Turning point in market for high-end mansions in Los Angeles

Online, June 16, 2010 (Newswire.com) - Los Angeles, in June 2010. The downturn in the market for high-end real estate in the Greater Los Angeles Area, brought about by the financial and economic crisis, has now bottomed out and is set to assume an upward curve once again. The most desirable and world-renowned neighborhoods in the global entertainment capital - including addresses such as Bel Air, Hollywood, Pacific Palisades, Malibu and Santa Monica - are witnessing a particularly strong increase in demand this spring, heralding an end to the slump in property sale transactions.

The market is dominated by prestigious mansion estates affording interiors upwards of 8,000 square feet and expansive land plots in excess of 20,000 square feet. Enclosed by uniquely spectacular landscape backdrops, these residential districts are also home to a host of legendary actors, artists and directors, giving the market an additional element of glamour and prestige. Properties appreciate in value if they are designed in a modern or strikingly Mediterranean style reminiscent of Spanish or French architectural traditions, or if they have a particularly fascinating history or personal story to tell. The standard appointment of these luxury villas includes a spacious entertainment area, a swimming pool, guesthouse and tennis court - as well as panoramic views overlooking the ocean, the mountains or the cityscape. A prestigious location is perhaps the most crucial purchasing factor. "Properties only reach seven-figure asking prices if they are located in one of the 'A-list' residential areas in and around Los Angeles," said Mathias Bode, CEO of Engel & Völkers California.

Even this traditionally stable market was subjected to a period of significant decline as a result of the financial and economic crisis however. In 2009, the number of properties sold with a value of more than 5 million US dollars decreased from 608 (2008) to 332, with prices falling by up to 20 percent during this timeframe. But while the real estate market as a whole was hit hard by price slumps in 2008, the high end of the market for luxury mansions was only impacted from the end of 2008 onwards - and to a lesser extent as a result of the broader after-effects of the financial crisis. "We have seen a relatively small drop in the market over the past year. Property prices leveled out at roughly the same valuations as those reached in 2005," Mr. Bode continued.

Prime residential locations in Los Angeles such as Santa Monica and the surrounding areas "North of Montana" did not experience any decline in house prices, while to the west of the city, in Wilshire for example, declines leveled off at around 15 percent. Valuations for luxury real estate still remain high however, ranging from 3 to 10 million US dollars in Beverly Hills, 4 to 15 million US dollars in Santa Monica and 3 to 10 million US dollars in Malibu. A particularly upscale mansion in Beverly Hills is currently on the market for 28.5 million dollars, while a further property is even set to reach 120 million dollars. Elsewhere in Malibu, there is a spectacular villa property for sale for 29.5 million dollars and another prestigious estate on offer for 65 million US dollars.

The relatively low fluctuations in this high-end market segment can be largely traced back to the fact that owners of these luxury properties have not usually been forced to sell. Overall, the market could be said to have assumed a "wait and see" stance over the past crisis year, as buyers bide their time. Clear indications of an upturn in the market have now heralded a turning point, whereby the levels of interest are greatly increasing. Many affluent prospective buyers are now emerging from the local area or elsewhere in the USA, keen to exploit the opportunity to acquire a significantly larger or more luxurious residence at a much lower price than those fetched some two to three years ago. Moreover, those requiring a means of financing are also still benefiting greatly here from very low mortgage rates at present. "We have also been registering interest from celebrity circles, with stars most probably also looking to take advantage of the current market situation and
Upgrade to even more lavish homes," said Mr. Bode.

The film industry does not in fact constitute the largest group of interested buyers for the premium mansion market though. Rather, it is CEOs and top managers of large corporations that account for 35 percent of overall demand, followed by companies themselves at 25 percent. Actors and sports personalities come in third place, each making up a ten percent share of the overall buyer demographic. Doctors and lawyers make up the smallest buyer group with just five percent, respectively. "In view of the current low in real estate prices and bearing in mind that the US economy and therefore the property market are entering a phase of recovery that will bring renewed price rises, now is the best time to acquire an exclusive residence at a prime Los Angeles address on very favorable terms," Mr. Bode concluded.

For further information please contact:

ENGEL & VÃ-LKERS • California
Jonathan Strauss
Marketing / Communications
1900 Avenue of the Stars / Suite 2460
Los Angeles, CA 90067, USA
Phone: +1-310-277-5410
[email protected]

ENGEL & VÃ-LKERS • California
Mathias Bode
CEO / President
1900 Avenue of the Stars / Suite 2460
Los Angeles, CA 90067, USA
Phone: +1-310-277-5410
www.engelvoelkers.com/california