Those properties are still selling, he says—his company listed a $78 million, 31,000-square-foot house in Holmby Hills earlier this week—“but you have to work with the seller to come up with a good pricing model that will be well-received by the market,” he says.
Kotler says that his team did a review of the entire LA market for a recent sales meeting and discovered that “inventory is up 50 percent year over year,” he says. “It was very revealing, and the reaction from our sales folks was that it’s a hugely opportunistic time for buyers.”
The cause of the glut, he says, is simply market timing. “When you’re running after a market, you try to bring your product to market while it’s still strong,” he says. “There’s a lot of stuff that was planned two years ago [when sales were booming] that’s just coming onto the market now.”
The Very Top
That roughly tracks with Niami’s timeline for the property. He says he bought the lot about three and a half years ago for around $17 million and then divided it in two. This house has taken him nearly that long to construct; building costs, he says, were $1,200 per square foot, meaning that, all told, he’s spent nearly $41 million on it.
But given that he’s charging $65 million for a 27,000-square-foot house—which comes to about $2,400 per square foot, about 16 percent higher than the luxury average listed by the Elliman report—Niami is still aiming for the very top.
“I just got an appraisal for the house that was almost $60 million, not including the furniture, so I must not be too off-base,” he says.
And if it is too much for the market to bear? “We won’t know until we go in,” he says. “If we need to reduce the price, we will.”
This article was provided by Bloomberg News.