_Los Angeles: Downtown revival, Metro investment and The 2028 Olympics
What sets the Los Angeles market apart?
The Los Angeles property market has less of an international bias than those of New York and Miami. Despite being the headquarters of the global entertainment industry, only around 10% of buyers originate from overseas.
It is also big. Greater Los Angeles is 100-miles wide and comprises 88 cities. Our focus is primarily on Los Angeles city and in particular the prime neighbourhoods of Beverly Hills, Bel Air, Sunset Strip, Malibu and the increasingly popular Downtown market.
Where are the opportunities for buyers?
Los Angeles has transitioned from a horizontal to a vertical city in the last 20 years as land has become scarce. Several new high-rise developments are in the pipeline, with a number forming part of the metro improvements.
There are four metro projects currently under construction that will be operational in time for The 2028 Summer Olympics, these include extensions to the Green and Purple Lines and faster connections to LAX Airport which handles nearly 85 million passengers each year.
One prime neighbourhood that is often overlooked is Holmby Hills which sits to the north west of Beverly Hills. Today’s celebrities head to Sunset Strip, Beverly Hills and Malibu, but Holmby Hills, once home to Walt Disney, Frank Sinatra and Bing Crosby, is more exclusive, less ostentatious and now attracts heads of commerce outside of the entertainment industry.
How is the city’s new-build market performing?
Historically, wealthy buyers in Los Angeles have gravitated towards established detached family homes, often in gated communities in the Hollywood Hills, but the launch of the Ritz Carlton Residences in Downtown Los Angeles in 2010 exposed an appetite for high-end new build condominiums in the city centre.
The Downtown market has undergone a revival in the last decade as new investment has spawned numerous galleries, theatres, hotels, restaurants and improved public spaces. The US$1 billion mixed-use Metropolis Complex has acted as a catalyst, and here plans are underway for a new 65-storey Oceanwide Plaza which is a combination of hotel and condos.
How are luxury prices performing?
Under US$2m the market has remained strong, while the over US$5m market has softened, it is now back to normal, having lost the frenetic pace we witnessed in 2016 and 2017.
Above US$20m there is a lot of product, sales are steady but it remains a buyers’ market. Between these two price bands we are seeing steady growth with prices currently rising by around 4% per annum.The highest-priced sale to date in 2018 reached US$110 million.
Luxury prices have increased 64% since the market's low in 2010 and we expect steady growth over the medium term driven by a buoyant local economy and strong wealth forecasts. By 2026, there are expected to be some 4,095 individuals with more than US$30m in net assets living in Los Angeles (figure 5).
Who’s buying and why?
Most Los Angeles buyers are motivated by the lifestyle on offer rather than owning a high-yielding rental asset. Boasting 330 days of sunshine a year as well as the beaches of Santa Monica, the hills of Runyon Canyon, and the glamour of Hollywood, the city’s quality of life is unrivalled. An outstanding view and a generous-sized pool remain at the top of most buyers’ wishlists.
The emergence of ‘Silicon Beach’, home to 500 start-ups, has meant we are seeing more entrepreneurs as Los Angeles starts to rival San Francisco as a hotbed of creativity. The city is also home to two of the top research universities in the world, USC and UCLA, which are key employers in the area.
Read the report in full here
For more details please contact Stacey Watson or Kate Everett-Allen