Tag Archives: Los Angeles

L.A. to Worsen Housing Shortage with New Rent Controls

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Los Angeles, home to one of the least affordable housing markets in North America, is now proposing to expand rent control to “fix” its housing problem. 

As with all price control schemes, rent control will serve only to make housing affordable to a small sliver of the population while rendering housing more inaccessible to most. 

Specifically, city activists hope that a new bill in the state legislature, AB1506, will allow local governments, Los Angeles included, to expand the number of units covered by rent control laws while also restricting the extent to which landlords can raise rents. 

Unintended Consequences 

Currently, partial rent control is already in place in Los Angeles and landlords there are limited in how much they can raise rents on current residents. However, according to LA Weeklylandlords are free to raise rents to market levels for a unit once that unit turns over to new residents. 

This creates a situation of perverse incentives that do a disservice to both renters and landlords. Under normal circumstances, landlords want to minimize turnover among renters because it is costly to advertise and fill units, and it’s costly to prepare units for new renters. (Turnover is also costly and inconvenient for renters.) 

By limiting rent growth for ongoing renters, however, this creates an incentive for landlords to break leases with residents — even residents who the landlords may like — just so the landlords can increase rents for new incoming renters in order to cover their costs of building maintenance and improvements. The only upside to this current regime is that at least this partial loophole still allows for some profit to be made, and thus allows for owners to produce and improve housing some of the time

But, if this loophole is closed, as the “affordable housing” activists hope to do, we can look forward to even fewer housing units being built, current units falling into disrepair, and even less availability of housing for residents. 

Why Entrepreneurs Bring Products to Market 

The reason fewer units will be built under a regime of harsher rent control, is because entrepreneurs (i.e., producers) only bring goods and services to market if they can be produced at a cost below the market price. 

Contrary to the myth perpetuated by many anti-capitalists, market prices — in this case, rents are not determined by the cost of producing a good or service. Nor are prices determined by the whims of producers based on how greedy they are or how much profit they’d like to make. 

In fact, producers are at the mercy of the renters who — in the absence of price controls — determine the price level at which entrepreneurs must produce housing before they can expect to make any profit. 

However, when governments dictate that rent levels must be below what would have been market prices — and also below the level at which new units can be produced and maintained — then producers of housing will look elsewhere. 

Henry Hazlitt explains many of the distortions and bizarre incentives that emerge from price control measures: 

The effects of rent control become worse the longer the rent control continues. New housing is not built because there is no incentive to build it. With the increase in building costs (commonly as a result of inflation), the old level of rents will not yield a profit. If, as often happens, the government finally recognizes this and exempts new housing from rent control, there is still not an incentive to as much new building as if older buildings were also free of rent control. Depending on the extent of money depreciation since old rents were legally frozen, rents for new housing might be ten or twenty times as high as rent in equivalent space in the old. (This actually happened in France after World War II, for example.) Under such conditions existing tenants in old buildings are indisposed to move, no matter how much their families grow or their existing accommodations deteriorate.

Thus, 

Rent control … encourages wasteful use of space. It discriminates in favor of those who already occupy houses or apartments in a particular city or region at the expense of those who find themselves on the outside. Permitting rents to rise to the free market level allows all tenants or would-be tenants equal opportunity to bid for space. 

Nor surprisingly, when we look into the current rent-control regime in Los Angeles, we find that newer housing is exempt, just as Hazlitt might have predicted. Unfortunately, housing activists now seek to eliminate even this exemption, and once these expanded rent controls are imposed, those on the outside won’t be able to bid for space in either new or old housing.

Newcomers will be locked out of all rent-controlled units — on which the current residents hold a death grip — and they can’t bid on the units that were never built because rent control made new housing production unprofitable. Thus, as rent control expands, the universe of available units shrinks smaller and smaller. Renters might flee to single-family rental homes where rent increases might still be allowed, or they might have to move to neighboring jurisdictions that might not have rent controls in place. 

In both cases, the effect is to reduce affordability and choice. By pushing new renters toward single-family homes this makes single-family homes relatively more profitable than multi-family dwellings, thus reducing density, and robbing both owners and renters of the benefits of economies of scale that come with higher-density housing. Also, those renters who would prefer the amenities of multi-family communities are prevented from accessing them. Meanwhile, by forcing multi-family production into neighboring jurisdictions, this increases commute times for renters while forcing them into areas they would have preferred not to live in the first place. 

