Real estate developers catering to the wealthiest buyers on the planet are taking their spec houses—custom homes with extravagant features commanding astronomical price tags—to new levels. In fact, one Los Angeles development company recently created a spec house with an open shark tank with stepping stones. The “shark house” is located in Hollywood Hills and listed for $35 million.
Listing Agent Sam Real of Nest Seekers International explained why a builder might create this type of custom property without a buyer already lined up. “Buyers are looking for a place that is more of a resort than a home,” he said. This is why properties include wellness centers, wine cellars, humidors, and special tequila freezers. “It’s about, ‘How much else can I put in my house so that I don’t have to leave?’”
What Type of Carrying Costs Come with a Shark Tank?
Not surprisingly, a property built to be the ultimate in opulence comes with extravagant maintenance requirements. For example, if you purchase the shark house, the property comes with a contracted aquarium specialist. The specialist’s job, among others, is to periodically replace shark species when they get too large for the home aquarium. For example, houndsharks may grow as long as six feet—too big for a shark pond. Once they reach their full size, they are re-homed to an aquarium and replaced with younger, smaller specimens.
The Spec House Boom
Although residential real estate construction is down 40% on a national level and space is even harder to find in Los Angeles and similar attractive metro markets, a small group of specialized developers is busy building up a big storm. One commercial real estate CEO explained his company is filling “the massive hole in the L.A. market for well-made, sophisticated homes…for the one percent of the one percent.” Since that elite group of buyers tends to have little trouble paying for property, it is worth it to builders to shell out huge upfront construction and acquisition fees to create a desirable property.
For example, one developer has been buying and demolishing pricy Bel-Air homes since 2011. He recently purchased 13 acres of vineyards for $28.8 million to install a new spec development. The development will feature homes with handmade kitchens, climatized wine rooms, and high-end original artwork.
The properties will likely sit empty much of the time as “trophy homes” rather than primary residences. Most buyers are international investors who find U.S. real estate to be attractive. Eric Sussman, Senior Lecturer at UCLA’s Anderson School of Management, believes this is because “the L.A. housing market [is] a modestly low-risk, very safe investment.” He added that, “Los Angeles is a bargain, comparatively, [to Hong Kong, London, and New York].”