Beverly Hills Boosts Luxury Market with High-End Developments Amid LA's Mansion Tax Struggles

The introduction of the Los Angeles mansion tax, effective since April 2023, has sparked varied reactions. While some criticize it for exacerbating market issues, others see potential benefits for luxury housing development in nearby areas like Beverly Hills. The tax, known as Measure ULA, aims to address housing and homelessness issues by generating revenue, having raised approximately $215 million in its first year according to the Los Angeles Times. However, the tax applies only within the City of Los Angeles, not in neighboring cities like Beverly Hills.

Exemption and Real Estate Trends in Beverly Hills

Beverly Hills, a city independent from Los Angeles and exempt from the mansion tax, continues to experience a steady real estate market despite a general slowdown in luxury sales. The absence of the mansion tax in Beverly Hills may give it a competitive edge, as evidenced by a study from appraiser Jonathan Miller. This study highlights a 40% decline in high-end sales in Los Angeles post-tax implementation, compared to a 20% decline in Beverly Hills. The city has seen activity particularly in new luxury condominium developments by major brands like Mandarin Oriental, Rosewood, and Aman.

Impact on Luxury Condominium Developments

The mansion tax absence has encouraged luxury condo developments in Beverly Hills, particularly in the Golden Triangle area, known for its prestigious shopping and dining venues. The Mandarin Oriental Residences launched sales in 2023, offering high-end condos with features like outdoor spaces and upscale dining by chef Daniel Boulud. Prices for these units range from $2.97 million for one-bedroom units to $50 million for the Penthouse West.

Similarly, Rosewood Residences Beverly Hills, managed by Rosewood Hotels & Resorts, offers estate-sized condos priced between $10 million and $45 million. With amenities like private pools, extensive living spaces, and luxury services, these developments are attracting buyers who prefer to avoid the mansion tax.

The Broader Luxury Real Estate Market in Beverly Hills

In addition to condos, Beverly Hills offers a range of high-end single-family homes, such as a four-bedroom estate on Summitridge Drive listed for $18.99 million and a nine-bedroom mansion on Beverly Park Way for $48.5 million. These properties are marketed by prominent real estate firms like Douglas Elliman and Jones Fridman International.

The 17.5-acre One Beverly Hills project is a notable development transforming the area’s landscape, featuring the Aman Beverly Hills hotel and approximately 200 residences. Though still under construction, the project is generating significant interest and brisk sales.

Financial Considerations and Market Reactions

The wealthy in Beverly Hills are keenly aware of the financial implications of the mansion tax, which imposes additional costs on property sales above $5 million. Real estate expert Ernie Carswell notes that buyers are reluctant to incur extra expenses that could significantly affect their investments. He suggests that if Beverly Hills were to introduce a similar tax, it could negatively impact property values and drive buyers to other markets. Therefore, the absence of a mansion tax remains a crucial factor for maintaining Beverly Hills’ appeal to high-net-worth individuals.