When it comes to luxury real estate markets in the country, few are as enduring as Beverly Hills, CA. Storied and iconic, many dream of owning properties in the city, including investors from different parts of the world. If you’re on the verge of making that commitment yourself, read on to find out why Beverly Hills luxury real estate is a must-have in any savvy real estate investor’s portfolio.
Global investors love Beverly Hills luxury real estate because…
It’s a market that continuously appreciates
Ever since Beverly Hills boomed in the 1920s, local home values have been steadily increasing. And in the past decade, Beverly Hills luxury real estate continues to outperform other markets in the country.
To date, Beverly Hills luxury real estate is in the top 20% nationally when it comes to appreciation. Home values in the market appreciated by 115.33% in the past decade, which represents an average annual increase of nearly 8%. If you want to look at the bigger picture, homes in Beverly Hills have appreciated by 190.91% in the last 20 years— an amazing feat, considering that the U.S. real estate market was rocked by several challenges within the same period.
Beverly Hills does experience occasional dips in home prices— all markets do as a response to current market and economic conditions— but given its impressive track record, it’s hard to deny that the city is one of the best real estate investment areas in California and the country. Global investors in the loop know this and time their investments well for long-term profits.
Consistent appreciation rates aside, another factor that makes Beverly Hills luxury real estate an attractive long-term investment is that it holds its value over a long period of time.
Luxury real estate is always worth investing
It’s widely accepted that real estate investments are far stabler than other assets. Stocks do promise greater returns, but since it’s more exposed to market and economic risks, it also tends to be more volatile. Real estate investments can take time to yield profit, but it has tangible value and can generate passive income streams. This value and potential for profit is more than doubled when it comes to luxury real estate, especially if you time your purchase well.
It also helps that the luxury sector is growing as more people get richer. In 2021, the world’s affluent population grew by 18%, with their combined wealth totaling over $75 trillion. In the United States alone, there was a 24.8% increase within the same timeframe. And with wealth comes a greater appreciation for higher-end properties. Also in 2021: luxury single-family homes jumped by 20%, while sales experienced a 15% year-on-year increase.
The luxury real estate landscape will likely continue to expand. With the market balancing and travel restrictions lifted, more foreign investors will swoop in to purchase some choice Beverly Hills luxury real estate.
It’s a diverse market
Beverly Hills only covers a total area of under six square miles, but the luxury housing options here are wide-ranging.
In addition to larger single-family homes that are found in most Beverly Hills neighborhoods, foreign investors can choose to purchase condos, apartments, smaller but no less upscale residences, and vacant lots. Land especially comes at a premium given Beverly Hills’ limited space, making it one of the more significant real estate investments to make in LA.
A diverse architectural landscape also awaits in Beverly Hills. Real estate properties in the city showcase a great range of styles, from classic and traditional to contemporary and avantgarde. These include Spanish Colonial (a trademark style in many parts of Los Angeles and Southern California), American Colonial, Georgian, Cape Cod, Mid-century Modern, European, and different renditions of period revivals.
In a nutshell, Beverly Hills luxury real estate offers investors, no matter where they’re from, the chance to diversify their investment portfolios in all aspects.
There are a variety of viable investment options to explore
Purchasing a Beverly Hills home to use it as a year-round residence or vacation property aren’t the only options people have when they invest in the market. Of the city’s 14,685 homes, only 43.3% are owner-occupied while 56.7% are leased to tenants.
Global investors see this as an opportunity to buy high-value properties that can earn them a steady stream of passive income. And with the right long-term tenants and the provenance the property eventually builds, investors can recoup their investment costs in time.
When it comes to potential tenants, you will always find someone in Beverly Hills. The city attracts high-net-worth individuals, from actors and other Hollywood industry professionals to entertainers, professional athletes, and business magnates who tend to stay in Beverly Hills for months or years on end. A lot of them have no plans on investing in their own Beverly Hills property yet, residing in long-term luxury rentals.
A post-pandemic review of the Southern California luxury real estate market
The Report: 2022 Global Luxury Market Insights by Coldwell Banker dubbed 2021 as the “year of great reconciliation.” With their newly acquired wealth, people went on a major homebuying spree in the spring of 2021 that resulted in historic low inventories across the United States. In only four months (March to June 2021), luxury single-family home sales had a 77.2% year-on-year increase, which marked one of the busiest spring homebuying seasons in history.
