The Boundary
Not everyone is griping about the Los Angeles mansion tax, which took effect in April 2023. It’s proving to be a bonus for one notoriously wealthy Southern California enclave that’s becoming a hotbed of new luxury housing development.
Measure ULA (United Los Angeles) has been heavily criticized as adding to market problems, despite its proceeds being funneled to ease the lower-income housing and homelessness crisis. According the Los Angeles Times, in its first year, Measure ULA raised roughly $215 million.
But it only applies to properties within the jurisdiction of the City of Los Angeles, which includes mansion-heavy Brentwood, the Hollywood Hills and Bel Air.
The monied Beverly Hills, meanwhile, known for its super-rich inhabitants and high-end Rodeo Drive shopping, is an independent city — and has no mansion tax.
Sales there might not be soaring during LA’s luxury snooze, but the Beverly Hills real estate market is ticking along — especially with several new luxury branded condo developments from the likes of Mandarin Oriental, Rosewood and Aman adding movement.
Appraiser Jonathan Miller analyzed a two-year sales window in Los Angeles and Beverly Hills priced above $5 million, and shared his findings with The Post.
“Sales are down in both markets as they are in many high-end US housing markets,” he said. “But when comparing the monthly rate of sales before and after the April 2023 Measure ULA Mansion Tax, Los Angeles sales subjected to the tax were down about 40%, and roughly double the 20% decline over the same period seen in Beverly Hills, which is not subject to the tax. It is possible the absence of the tax gave Beverly Hills a competitive advantage.”
For well-to-do LA home sellers, the tax levies a 4% charge to all property sales more than $5 million and a 5.5% charge to all sales more than $10 million — and knocks hundreds of thousands, if not millions, of dollars off cash pocketed upon sales completion.
It’s not only sellers grimacing at the tax. It also puts off savvy buyers who consider that, come time for them to move on, they will also lose a big chunk of their equity.
Not having the tax is proving to be a golden ticket to the new condo developers busy in Beverly Hills’ Golden Triangle, that hallowed space where three major roads — South Santa Monica Boulevard, Wilshire Boulevard and Cañon Drive — unite around the neighborhood’s lauded Rodeo Drive, which is famously home to Hermès, Chanel and Tiffany.
Sales launched last year at the Mandarin Oriental Residences, Beverly Hills, the first new condominium in Beverly Hills in more than a decade. Move-ins began during the first quarter of 2023.
Developed by Manhattan-based SHVO, the Beverly Hills property has 54 dwellings, all with outdoor space, and marks the Mandarin Oriental brand’s first residential-only location on the West Coast. Michelin-starred chef Daniel Boulud made his West Coast debut operating in-home and private rooftop dining, adjacent to the pool. Boulud’s upmarket chain, Café Boulud, opens to the public later this year within the building.
One-bedrooms start at $2.97 million; two-bedrooms at $4.72 million; and three-bedrooms at $7.12 million. The top-end residences include Penthouse West, a four-bed, four-bath home with approximately 7,300 square feet interior and 2,800 square feet of exterior living space, which is going for $50 million — and with no $2.5 million mansion tax to worry about down the line.
There is also considerable buzz about Rosewood Residences Beverly Hills, managed by the discreetly chic Rosewood Hotels & Resorts. This is the brand’s first standalone residential project in the US.
Rosewood Residences Beverly Hills developers Nahla Capital and GPI Companies launched sales at the four-story building in May, with Compass Development Marketing Group in partnership with Jones Fridman International handling sales.
After 10 years planning the massive project, the threat of the new LA mansion tax was initially concerning, Nahla Capital co-founder and managing principal Genghis Hadi told The Post.
“It was a big relief to us,” Hadi said of Beverly Hills remaining exempt. “Beverly Hills has a high barrier to entry — the town is very demanding on what goes up and so is the community. It’s a pleasure to bring a building with the sophistication this neighborhood demands, but a mansion tax is another element we don’t want to deal with.”
Rosewood residences range from approximately 3,000 to 7,500 square feet. And with pricing starting at $10 million and running to approximately $45 million for a penthouse, a mansion tax would have been a definite selling burden. Instead, Hadi thinks the tax will divert more people to Beverly Hills to buy.
“Nobody wants to pay that tax and it affects the market across different channels,” he said.
Rosewood Residences Beverly Hills is located on South Santa Monica Boulevard on the former site of the Friars Club, architect Sidney Eisenshtat’s modernist gem, which was demolished in 2011. Move-ins are expected by the end of this year, but anyone looking for a pied-à-terre or one bedroom won’t find it here.
“These are estate-sized condos,” Hadi said of the super-sized, ultra-luxury residences. All 17 homes feature direct elevator access, indoor and outdoor fireplaces, a tucked-away service elevator, oversize kitchens with large double islands and sanctuary-like master suites with enormous walk-in closets. Six residences feature private pools and outdoor kitchens.
There’s no hotel, but there are all the trimmings including liveried staff, and housekeeping and turn-down service; access to in-residence spa treatments and private chefs; a 50-foot rooftop pool, and a roof bar and lounge; and a fitness center with personal training services. Additionally, the concierge is on hand to help snag those impossible-to-get dinner reservations at nearby Funke, hotshot chef Evan Funke’s latest spot, a 20-minute stroll on South Santa Monica Boulevard at North Cañon.
Still, Beverly Hills has its fair share of stunning single-family homes for sale. How about a four-bed estate on Summitridge Drive, minutes from the storied Polo Lounge at the Beverly Hills Hotel, currently for sale at $18.99 million? It’s handled by Tracy Tutor and Stephen Apelian of Douglas Elliman. There’s also a classy nine-bed Empire revival manse on Beverly Park Way for $48.5 million, and a Pacific-peering seven-bed new-build on Laurel Way for $34.95 million, both listed by Beverly Hills based Jones Fridman International.
But the flurry of condo developments is changing the Beverly Hills landscape, and nowhere more so than the 17.5-acre One Beverly Hills project. This site will bring the Aman Beverly Hills hotel and around 200 residences spread across its twin towers, currently inching up on the celebrated ground next to the star-favored Beverly Hilton, which opened in 1955 and has hosted the annual Golden Globe Awards since 1961.
With both the non-residential Hilton and the adjacent sister hotel the Waldorf Astoria remaining fully open, the Aman broke ground just this year. Pricing and sizing details are not yet public, and although it’s currently a construction site, behind-the-scenes sales are brisk, a rep tells The Post.
But do the super wealthy really care that much about paying the extra mansion tax? You bet they do, says Ernie Carswell of Douglas Elliman real estate agency in Beverly Hills.
“Not paying your taxes is very un-American, we all pay taxes. But an extra $4 or $5 million on the closing costs is a big expense,” he said.
Would the City of Beverly Hills ever impose a mansion tax? “It wont,” Carswell stated. “It would be disastrous.”
“If the city instigated a mansion tax, value would plummet in the luxury sector. Buyers will go elsewhere, ” he said, adding that the very wealthy only stay very wealthy by watching the bottom line. “They won’t pay it; they don’t want to pay a tax on selling their mansion. They figure something out somehow. If buyers think they will be saddled with this extra tax, they will think twice.”