When news broke last week that an exclusive property in Beverly Hills had hit the market for $1 billion, imaginations ran wild with speculation. A spec house in this neighborhood is asking $500 million, and with a 40 seat theater, a four lane bowling alley, an indoor nightclub, and a jellyfish aquarium, it’s hard to imagine the property that would be worth twice as much. (The $500 million house also has a moat surrounding the house – a literal, medieval-style, water-filled moat – which begs the question of, does it also have a drawbridge? And who, exactly, are they worried is going to charge up there with pitchforks and torches?)
So it came as a bit of surprise when it turned out the billion-dollar property was … well, nothing. A big empty lot. It’s the real estate equivalent of when Kanye sold a plain white tshirt for $120. The difference there is that the Kanye tshirts sold out, while this lot is more or less cursed.
Newly branded as “the Mountain of Beverly Hills” (eye roll), the lot is 157 acres of hilltop land in arguably the most exclusive neighborhood in the United States. (For contrast, you can get a whopping 510,000 acres in Texas for $725 million.) Formerly known as Vineyard Beverly Hills, the property was bought by an Iranian princess in the Seventies; she planned to build an opulent mansion here, but she had to abandon her plans when the pesky Iranian revolution of 1980 happened, and her brother, the Shah, was dragged from his palace and thrown out of the country. (He should’ve taken a cue from the $500 million spec house, and built a moat around the place.) Iranian students stormed the princess’s other Beverly Hills property, bombarded it with firebombs, and she went into hiding.
The property was then bought by Merv Griffin, who was going to build LA’s biggest house on it, eclipsing the notorious Aaron Spelling house. Griffin either lost interest or realized that this was an incredibly stupid idea, and never broke ground. He sold the lot for $8.5 million in the last Nineties, to the founder of Herbalife, that herbal diet pill that made your aunt stay up for three days straight and clean her entire house with a toothbrush. When Mr. Herbalife died unexpectedly, the property went into a trust and was managed – mismanaged, some would say – by various shady businessmen, at least one of whom served time in a federal prison for financial crimes. At some point, Tom Cruise tried and failed to buy the property.
The last time the property changed hands, in 2004, it was sold for just under $24 million. That was only 14 years ago. So what’s changed? How does an empty lot that last went for the relatively paltry sum of $24 million suddenly hit the market for a billion dollars? Well, it has to do with the mechanics of selling a property like this. What you do is, you put up a “For Sale” sign, and when people want to know how much you’re asking, you say, “a billion dollars.” (And then they laugh in your face.) Most experts agree that the billion dollar asking price is more marketing than a serious asking price, and that the eventual sale price, if there is an eventual sale, will be much lower – possibly as low as $200 million. After all, similarly unspoiled lots in the area are already on the market – Microsoft’s Paul Allen is selling 120 acres for $150 million, and a 97 acre lot is listed for $250 million – and haven’t drawn much interest. The most expensive home that’s ever sold, on Earth, was a $300 million French estate bought by a Saudi prince, and that was, you know, an estate. In France. This is a backyard without a house from which, on a clear day, you can probably see multiple Little Caesar’s franchises.
Of course, as my mother says, it only takes one sucker. The agent selling the lot is targeting a list of less than a hundred billionaires who could afford the place and might have interest. If he can find just one Russian oil doofus who likes the idea of being known as the guy who bought the billion dollar mountain in Beverly Hills, then it might just happen. And it’ll have to be purchased to build an individual home; the lot’s too expensive for a developer to be able to subdivide and make his money back. Crazier yet, experts using the average price per foot for construction in the area estimate that any house built on the lot would cost at least $4 billion, on top of the $1 billion for the land. Jeff Bezos, are you hearing this? What else you going to use that five billion dollars for? (Not higher employee wages, that’s for sure.)
The crazy thing is, this wouldn’t even be the stupidest property to sell for billions of dollars. Just last year, someone paid $3 billion for a parking garage in Hong Kong.