But, then again, for many local governments — and the residents who support them — fewer multi-family units, lower densities, and fewer residents in general, are all to the good. After all, local government routinely prohibit developers from developing more housing through zoning laws, regulation of new construction, parking requirements, and limitations on density. 

And these local ordinances, of course, are the real cause of Los Angeles’s housing crisis. Housing isn’t expensive in Los Angeles because landlords are greedy monsters who try to exploit their residents. Housing is expensive because a large number of renters are competing for a relatively small number of housing units. 

And why are there so few housing units? Because the local governments usually drive up the cost of housing. As this report from UC Berkeley concluded: 

In California, local governments have substantial control over the quantity and type of housing that can be built. Through the local zoning code, cities decide how much housing can theoretically be built, whether it can be built by right or requires significant public review, whether the developer needs to perform a costly environmental review, fees that a developer must pay, parking and retail required on site, and the design of the building, among other regulations. And these factors can be significant – a 2002 study by economists from Harvard and the University of Pennsylvania found strict zoning controls to be the most likely cause of high housing costs in California.

Contrary to what housing activists seem to think, declaring that rents shall be lower will not magically make more housing appear. Put simply, the problem of too little housing — assuming demand remains the same — can be solved with only one strategy: producing more housing

Rent control certainly won’t solve that problem, and if housing advocates need to find a reason why so little housing is being built, they likely will need to look no further than the city council.

By Ryan McMaken | Mises Institute

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As International Billionaires Get Nervous, Sales In L.A.’s Ultra-Luxury Housing Market Slow

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Billionaire Steve Wynn finally found a buyer for his Bel-Air home when he dropped the asking price to $15.95 million, or $300,000 less than what he bought it for in 2014. (Redfin)

A cooling market for the most expensive homes is costing hotel and casino magnate Steve Wynn some money.

Two years ago, Wynn paid $16.25 million for an 11,000-square-foot mansion perched on nearly an acre above the Bel-Air Country Club. Less than a year later, he sought to unload the home with a paneled library and staff bedroom for $20 million.

No luck. Then he tried $17.45 million. No luck again.

In May, Wynn dropped his price to $15.95 million, $300,000 less than what he paid for the property in 2014. The home went into escrow “very close” to that price last month, said Coldwell Banker agent Mary Swanson, who confirmed Wynn would be taking a loss.

It’s not just Wynn who isn’t getting as much money as he hoped.

Even before Britain’s vote last week to leave the European Union jolted investors worldwide, there were reports of a slowdown in the ultra-luxury housing market.

In Los Angeles, agents were seeing more price cuts. Condo sales on New York’s Billionaires’ Row were slowing. Luxury developers shelved projects in Miami. And prices at the tip-top end of the London market were on their way down.

Blame it on the global economy, which has displayed weakness in the past year, choking off the spigot of international millionaires and billionaires seeking a pied-à-terre, or two, in glamorous locales.

So far, in Los Angeles, Wynn’s experience aside, the effect has been minimal, given the nature of Southern California ultra-luxury development – which largely consists of one dramatic hillside estate at a time, rather than a condo tower with multiple units.

But a spate of new construction is on the horizon. By one estimate, there are about 30 new hillside homes priced above $30 million that could hit the market in the next year and a half.

The so-called Brexit vote may not help matters.  It has sown economic uncertainty on a global scale and caused the dollar to strengthen against major currencies – potentially leading international buyers to trim their purchases in the United States.

“The price of real estate here in California and the U.S. has gotten more expensive,” said Jordan Levine, an economist with the California Assn. of Realtors.

In Manhattan, the slowdown has taken a sharp toll. The number of previously owned homes that sold in the first quarter for $10 million or more fell 40% from a year earlier to 15, according to appraisal firm Miller Samuel.

One builder, Extell Development Co., trimmed $162 million in projected revenue from its One57 condo-and-hotel project, a 1,000-foot tower on Manhattan’s 57th Street originally slated to bring in $2.73 billion, according to a March regulatory filing.

It features more than 90 units, with several reportedly selling for more than $40 million and one bought by an investment group for about $90 million.

“More has been constructed in New York,” said Stephen Kotler, chief revenue officer of real estate brokerage Douglas Elliman. “You have some sellers [in Los Angeles] getting more realistic, but in New York you are seeing more.”

In Los Angeles County, by comparison, $10-million plus sales ticked up by one to 17 in the first quarter compared with a year earlier, according to the California Assn. of Realtors, whose data largely covers resale transactions.

