It’s big enough to house both Disneyland and California Adventure. It sits on the highest point in Beverly Hills and has 360-degree views of Los Angeles and the Pacific Ocean, yet it’s within 10 minutes of Rodeo Drive.
It’s been owned by Merv Griffin and an Iranian princess. Tom Cruise once tried to buy it. Now this 157-acre parcel of undeveloped land recently christened “The Mountain of Beverly Hills” is on the market for $1 billion.
You read that right. One billion bucks for a plot of land that doesn’t even have a mansion on it.
So what exactly would one do with a massive lot in one of the most exclusive (and expensive!) markets in the world?
Listing agent Aaron Kirman of Pacific Union Real estate reports the site comes with permission to build 1.5 million square feet of living space in multiple buildings. It’s also zoned for six lots, which means a developer could break it up.
But does subdividing make financial sense? Split the property into six equal lots, and you get 26-acre lots. Divide the 1.5 million square feet of living space by six, and each lot gets 250,000 square feet.
To break even, a developer would have to charge close to $161 million per home. Even in the Beverly Hills market, that’s optimistic.
“When you pencil it out, I don’t really see how the dots connect for a developer,” says Billy Rose, president and co-founder of The Agency.
When asked about potential buyers, Rose speculated that perhaps a wealthy family could build a compound there. Or he imagined an enclave of elite, like-minded billionaires creating the most technologically advanced community of all time, with beautiful, safe parks for their children and other superlative luxury amenities.
It’s the kind of dream that could fuel a fabulous film. But is the billion-dollar price tag a dream as well?
It’s common practice for sellers to launch their luxury properties at a record price in order to get attention. After all, since there are no comps, who’s to say what it’s worth? The closest comparisons nearby include a 97-acre lot for $250 million, and Microsoft co-founder Paul Allen‘s 120-acre plot he recently put on the market for $150 million.
The strategy is to attract a lot of attention, then see how much buyers are really willing to pay, as happened with the Bel Air spec mansion known as “Billionaire.” When it went on the market at $250 million, it made news as the area’s most expensive home. An offer around $190 million came in and it went into escrow, but the deal fell through. Based on the offer, the property went back on the market at $188 million.
And it’s hard to assess the billion-dollar property’s value based on what others have paid for it in the past, because the SoCal luxury market has hit stratospheric heights in recent years. Griffin sold it to Herbalife head Mark Hughes in 1997 for $8.5 million. After Hughes died in 2000, the property went into a family trust and became the subject of a few legal battles. It was eventually sold to a developer for $23.75 million in 2004.
The mountaintop property is now ready for a new, well-heeled owner. The land has been graded and landscaped, a sprinkler system installed, and sod laid on a portion of it so prospective buyers have more to see than scrubland.
Over the past several years, the property has been the site of a handful of high-profile events, including charity benefits, Oscar parties, and Rihanna‘s famous Diamond Ball in 2014.
The sellers hope billion-dollar bragging rights will make sense to someone with megabucks to spare. Will a buyer literally break the bank and splurge on this 10-digit spread? Stay tuned…
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Source: Housing Trends Feed