(Bloomberg) -- After more than three years on the market, a Beverly Hills mansion initially listed for $100 million has sold at less than half that price.
The 20,000-square-foot (1,900-square-meter) house -- dubbed “Opus” in a flashy marketing campaign -- sold this week for $48.4 million, including furniture, according to a Multiple Listings Service report. It’s the latest luxury Los Angeles property to go for a steep discount in the midst of a pandemic that has left the area partially locked down for months, deterred foreign buyers and kept out-of-state investors away.
The market is particularly tough for so-called spec houses, built by developers with lofty price expectations that have often proved unrealistic.
“It was never worth that to begin with,” Jonathan Miller, president of appraiser Miller Samuel, said of Opus’s original $100 million price tag. “High-end properties are moving, but they’re not moving for prices that are disconnected from the market.”
Spec homes with sky-high asking prices are outliers even within the luxury market, where the bid-ask price spread has narrowed, properties receive multiple offers, time on the market has plunged and other measures indicate a shortage of supply, according to Miller.
Demand for luxury property has surged nationally -- in Los Angeles, South Florida, the Hamptons and Greenwich, Connecticut, he said. But spec houses priced above $100 million usually move for half or less the asking price, if they sell at all.
“There’s a big gap between what the owners are willing to sell for and buyers are willing to pay,” Mauricio Umansky, chief executive officer of the Agency, said about developers of ultra-luxury homes. “They didn’t underwrite correctly.”
Even sellers of non-spec houses have had to ratchet back their price expectations. Before heading to prison for her part in the 2019 college scandal, actress Lori Loughlin sold her Bel Air mansion for $18.75 million, a nearly 50% drop from the $35 million she originally sought. Ellen DeGeneres and Portia de Rossi asked $40 million for their Montecito home that sold for $33.3 million. Uber Technologies Inc. co-founder Travis Kalanick purchased his $43 million Bel Air mansion at a 42% price cut this year.
And Los Angeles spec mansions failed to fetch sky-high prices even before the pandemic. A sprawling home built by handbag magnate Bruce Makowsky sold last year for $94 million -- a 62% discount to its $250 million asking price.
The seven-bedroom, 11-bathroom Opus was built by former movie producer Nile Niami, now a real estate developer known for his ambitious projects with eye-popping price tags. He initially approached the market with a PR campaign involving a hyper-sexualized video of mostly-naked women in different parts of the house, including one shot of four women slathered in gold paint posing around a golden Lamborghini.
Since the video’s launch more than three years ago, the price of the house has been cut multiple times, most recently to $59.95 million. The buyer was Bin Fen Cheng, a local real estate investor, according to published reports. Branden and Rayni Williams of Williams and Williams at the Beverly Hills Estates represented both the buyer and the seller.
Niami is currently finishing “The One,” America’s largest and most expensive private residence, which is being listed for $500 million and features a nightclub, four swimming pools, a bowling alley and 360-degree views of Los Angeles.
Niami has been developing the place for more than seven years and the proposed price hasn’t budged. He didn’t reply to an email requesting comment.
“When you have something that’s as rare as the Mona Lisa, you can command whatever you want for it,” Niami said in an interview with Bloomberg in January, arguing that recent nine-figure property deals in Los Angeles and elsewhere are proof that his pricing strategy wasn’t just about generating press. “We have a list of very real, verifiable buyers that we will bring in soon,” he said.
Buyers made reasonable offers for Niami’s projects that were spurned while he held out for more, according to Umansky, whose Beverly Hills-based brokerage specializes in luxury real estate.
“He just won’t listen to the market,” Umansky said. “If he would just sell and not try to hit a grand slam on every deal, he would be great.”
©2020 Bloomberg L.P.