But over a longer timeline, it appears the market has begun to stall. The number of sales of $10 million or more in L.A. County has dipped in three of the last five quarters for which data is available, even as inventory has steadily grown, according to the Realtors group.

And, brokers say, the slowdown is more pronounced the higher the price.

As of mid-June, nine homes in the county had sold this year for $20 million or more, compared with 18 during the same period last year, according to Loren Goldman a vice president with First American Title Co.

Michael Nourmand, president of L.A. luxury brokerage Nourmand & Associates Realtors, said the slowdown will probably bleed into the rest of the market eventually, but that’s not likely to happen “any time soon.”

Like elsewhere, local agents put much of the blame on a pullback by international buyers who had flooded Los Angeles in recent years. Turmoil in their economies, along with a strong dollar, have many from Russia, the Middle East and China second-guessing a purchase here.

“It used to be, if they like it they buy it, or more like, if they like it they buy two,” said Cindy Ambuehl, director of residential estates for the Agency. “Now they are keeping their hands in their pockets and they are waiting.”

Nourmand has seen that first-hand.

A client from the Middle East recently hoped to pull the trigger on a nearly $40-million estate in Bel Air – one set behind gates with a driveway that took “one to two minutes” to walk from street to front door.

But the buyer got cold feet in February and backed out, Nourmand said, explaining that her family’s businesses had taken a beating along with the price of oil, which plunged last year.

“You have a shrinking buyer pool for the really expensive stuff,” he said.

http://www.trbimg.com/img-56940497/turbine/la-fi-hotprop-playboy-mansion-for-sale-2016011-002/750/750x422Daren Metropoulos plans to reconnect the Playboy Mansion, above, to his estate next door, creating a 7.3-acre compound. (Jim Bartsch)

Unlike other brokers, Adam Rosenfeld, founding partner of brokerage Mercer Vine, said he thinks the market is still strong and pointed to some recent mega-deals that went into escrow, including the Playboy Mansion, which is being purchased by the son of a billionaire food magnate for $105 million – a record for L.A. County.

(Though that’s half the asking price of $200 million, agents who know the market say they didn’t expect the mansion to sell for that astronomical, headline-grabbing figure.)

But even Rosenfeld said it was unclear how well the upcoming flood of high-end homes will sell.

“There are only so many buyers that can afford a $30-million plus house,” he said. “The [developers] that do them the best probably will make a killing. Guys who don’t … some of those people might lose their shirts.”

Levine, of the Realtors association, said that one dynamic has yet to play out – whether the strong dollar deters international investors from entering the U.S. real estate market, or as their own home country currencies weaken, they come to increasingly view it as a haven.

“It’s not necessarily clear which one of those two is going to win out,” he said.

by Andrew Khouri | Los Angeles Times

Los Angeles Is Re-Segregating — And Whites Are A Major Reason Why

Parents walk their daughter to class on the first day of kindergarten at the Telesis Academy in West Covina on Aug. 17, 2015. (Los Angeles Times)

Some of America’s most racially integrated neighborhoods and cities are on a path to becoming segregated all over again. In Los Angeles this means neighborhoods where Latinos and Asians now live alongside black or white neighbors may have few to no whites or blacks in 10 to 20 years.

In research I conducted with Siri Warkentien, another sociologist, we used a statistical model and census data to identify the most common changes in racial composition in 10,681 neighborhoods in metropolitan L.A., Houston, Chicago and New York, beginning as far back as 1970 in some areas. That starting point corresponds with the implementation of the 1968 federal Fair Housing Act, which protects buyers and renters from discrimination in choosing where to live.

Covina, 22 miles east of downtown L.A., provides an example of one city at risk of re-segregating. Whites make up about 26% of Covina as of 2014 and Latinos about 57%. Typically we consider neighborhoods with at least 10% of each group to be racially integrated. But the mix is crumbling. Latinos made up 13% of Covina’s residents in 1980, 26% in 1990, 40% in 2000, and 52% in 2010. Four years later, according to the most recent census estimate, the Latino population had grown by five more percentage points. By 2025, Covina is likely to be overwhelmingly Latino.

Something similar happened already in nearby Norwalk. In 1990, just under half its residents were Latino and about a third were white (not unlike Covina now). By 2014, Latinos made up 70% of residents and whites 11%.

