East Hampton.

New York and the Hamptons have seen fewer big-ticket deals in recent years, as the area’s high-end real-estate market has suffered a slowdown. In Florida, the exclusive barrier island of Palm Beach has seen the state’s only sales topping nine figures.

Every home that trades for $100 million or more spawns a bevy of followers who try but fail to achieve a sale at that price point, said New York real estate appraiser Jonathan Miller. The frenzy of publicity that accompanies each $100 million sale prompts sellers to put nine-figure price tags on their properties—whether they are warranted or not, he said.

Since nine-figure listings first popped up in the mid-2000s, roughly 70 properties have been listed for $100 million or more, according to a Wall Street Journal analysis, plus a number of new development condos available at that price point but not publicly listed. Moreover, many of the properties that fetched more than $100 million were never listed at all, but traded quietly in off-market deals.

“What everybody got wrong about this market is it was never as wide and deep as the press releases said,” said Mr. Miller, noting that developers across the country overbuilt super high-end homes to try to lure billionaire buyers. “It’s not as big a market as expectations suggested.”

And while putting a sky-high price tag on a home attracts attention, it can often be a mistake. “If things are overpriced, properties sit and they don’t sell,” said Los Angeles real-estate agent Kurt Rappaport. “The longer they’re on the market, the lower price is going to be.”

A number of these properties have since been taken off the market. In 2012 Steven Klar, the owner of a residential-real-estate development firm, made headlines when he put his 8,000-square-foot penthouse in Manhattan’s CitySpire building on the market for $100 million, though nothing in the circa 1987 condo building had sold for anywhere near that price. The property didn’t sell; Mr. Klar still owns it.

Others traded for a fraction of their asking prices. In 2006 Saudi Prince Bandar bin Sultan listed a 90-acre ranch in Aspen for $135 million. It sold six years later to hedge-fund executive John Paulson for $41 million. And an elaborate Versailles-style mansion in Hillsboro Beach, Fla., once listed for $159 million ultimately sold at auction for $42.5 million.

In recent weeks, an elaborate Los Angeles spec house known as “the Billionaire” sold for roughly $94 million, nearly three years after going on the market for $250 million.

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