In 2011, Dr. Raj Kanodia, a plastic surgeon to the stars, bought the lot next door to his Mediterranean home in Bel Air for $6.8M. His plan was to build a “modest” home for himself or to sell but, with every architect with whom he discussed his ideas, the project grew from a 3,000 square foot home to a 34,000 square foot mega mansion with 9 bedrooms, a Portuguese-limestone façade, spa, theater, 2,000-bottle wine room, three kitchens, fully loaded gym and a fully equipped medical clinic on the lower floor where he could “work at home” doing injections and surgeries.

Additionally, Kanodia embellished the grounds with exotic plants and trees from India, rolling hills and hanging gardens. The views, as one could only imagine, are some of the most spectacular of Los Angeles the city, the mountains and the ocean.

Kanodia felt his experience reshaping faces would translate well into reshaping homes. “The house is built with the same millimeter precision of the beauty I like to create. I like to create beauty, it’s a sense of euphoria for me.”

The doctor listed the home in 2018 for $180M and his sense of euphoria was jolted by a sense of reality. One of many spec builders drawn to flipping profits spurred by the 2014-2015 boom, Kanodia’s modern glass palace is now one of too many newly build spec homes on the market. In fact, his next-door neighbor listed his spec house for $250M in 2017 but soon cut its price to $150M. No word as to whether or not his neighbor has yet to find a buyer since, due to overbuilding and overpricing, there is no urgency for buyers to make deals.

Dr. Kanodia’s mega-mansion is symptomatic of the ultra high-end glut in some of the most affluent zip codes around the country. For example,

  • Manhattan has been experiencing six straight quarters of sales declines, the longest downturn in three decades, according to a report from Douglas Elliman and Miller Samuel.
  • Ultra luxury prices in Greenwich CT fell -24% in Q1 2019 and the number of listings exploded +68%.
  • Luxury sales in the Hamptons diminished -19% in Q1 2019 and the number of listings doubled.

Kanodia has more options than most luxury spec builders…he could live in his creation and sell his current Mediterranean living quarters for approximately $20M…he could find an investor/partner with whom to share the debt load and maintenance costs of his palace…he could rent out the house for $1.5M/month…he could/would consider offers on the house for $120M+ and/or he could “work at home” in the mega-mansion’s completed medical clinic doing more injections and surgeries in his spare time to help pay his bills.

Or, Kanodia could simply, as he told Robert Frank of CNBC, “accept whatever is there. For me to live in this house for just one day, it’s a success.”

 

What with foreign buyers evaporating and tax changes making it much more costly to live in high-tax states, mostly white spec mansions (and modern glass palaces) are becoming white elephants in the country’s most expensive zip codes.

 

 

 

Thanks to Robert Frank’s piece on “Wealth” in CNBC as a source for this piece.