$100 Million Question

Twenty years ago, a house selling for $100 million was almost unthinkable. This year, four homes in the U.S. have closed at or in excess of $100 million. Since 2007, 20 homes have sold for over $100 million.

Properties that have sold for a nine figure price tag, define a group of uber-wealthy individuals and illustrate that this massive wealth is increasingly concentrated in the hands of a few and 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 previous year, according to a report by data provider Wealth-X. There were 2,170 billionaires world-wide in 2012.

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. 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, Florida, where he plans to build two homes: one for himself and one for his mother. Then earlier this year, he spent about $238 million for a new Manhattan penthouse apartment overlooking Central Park.

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.

With New York—which has seen two nine-figure sales to date—hosting the highest population of billionaires of any city in the world, the report found.

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 neighbourhoods, 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 districts 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.

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