The data show that vast portions of south and east Los Angeles are slipping from mixed populations toward single race populations. And the change has not just occurred in formerly white areas. One of the trajectories that we identified followed a similar pattern in neighborhoods that were once black. Compton residents were nearly three-quarters black in 1980; by 1990, the mix was about 52% black and 43% Latino; in 2014, two-thirds Latino. Such slow but steadily increasing Latino growth can be found in 46% of the neighborhoods we studied in the Los Angeles metropolitan region.

What’s causing a shift from mixed to single-race populations?

Immigration is one obvious factor. The Latino population increased in Los Angeles after immigration laws were changed in 1965 to encourage family reunification. That population was bolstered by a steady increase in Mexican immigrants from the mid-1990s until the recession. Newly arrived Latinos, like all immigrant groups, tend to find housing in neighborhoods already pioneered by their countryman who are already here.

Our research found that this process is occurring again in Southern California, but this time among immigrants from Asia, the source of the largest number of U.S. newcomers now. For example, the Asian proportion of the population in Cerritos increased from 44% in 1990 to 58% in 2000 to 62% in 2014. It appears to be following a path toward Asian segregation much like Covina is on the path to Latino segregation.

White preferences are another major factor that helps explain re-segregation.

Our model showed that, broadly speaking, during the 1980s, whites stopped fleeing from neighborhoods that were becoming integrated. But then — more than any other racial group — when whites did move they chose new neighborhoods with same-race neighbors.

In other words, Latinos moving to an area would not cause most whites to move out. But the prospect of having Latino neighbors might be enough to prevent whites from moving into a neighborhood. (Whites are moving to one kind of integrated neighborhoods: those that are gentrifying like downtown Los Angeles. But many fewer neighborhoods are gentrifying than segregating.)

For a time, places like Covina and Norwalk will remain integrated. But as whites in these areas get older and die, the outcome is clear. Consider the age patterns: In Covina, 22% of whites are 65 or older; only 14% are under the age of 18. Among Latinos in Covina, 6% are 65 or older; 32% are younger than 18.

Segregation is not, however, inevitable. Our statistical model found that in 20% of L.A. neighborhoods we examined, whites, blacks, Latinos and Asians have been living together for 10 to 30 years, and no group’s population is changing much faster or slower than any other. In fact, among L.A., Houston, Chicago and New York, Los Angeles had the highest proportion of these “quadrivial” neighborhoods.

There are ways to encourage integration. The Department of Housing and Urban Development has taken a positive step in this direction by requiring all grant recipients to show how they would promote integration, although Congress is threatening to undo this rule. At a local level, investment in neighborhood infrastructure, especially schools, attracts diverse residents and promotes integration. There is also new research that shows whites are choosing same-race neighborhoods not solely because of prejudice or animus, but because they don’t know about more mixed areas. In a separate study of Chicago area residents, for instance, whites were 2 to 6 times less likely than Latinos to even know about majority Latino neighborhoods.

Because so much of the shift in integration is based on whites’ decisions about where they will move next, Los Angeles’ future demographic patterns are in their hands. If whites do their homework, and find out more about neighborhoods that are now unfamiliar to them, they can make L.A. an example to the nation of how to create integration in the 21st century. Otherwise, knowingly or not, they may reproduce the problems of racial segregation for the future.

by Michael Bader | Los Angeles Times

 

Some Wild Stuff Going On in the Los Angeles Housing Market Last Month

Housing prices in Crenshaw jumped way up, while Hancock Park’s tumbled way down

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Redfin’s housing market report for February has been released, and, as per usual, a lot of activity took place east of Vermont. Neighborhoods like Echo Park, Eagle Rock, Glassell Park, Mount Washington, and East LA all saw double digit rises in median housing price.

Mount Washington’s median price for February was up 19.2 percent to $790,000, which is up significantly from the $699,000 median price Redfin cited in January when it predicted Mount Washington would be the hottest neighborhood of 2016. Their prediction may be coming true (self-fulfilling?). Sellers in Mount Washington are getting 6.5 percent above asking price and houses are staying on the market for an average of only 13 days.

 

The Valley also saw some action in February: Studio City, Sherman Oaks, Sun Valley, and Van Nuys all had double digit jumps in median housing prices. Studio City fared the best with a 26.9 percent increase, to $888,250, and a 22.9 percent increase in total sales.