Southern California’s high-end housing markets were not exempt from the luxury homebuying fever that swept the nation in 2021. Here are some of the highlights:
- In the greater Los Angeles area: 628 luxury properties worth $10 million and over were sold in 2021, which is equivalent to a total sales volume of $10.6 billion for this specific bracket of the market. These numbers reflect year-on-year gains of 90.3% and 97.5%, respectively. Greater Los Angeles had the most luxury homebuying activity in California in 2021.
- In San Diego County: San Diego saw 44 of its luxury homes worth $10 million and more sold in 2021, translating to a total sales volume of a cool $621 million in the region. These mark a 84% and 68.79% year-on-year change on sale numbers and total sales volume. Of the three markets, San Diego County recorded the least sales but nonetheless performed impressively last year.
- In Orange County: Orange County also saw a fair bit of homebuying activity in 2021. The region recorded 101 luxury home sales which is roughly $1.5 billion in total sales volume. The Orange County luxury market also saw the biggest year-on-year increases for sales and total sales volume: 114.89% and 128.88%, respectively.
Understanding buyer behavior
A notable increase in wealth isn’t the only factor that spurred homebuyers into action last year. The following trends have also been influential:
- Change in lifestyle and priorities: The COVID-19 pandemic definitely played a role in reshaping what the luxury homebuyer wants. They were driven to markets like Southern California which offered a great variety of lifestyle opportunities, from outdoor recreation to upscale shopping and dining.
- Outdoor living and flexible spaces: Another by-product of the pandemic was the heightened need for homes that offered generous outdoor areas and flexible living spaces. Having a garden or a yard proved to be a boon especially during the height of COVID-19 infections; it enabled people to isolate in place more comfortably.
- Potential hedge against inflation: Circling back to wealth creation and the country’s growing affluent population, many people specifically invested in luxury properties as a means to protect themselves from the effects of inflation.
With lockdowns in place, we were also forced to work remotely. Today, hybrid and work-from-home setups are making home offices or flexible areas must-haves in any luxury home. Furthermore, these work arrangements have also enabled some to completely relocate to a different city or state.
Bursting or cooling down: What’s happening this year?
Although 2021’s luxury homebuying spree left Southern California with lower housing inventories and higher prices, significant changes have started to occur in the region in 2022.
Inventory levels are slowly starting to rise in many luxury markets across the country as more sellers grow comfortable with putting their homes up for sale. But prices leveling out and the increase in inventory has made many people wonder if the market is going to burst. The reality, however, is that many luxury housing markets are only cooling down.
The luxury real estate market saw sales decline by 17.8% during the first quarter of 2022. Mortgage rates continue to hike as well after years of being at historic all-time-lows. And although prices for luxury properties are still increasing (albeit at a slower rate), this balancing market is creating more opportunities for investors who want their own piece of Beverly Hills, CA luxury real estate.
Is now a good time to invest in Beverly Hills luxury real estate?
For investors who are looking for deals, it may be a great time to explore offerings in the Beverly Hills luxury real estate market.
Across the Greater Los Angeles area, price reductions have started to occur. These are fueled by the market cooling down, along with higher mortgage rates and the increase of available inventory. Earlier this year, pop singer Adele was able to snag Sylvester Stallone’s Mediterranean manse in Beverly Park for $58 million. The property was offered last year for $80 million.
Price reductions, however, remain far from the norm in the Beverly Hills and Southern California market. And when you do see them, the reductions widely vary. Some properties have as little as $50,000 to $100,000 price cuts, while others have at least $1 million or so slashed off of the original listing price.
Should home prices in the Beverly Hills and Southern California luxury real estate market experience a more widespread decline remains to be seen for sure. Some economic experts believe we might see more price reductions as soon as 2023 rolls in. But since you’re already in the market, take your time to explore opportunities that are already available.
A closer look at Beverly Hills, CA luxury real estate
Beverly Hills is divided into several neighborhoods that each offer different takes on luxury living. Below are some of the most sought-after enclaves in the market:
Located within the Beverly Hills Post Office (BHPO) area, Benedict Canyon features steep hillsides covered in lush Southern California flora, which include oak trees, sycamores, chaparral, and several kinds of evergreens. This plant cover helps make the homes at Benedict Canyon extremely private, which makes it easy to see why the likes of Bruce Springsteen, David Beckham, and Jay Leno all chose to invest in properties here.
