(Bloomberg News) Beverly Hills, the California enclave known for its celebrity residents and Rodeo Drive boutiques, is luring wealthy individuals seeking real estate investments, driving up prices for trophy apartment buildings in the city.

A 24-unit multifamily complex, located one block from the Four Seasons Hotel Los Angeles at Beverly Hills, sold in March for $7.5 million, giving its buyer a lower return than similar buildings in the U.S. The property is a mile (1.6 kilometers) from the home of Doug Ellin, creator of HBO's "Entourage," and two miles from actor Billy Bob Thornton's house.

Buyers with high net worths are accepting lower and lower capitalization rates, a measure of yield in the real estate industry, for rental apartments in the Los Angeles area's wealthiest neighborhoods. The Beverly Hills investor accepted an annual cap rate of 4.5%, more than two percentage points below the national average, said Hamid Soroudi, senior managing director at Los Angeles-based real estate firm Charles Dunn.

"It seems almost a privilege to own these multifamily units in these areas because they're not replaceable and seldom on the market," said Christopher Cooper, Charles Dunn's chief executive officer. "When these assets do come on the market, there is a bit of a feeding frenzy."

Nationwide, the average cap rate for apartment buildings slipped to 6.6% in the latter half of 2010 from 6.9% in the first six months, according to New York-based research company Real Capital Analytics Inc. The cap rate is a property's annual income divided by the purchase price.

Platinum Triangle

A 29-unit apartment building in Bel Air-part of the Platinum Triangle of wealthy neighborhoods along with Beverly Hills and Holmby Hills-sold in March for $7.2 million. That gave it a cap rate of 4.6%, according to Soroudi. The average rate in the Los Angeles area's richest enclaves slipped to about 4% during the first quarter from 5% in mid-2010, he said.

Multifamily property prices have soared as much as 30% in the most affluent parts of Los Angeles over the past 18 months, said Hessam Nadji, managing director of research at Marcus & Millichap Real Estate Investment Services Inc. in Walnut Creek, California. Values have risen even as California's jobless rate stood at 12% in March, higher than the U.S. average of 8.8%. The state's credit rating from Standard & Poor's is the lowest in the U.S., and Governor Jerry Brown is struggling to close a $15 billion budget deficit.

Values in high-end neighborhoods have been driven up in part by demand for multifamily properties priced at $20 million or more. The dollar volume of such transactions jumped 202% last year in Los Angeles County, more than the nationwide increase of 179%, Nadji said.

'Monopoly Game'

"Real estate is not hard to understand and there's a lot of pride in owning any kind of home or apartment building," said Ken Chong, regional director at Los Angeles-based Commercial Investment Brokerage Corp. "It's pride of ownership as compared to stocks or bonds, which is a piece of paper-if that. It's this Monopoly game that rich people like to play."

Michael Hakim, a Beverly Hills resident who has been investing in multifamily properties in Los Angeles for a decade, last year bought a 25-unit Beverly Hills building near the luxury SLS Hotel at Beverly Hills. He declined to say how much he paid. Hakim said tenant demand is growing for apartments in such neighborhoods, which are becoming "small Manhattans" where people work, live and socialize.