Around town other neighborhoods experienced some major fluctuations. On the positive end, Crenshaw had a big February; median prices in that neighborhood shot up a whopping 66.8 percent, to $628,125. Total sales in Crenshaw were up 64.3 percent.

Redfin also reports a 25 percent increase in the median price of houses on the Westside of town—those are now selling for a median of $1.5 million.

Conversely, Hancock Park did not fare so well in the February report. Median prices for the neighborhood contracted 68.8 percent, to an even (and crazy low) $500,000. Sales were down 31.3 percent and sellers were getting 1.7 percent below asking price.

Los Angeles on the whole had a 14.6 percent increase in median price, up to $590,000. The city also saw a lot of new houses added to the market in February, with inventory moving up 10.5 percent. But total sales were down 2.5 percent for the month.

by Jeff Wattenhofer

The Making of the Most Expensive Mansion in History

On a hilltop in Bel Air, a 100,000-square-foot giga-mansion is under construction, for no one in particular. The asking price—$500 million—would shatter records, but, as ridiculous as it sounds, in L.A.’s unbridled real-estate bubble, this house could be billed as a bargain.

My mansion really is worth $500M, claims the man behind most expensive home ever built which boasts five swimming pools, a casino and a VIP nightclub

  • The Bel Air home, which will be finished in 2017, is close to those of celebrities such as Jennifer Aniston and Elon Musk
  • The property has panoramic views of the LA basin and Pacific Ocean and will cover more than 100,000 square feet
  • The price works out to about $5,000 per square foot, which the property’s developer Nile Niami says is a good price for what the buyer is getting
  • The home will have five swimming pools, a casino, a nightclub and a lounge with jellyfish tanks replacing the walls and ceilings
  • Niami, behind films including action-thriller The Patriot, hopes to double the world-record for the most expensive home ever sold

A mega-mansion in Bel Air has been listed for a whopping $500million – but the extravagant home is worth its value, the real-estate developer claims.

Sitting on a hilltop with views of the San Gabriel Mountains, LA basin, Beverly Hills and the Pacific Ocean, the home will have five swimming pools, a casino, a nightclub with VIP access, a lounge with jellyfish tanks replacing the walls and ceilings, and many other amenities.

The home, which will be finished in 2017 and boasts neighbors including Jennifer Aniston and Elon Musk, will be more than 100,000 square feet – twice the size of the White House.

A home being built in the Bel Air neighborhood of Los Angeles, California, by real-estate developer Nile Niami is being listed for $500million. Above is a depiction of what it will look like when finished.

A home being built in the Bel Air neighborhood of Los Angeles, California, by real-estate developer Nile Niami is being listed for $500million. Above is a depiction of what it will look like when finished

The 100,000-square-foot home, which is still being built (pictured) is close to several celebrities' houses 

The 100,000-square-foot home, which is still being built (pictured) is close to several celebrities’ houses.

The 100,000-square-foot home, which is still being built (pictured) is close to several celebrities’ houses 

The price works out to about $5,000 per square foot, which Hollywood producer-turned-developer 47-year-old Nile Niami notes is less than half of what some billionaires pay for Manhattan penthouses.

Niami, pictured in 2013, said the property will be worth the cost

Niami, pictured in 2013, said the property will be worth the cost.

‘We have a very specific client in mind,’ Niami told Details magazine. ‘Someone who already has a $100million yacht and seven houses all over the world, in London and Dubai and whatever.

‘To be able to say that the biggest, most expensive house in the world is here, that will really be good for LA.’

Niami, behind films including action-thriller The Patriot, hopes to double the world-record for the most expensive home ever sold with the $500million asking price.

He grew unpopular with neighbors last fall, when he sliced off the top of a hill to create panoramic vistas on his four-acre lot.

For weeks, dump trucks filled the neighborhood’s narrow streets as they removed about 40,000 cubic yards of dirt from the property.

Drew Fenton, the real-estate broker listing the property, said that the home is important to Los Angeles.

‘It is by far the most important estate project in Los Angeles over the last 25 years and will raise the bar for all other estates built in the city,’ he told Details.

The home will have several features that most residential properties don’t, including a two-story waterfall, temperature-controlled room for storing fresh flowers, a cigar lounge and an indoor-outdoor dance floor. 

It also will have a 30-car garage, 40-seat screening room and a 6,000-square-foot master suite.  

