The $75 million vacant lot

Posted by: Chris Palmeri on October 2, 2006

A 12-acre parcel of land in Los Angeles’ ritzy Bel-Air neighborhood is up for sale, making it potentially the highest-priced single family home site in America. The property has sweeping views of the city and the Pacific Ocean. Two immediate neighbors are on the Forbes 400 list of richest Americans. Nancy Reagan lives close by.

The property has a history too. Some of the trees were planted more than 80 years ago by Alphonzo Bell Sr., who developed Bel-Air. Stars such as Kim Novak, Red Buttons and Barry Manilow once lived on the land before movie producer and New York real estate heir Steve Bing acquired and demolished eight of the nine homes on the site. Bing originally planned to build his own version of Shangri-La on the property but sold it last year to investor group ECP Acquisitions for a reported $75 million.

That ECP has decided to flip it so quickly rather than develop it shows that even in the stratospheric world of deci-million dollar properties, the housing market may be softening. ECP is putting the land up for auction by Beverly Hills-based Westside Estate Agency and New York-based The Greenwich Group International this week.

Reader Comments

Toby Munk

September 30, 2006 9:46 PM

Putting real estate out for auction is a sure sign of desperation. Transaction costs are much higher when using an auction process then when using the conventional Realtor approach. A property here in Aspen Colorado was recently put up for action with a reserve price of $29.8m after going unsold at a listing price of $37m. My prediction it will not sell at auction on October 4th.
As for the Bel-Air property, it would need to fetch at least $83.33m to pay the customary 10% auctioneers fee just to break even. So is a 11% price increase from last year realistic for this type of property? I guess the auction will tell.

Brian

October 3, 2006 2:12 PM

I doubt that they expect to recoup their investment. Putting a property up for auction in a period like this is a move to buy liquidity. They want to avoid more significant losses in the future and get rid of the property as soon as possible.

Gordon Schaye

October 3, 2006 6:41 PM

I forecast all of these real estate woes, with the reasoning behind the decline, over the past one year in frequent postings on www.LARealestateblog.net. Now we are discussing how to best handle the decline both for the buyer and the seller.

Jimbo

October 5, 2006 2:59 PM

I rather be in an auction where I can see real bidders and know how much each was putting on the line, then be told by realtors "There are others bids, can you go higher?".

Not knowing who the bidders are, or if they even exist, or what the other bids $$$ were.

Realtors! I would stay away from them until we see painful declines of 25-35%. And then if you must deal with them. Keep your guard up

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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