Beverly Ridge Estates
Beverly Ridge Estates is a small, guard-gated community located along Mulholland Corridor in Beverly Hills. Adding to the security is the neighborhood’s location, perched on top of a steep hill about 800 feet above sea level. There are only 12 residences in Beverly Ridge Estates, and several very high-profile individuals have already resided here. They include Paris Hilton, Tyler Perry, and the Duke and Duchess of Sussex (the royal couple stayed in Tyler Perry’s mansion).
La Collina is another gated enclave in Beverly Hills, this time only minutes away from the luxury shopping and dining the city is well known for. Despite its proximity to Beverly Hills’ downtown core, La Collina remains private and ultra-exclusive. Luxury homes in the neighborhood tend to sit on combined tax lots, guaranteeing space and privacy (the typical La Collina home has over 3,000 sq. ft. of total livable space). One of the finest homes in the area is the La Collina Estate. Built in the early 1920s, it used to be the residence of Eartha Kitt.
Located within the BHPO area, homes in The Summit bear the iconic 90210 zip code and a stunning hill location. The guard-gated neighborhood is near Mulholland Drive and Coldwater Canyon Drive. Only six streets comprise The Summit, which has approximately 80 luxury residences that were mostly built in the 1980s. For a modest-sized gated community, The Summit features some architectural diversity. Popular styles in the neighborhood include contemporary, Tudor, Mediterranean, and Colonial.
Beverly Hills Gateway
Homes in the Beverly Hills Gateway neighborhood are known to be some of the grandest in the entire Beverly Hills luxury real estate market. Located north of The Flats and Sunset Boulevard, there is a fine collection of luxury properties in this area, showcasing different architectural styles and acreage.
Older luxury homes dating back from the 1920s to 1960s used to dominate the small gated community of Bowmont Estates, but most of these properties have been replaced with modern mega mansions and elegant European-inspired villas that offer over 13,000 sq. ft. of total livable space.
The luxury properties at Mulholland Estates are highly coveted for a number of reasons. Apart from bearing the famous 90210 zip code (it is located within the BHPO area), these homes feature some of the best views in Beverly Hills and are protected by round-the-clock security. Most properties in Mulholland Estates were built in the 1990s but have been updated with modern amenities. And as for livable space, 8,000 sq. ft. is the standard in the neighborhood.
One of the better known enclaves in Beverly Hills, Trousdale Estates sits on the foothills of the Santa Monica Mountains— the perfect location for prized Mid-Century Modern homes designed by notable architects. They include Lloyd Wright, Wallace Neff, A. Quincy Jones, and Cliff May. The high concentration of Mid-Century Modern properties in Trousdale Estates earned the neighborhood the distinction of having the best and largest master collection in Los Angeles.
Grand displays of wealth are the norm at Beverly Crest, which has been a preferred address in Beverly Hills for well-heeled residents and investors since the 1920s. It’s also one of the highest elevated neighborhoods in Beverly Hills, boasting picture-perfect vistas of not only Greater Los Angeles but the ocean beyond. Because of this, Beverly Crest’s original collection of Mediterranean and period revival homes have been replaced with glass mansions, with the neighborhood’s rugged terrain giving plenty of privacy.
Oak Pass Road
Stretched along a private road in the upper Benedict Canyon area, Oak Pass Road only has 42 luxury residences that enjoy a secluded location surrounded by Southern California vegetation. Hidden behind native oak trees and other plant cover are beautiful Modern Contemporary estates, as well as Cape Cod and Mid-century Modern homes that have been updated by renowned architects in Greater Los Angeles.
One of the smallest and most exclusive communities in Beverly Hills, the gated community of Wallingford Estates only has 15 luxury homes, most of which were built in the 1970s. These properties offer up to 8,000 sq. ft. of total livable space, save for a trophy estate built in 2000— it features over 20,000 sq. ft. of living space.
Established in 1990, Beverly Park is ground-zero for grand celebrity homes that offer up to 40,000 sq. ft. of total livable space. The neighborhood covers 250 acres and is divided into north and south sections, both of which have their fair share of trophy properties. Beverly Park’s roster of famous residents include Rod Stewart, Sylvester Stallone, Denzel Washington, and Samuel L. Jackson.
Explore investment opportunities in Beverly Hills luxury real estate with Joyce Rey
I’m Joyce Rey, one of the top luxury Realtors in Southern California. It would be an honor to show you around Beverly Hills so you can find the perfect property to add to your investment portfolio. Connect with me here or send me an email so we can discuss your real estate needs in a private consultation.