Sitting on a hilltop with views of the San Gabriel Mountains, LA basin, Beverly Hills and the Pacific Ocean, the home will have five swimming pools, a casino, a nightclub with VIP access, a lounge with jellyfish tanks replacing the walls and ceilings, and many other amenities.

Sitting on a hilltop with views of the San Gabriel Mountains, LA basin, Beverly Hills and the Pacific Ocean, the home will have five swimming pools, a casino, a nightclub with VIP access, a lounge with jellyfish tanks replacing the walls and ceilings, and many other amenities

The price works out to about $5,000 per square foot, which Hollywood producer-turned-developer Niami notes is less than half of what some billionaires pay for Manhattan penthouses.

The price works out to about $5,000 per square foot, which Hollywood producer-turned-developer Niami notes is less than half of what some billionaires pay for Manhattan penthouses.

But when inside the master suite, ‘it doesn’t look that big, because everything else is so big’, Niami said.

It will have three smaller homes, four swimming pools including a 180ft long infinity pool and a 20,000-square-foot artificial lawn to comply with California’s drought-induced water restrictions.

A glass-walled, high-ceiling library will take part of the first floor, but Niami said not to expect to find books in the room.

‘Nobody really reads books,’ he said. ‘So I’m just going to fill the shelves with white books, for looks.’

Niami sells his homes fully furnished and decorated to the buyers’ tastes.

The property’s chief architect, Paul McClean, told Details that listing prices are not often the reality. 

Drew Fenton, the real-estate broker listing the property, said that the home is important to Los Angeles in that it will ‘raise the bar for all other estates built in the city.’

Drew Fenton, the real-estate broker listing the property, said that the home is important to Los Angeles in that it will ‘raise the bar for all other estates built in the city’

‘The numbers right now are crazy, no matter how you look at them,’ he said. ‘But for most people who buy these kinds of houses, it’s not a decision that they calculate based on price per square foot.

‘It’s more about the emotional draw. With Nile, we’re trying to sell a lifestyle, a sense of how people imagine they would live.’

Niami said he does not know who sold him the Bel Air plot – the secret transaction took place through a bank trust where the owner remained anonymous.

The real-estate developer declined to say how much he paid for the property, which originally included a decrepit home that has since been torn down.

As for who he’d like to live in his soon-to-be mega-mansion: ‘It doesn’t make a difference as long as they pay the money.

The home will have several features that most residential properties don’t, including a two-story waterfall, temperature-controlled room for storing fresh flowers, a cigar lounge and an indoor-outdoor dance floor. This image gives an idea of what it will look like when finished.

The home will have several features that most residential properties don’t, including a two-story waterfall, temperature-controlled room for storing fresh flowers, a cigar lounge and an indoor-outdoor dance floor. This image gives an idea of what it will look like when finished.

Read more: http://www.dailymail.co.uk/news/article-3318573/Nile-Niami-claims-Bel-Air-meganmansion-really-worth-500million.html#ixzz3racjlltZ

Why China Is on an L.A. Spending Spree: “It’s Just Monopoly Money to Them”

by Seth Abramovitch in The Hollywood Reporter

“$20,000 on drinks is a plain night on the town,” says one local restaurateur, as big-time Chinese money pours into Los Angeles, consuming everything from wine to diamonds to watches to cars to prime real estate (in one case, 25,000 square feet for a teenage college student).

A version of this story first appeared in the Oct. 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

The ultra-wealthy Chinese tend to get what they want, and right now most of them want one thing: to get out. More than 60 percent of China’s most affluent citizens have already left the country or are planning to leave it, according to the Los Angeles Times. And L.A. — a politically stable and always-comfortable metropolis where catering to the rich is a way of life — is among their most coveted destinations. The numbers don’t lie: In 2014, a full 20 percent of the city’s $8 billion in real estate sales was purchased by Chinese buyers. Showing no signs of slowing down, this injection of Chinese capital and influence can be felt at every level of L.A.’s culture of consumption.

Thanks to big import and consumption taxes introduced in recent years by President Xi Jinping, most wealthy Chinese consider the cost of homes and luxury goods in L.A. to be something of a bargain. “They’ll buy high-end watches in threes and fours,” says Korosh Soltani, owner of Rodeo Drive jewelry store David Orgell, of his Chinese clientele, who’ll typically drop $200,000 on gifts in a single shopping spree. (Soltani has so many Chinese customers, he asks companies like Corum and Baume & Mercier to send him watches bearing the Mandarin logos they are more familiar with.)

