This Bloomberg piece profiles the rise of the spec housing market, where developers are building houses prior to having negotiated a contract with a buyer. The hope is that ultra high net worth individuals will be able to tour the property once it is completed, fall in love with it, and purchase the property.
Case in point: a 74,000 square-foot house being built in Bel Air, a neighborhood of Los Angeles. Here is what this house will look like, per an artist’s drawing:
Nile Niami, a film producer and speculative residential developer, is pouring concrete in L.A.’s Bel Air neighborhood for a compound with a 74,000-square-foot (6,900-square-meter) main residence and three smaller homes, according to city records. The project, which will take at least 20 more months to complete, will exceed 100,000 square feet, including a 5,000-square-foot master bedroom, a 30-car garage and a “Monaco-style casino,” Niami said.
So can the house sell for $500 million? It seems possible but unlikely. Consider that the priciest home ever sold in the world was a $221 million London penthouse purchased in 2011, according to Christie’s. The most expensive properties on the market today include a $425 million estate in France’s Cote d’Azur, a $400 million penthouse in Monaco, and a $365 million London manor.
Regardless of whether this house sells for $500 million, it appears the spec market is booming:
New luxury mansions are proliferating in Los Angeles, often without buyers in place, known as building on spec. Niami, whose production credits include “The Patriot,” a 1998 action movie starring Steven Seagal, last September sold a Los Angeles home to entertainer Sean “Diddy” Combs for $40 million.
That was followed by the December sale of a Beverly Hills spec home for $70 million to Markus Persson, who last year sold his video-game company to Microsoft Corp. for $2.5 billion. In January, hedge-fund manager Steven Cohen closed on a Beverly Hills spec home for more than $30 million.
Los Angeles luxury homes have ballooned in size in the past 30 years, said Peter McCoy, contractor for a 53,000-square-foot mansion under construction on a Bel Air hilltop visible from Niami’s project.