Bloomberg ran a story earlier this week on Bruce Makowsky, luxury bag maker turned ultra-real estate developer, who is building $100m houses in Beverly Hills. What’s important here for the art market isn’t the real estate, the taste or the money. It’s the fact that the wealthiest are willing to buy pre-packaged luxury. Something similar was seen in the aftermath of the bidding for the Francis Bacon triptych featuring Lucien Freud where underbidders and auction house personnel alike remarked upon the appeal of a work that ticked obvious boxes.
Also, there’s the simple appetite for homes and the need to furnish them with status objects:
“There was a void of homes for super-wealthy people, and that’s why I did it,” Makowsky said while sitting near a curved 54-foot (16-meter) glass wall that slides open to an infinity pool with iPad-controlled fountains. “I don’t think there’s anybody who’s served up $85 million-to-$100 million homes at this level for somebody to step into and buy.”
Makowsky may be the boldest developer of Los Angeles mansions built on speculation, without a buyer in place. He’s betting on growing demand from billionaires, technology magnates and entertainers — a global elite who collect mansions in cities such as Hong Kong, London or Miami, where they alight a few times a year from their yachts and private jets.
“Even though this represents 0.1 percent of the housing market, this kind of a price tag is not out of the realm of possibilities,” said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. and a Bloomberg View contributor. “About three years ago, this global phenomenon built momentum where luxury real estate has become a new global currency.”
There’s one other quote that merits attention in this story too. It’s the observation that art is a safe haven asset like real estate but portable too:
“If you buy a house for $50 million, $60 million, and it falls to $40 million, it’s still better than having your money under a dictator who decides that money doesn’t belong to you any more,” the Italian-born Cajrati Crivelli said in a telephone interview. “It’s the return of capital rather than the return on capital.”