Brand names are essential: Hermes tableware, Lalique crystal and yellow-gold jewelry from Carrera y Carrera — gold is the most popular gift among Chinese — are consistent hot sellers. Spending can easily soar much higher if shopping for a special occasion: “We just had a Chinese family come in looking for the finest, most vivid canary yellow diamond you can have. Fortunately I had one,” says Beverly Hills jeweler Martin Katz of a recent engagement ring purchase. “It was a seven-figure-priced stone in the six-carat range.”

While money is frequently no object, the Chinese still like to negotiate and won’t close a deal without getting “big discounts … it’s in the culture,” Soltanti says. They also expect a little something extra: “We ask our brands to give us pens or hats that will keep them happy. They’re very appreciative of it.”

The Beverly Center, meanwhile, has taken active steps toward luring China’s big spenders: The high-end shopping mall — which houses Louis Vuitton, Prada and Fendi boutiques — provides a Chinese version of its website and brochures, staffs Mandarin-speaking concierges, accepts China UnionPay credit cards and promotes itself on Sina Weibo, China’s answer to Twitter.

“They arrive with this endless stream of money without working or earning it. It’s just Monopoly money to them,” says Gotham Dream Cars’ Rob Ferretti of Chinese customers who come to him in search of an exotic ride. They lease cars like the $397,000 Maybach 57S for $2,200 a day. Color-wise, “They love these light blues,” Ferretti says. They’re even particular about the car’s VIN number: They like when it has as many eights in it as possible.

“Eight in Chinese rhymes with the word for prosperity. It’s extremely significant,” explains architect Anthony Poon of Beverly Hills-based Poon Design Inc. The Chinese fixation on the number can verge on the obsessive: One client, whose husband is a major film director, wanted Poon to design her an 8,888-square-foot home, while another Chinese developer working on a luxury community in Pacific Palisades insists that it have eight estates.

“They understand vertical living very well, and they love new construction, so condos are very much in their wheelhouse,” says Beverly Hills realtor (and Real Housewives of Beverly Hills star) Mauricio Umansky of his Chinese clients, most of whom are relocating from densely packed urban centers like Shanghai to the comparative expansiveness of Arcadia, an L.A. suburb and Chinese-wealth magnet. If their kids are attending UCLA, parents will think nothing of spending $1 million to $3 million or more on a Westwood pied-a-terre instead of putting their children up in dorms. “The wealth and lack of reference point can be staggering,” marvels Poon, before sharing an anecdote about the family who purchased a 25,000-square-foot home in the Hollywood Hills for their teenage son. On the ultra-high-end market — mansions that cost $50 million and above — Umansky estimates that about 25 percent of sales are made to Chinese, a figure he says is climbing due to ongoing “political and financial uncertainty in China.”

When it comes to design, feng shui — the ancient philosophy of living in harmony with your surroundings — is a top priority among Chinese buyers, with architects scrambling to accommodate its highly specific criteria. According to Poon, a contained foyer is preferable to an open-plan entryway (it helps retain life force, or chi); floor plans must be simple, with no awkward or cramped spaces; furniture should be placed away from doors and be round, not rectangular; sloping backyards are a no-no (again, to avoid chi loss); and, says Umansky, “you don’t want the staircase facing the front door because it’s the money and fortune flowing out.”

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Dining, too, comes with its own set of Chinese rules. For a taste of home, Chinese emigres gravitate to authentic dumpling houses like Din Tai Fung — either the original in Arcadia or either of two trendier outposts in Costa Mesa and Glendale. (The latter location, nestled in Rick Caruso’s Americana at Brand, serves the much-coveted black-truffle soup dumplings, a Hong Kong delicacy.) Restaurateur Peter Garland, owner of Porta Via on Canon Drive, notes that uber-wealthy Chinese diners spend freely on high-end wines — especially chardonnay and California cabernet. That extends to any restaurant boasting a stellar wine list, as Beverly Hills mainstays like Cut or Mastro’s regularly draw a deep-pocketed Chinese clientele who’ll think nothing at dropping four-figures on rare vintages and for whom “$20,000 on drinks in one night is a plain night on the town,” says Poon.

‘Most Expensive’ Mansion Listing In U.S., Palazzo di Amore Cut Price By $46 Million

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Despite the $46-million price cut, the 53,000-square-foot Beverly Hills home is still asking a top-of-the-charts $149 million. (Marc Angeles | Inset: Tribune Publishing)

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