Seeking a warmer place for her retirement, interior designer Jane Gaillard left Manhattan after 40 years and moved to Palm Beach, the exclusive island community in Florida, just weeks before the world went into lockdown.
She was not the only one. “There were many residents I already knew from the East Coast. I felt comfortable immediately,” she says. “Life’s a bit slower, in a good way,” she adds. “And the residents have enough New York edge to keep the conversations lively.”
The buzz barely dimmed throughout the pandemic, she says. “The restaurants flourished [because] we have outdoor dining all year round. People never stopped playing golf and tennis. My new sport is croquet.”
But the real frenzy has been in its property market. In the first nine months of the year, $3.418bn was spent on single-family homes, according to Frisbie Real Estate. Between July and September, the median price paid for a single-family home in Palm Beach was $8.725m, 49 per cent higher than in the same period in 2020, according to data from estate agency Douglas Elliman.
At the same time, the number of homes for sale has fallen sharply. By the end of the third quarter of this year, there were only 37 single-family homes advertised for sale on the Multiple Listings Service, according to Frisbie, down from 113 in the same period in 2020. The number of condos and apartments fell from 255 in the third quarter last year to 54 the same period this year.
“Palm Beach is sold out. There’s nothing left,” says Christopher Leavitt, a realtor at Douglas Elliman. “Even when owners are being offered outrageous amounts, they are reluctant to sell as they have nowhere to move to.”
Leavitt was involved in this year’s biggest sale — and what is believed to be the highest price ever paid for a residential property in Florida — when New York financier Scott Shleifer paid $122.7m for a beachfront mansion.
But since the start of the pandemic, there has been a run of megadeals on the 16-mile-long barrier island, with 35 sales recorded above $30m, 20 above $40m and two above $100m, according to data compiled by Miller Samuel.
People do come for the “tax play”, says Leavitt, referring to Florida’s low tax environment. “But at the end of the day it’s about lifestyle. These people are ploughing hundreds of millions into a house. This isn’t a whim or a Covid play. [Palm Beach] is one of the most beautiful towns in the world — it’s Cap Ferrat, Bel Air, a miniature New York City, all wrapped up in one.
It is something of a monoculture, though. Ninety-five per cent of the island’s 9,000 residents are white, and the average age is 70.
The lack of stock — and billionaires buying out the millionaires on the island — is also driving money westwards. It’s a hop across the bridge over Lake Worth to the far bigger and more diverse location of West Palm Beach. You can find studio flats with partial water views there for $250,000, or spend several million on a waterfront home. Burt Minkoff, another realtor with Douglas Elliman, says West Palm Beach offers “a more urban experience”.
Thirty years ago, that wasn’t a good thing. This rundown city had one of the highest crimes rates and crack addiction problems in the US.
Crime is still an issue — the city’s north-west is generally considered the safest area, but in some southern neighbourhoods you have a one in 18 chance of being the victim of a crime, according to the independent data analysis company CrimeGrade.
But in recent decades, public and private money has been ploughed into regenerating downtown. Rosemary Square, a new mixed-use development of restaurants, hotels, offices and residential towers, following $550m investment by Related Companies in 2019, is latest of these. New York’s Hospital for Special Surgery has just opened a new facility and the University of Florida recently announced plans to build a graduate school campus downtown.
West Palm Beach may only be minutes from the billionaires’ island, but property prices can be half as much, which is driving some record-breaking sales there too. Minkoff sold the city’s most expensive single family home in July, a six-bedroom waterfront house on South Flagler Drive, one of the city’s most affluent areas, for $16.02m. He adds that a similarly sized property on Palm Beach Island would cost between $30m-$40m.
“People have been priced out of Palm Beach,” he says, but they are also questioning why they should spend $10m for an average-sized home on a quarter-acre lot, when in West Palm Beach, you can buy a large waterfront home with rights to use the water for a similar amount.
Gaillard is among those who have decided to make the switch. She tried to buy in Palm Beach Towers last spring, after renting there for her first year, but found prices had doubled within a few months. “One-bed apartments that sold for $450,000 last fall were going for $800,000 and needing a full renovation,” she says. Instead, she has bought a two-bedroom, water-view apartment for $625,000 on West Palm Beach’s South Flagler Drive.
“I go back and forth to the island every day to see friends, but I think I made a good choice,” she says of her move. “Palm Beach has an older, white and richer reputation. West Palm Beach is more forward-thinking and has lots of energy. There’s a younger, more diverse population and new buildings — restaurants, offices, residential — are going up all over.”
Real estate talk is inevitably the hot topic at dinner parties on both sides of the waterway, she says. “I’m realising that a lot of the really crazy prices come from consortiums buying up properties for tens of millions of dollars, renovating them and putting them back on the market for busy billionaires who want a property all ready to move into. Price seems to be no object,” says Gaillard.
But her bigger concern is Covid, the high rates of infection and low rates of vaccination, which she blames on Ron DeSantis, Florida’s Republican governor. In Palm Beach County, only about 62 per cent of residents are fully vaccinated — case numbers are falling, but are currently around 140 a day. Climate change — and rising water levels — are also high on the minds of those who live on the Intracoastal Waterway, where many homes sit barely above sea level.
The non-profit research foundation First Street says that 84 per cent of homes in the Palm Beach zip code are at risk of flooding. It predicts that by the middle of the century, 94 per cent will be at risk.
Whether property buyers are purely thinking short term, or think nothing of paying millions of dollars to elevate their homes several feet above sea level, little seems to be dampening billionaires’ desires for a Palm Beach home.
When asked, local realtors bristle. While the Palm Beach market is “on fire”, as one agent puts it, these buyers can afford to ignore it.
In the third quarter of 2021, the median sales price for a single-family home in Palm Beach hit $8.725m; the median price for a condo was $685,000, according to Miller Samuel.
The priciest rental this winter is a six-bedroom oceanfront estate in Palm Beach, available for $250,000 a month, through Douglas Elliman.
What you can buy for . . .
A three-bedroom remodelled condominium with a 90ft wraparound balcony in The Halcyon, a six-storey, 11-acre beachfront development on South Ocean Boulevard, Palm Beach. Facilities include a fitness centre, clay tennis courts and pool. Available through Knight Frank.
A villa on a corner plot in the El Cid neighbourhood of West Palm Beach. All five bedrooms have en-suite bathrooms, with a large terrace off the master suite. Outdoors there is a pool, spa, summer kitchen and guest accommodation. For sale with The Hasozbek-Garcia Team.
A five-bedroom family home in Palm Beach, within walking distance of The Beach Club and The Palm Beach Country Club. All of the ground-floor rooms at the back of the house feature French doors that lead to the landscaped swimming pool, while the property features hurricane doors and windows throughout, even in the two-car garage. On the market with Douglas Elliman.
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Source : https://www.ft.com/content/44a8b692-dee4-4c07-8dc2-04fb8c89cf852821