Factors behind the price tags of the UAE's and the world's most expensive properties.
The Dh75m house
Even by UAE standards it's a lot of money but Dh75m has just been spent to purchase a villa in the exclusive Dubai neighbourhood of Emirates Hills. At current exchange rates, that's about US$20.4m, £13m or 926m Indian rupees.
Now there's another villa on the market - on Palm Jumeirah - that can be yours for the same price. This provides positive answers to two of the most commonly asked UAE property questions: are top-end properties still sellable in the aftermath of an economic crisis, and are there really wealthy individuals out there ready to spend large sums of money to acquire them?
The question that is not asked as often is how these prestigious piles are actually priced. Is there a magic formula that agents use or do they simply slap a figure on them? Is a valuation done in a heartbeat or does it take weeks of toil, furrowed brows and beavering away at a calculator? And what is worth more: an air-conditioned tennis court, a gilded and chandelier-encrusted bedroom or a leather-walled soundproofed gymnasium?
According to Christoph Engels, a partner in Engel & Völkers, the property agency in Dubai that is selling the Palm Jumeirah villa, valuing top-end properties is a delicate mix of art and science.
He says a normal apartment in Dubai Marina has a market price and agents cannot really ask much more than the market price; however, for the truly luxurious and unique places the pricing technique can be as individual as the property itself.
"The first thing I do - before I have even thought of a price - is sit with the seller and start to write a strategy," he says. "I will note down some of the basic elements such as the size of the plot and the property, the location and amount of water frontage, and the views."
The 929 sq m four-bedroom and five-bathroom property is located near the tip of one of the eastern fronds of Palm Jumeirah, with far-reaching view over the water and, from the garden, a glimpse of Atlantis The Palm.
"Then I'll examine details such as the age and condition of the villa, has it been maintained or left to decay, and the amount and quality of work that the owner has had done: has it added value or decreased the potential asking price? For example, the kind of marble that has been used and where it came from - European marble can be substantially more valuable than Chinese. The work on the Signature Villa on Palm Jumeirah is excellent and very detailed."
The villa's owner, Holger Albers, who owns a fund management company, and builds, restores and re-sells houses as a hobby, has totally changed the floor plan, increasing the total area and making it more open-plan. The materials used in the renovation are all European and of the highest quality and Albers flew in his own hand-picked German and Austrian craftsmen to do all of the work.
The first step was enclosing the villa's central courtyard, transforming the dead space into a double-height, domed atrium encircled by a first-floor gallery that leads to the bedrooms, cinema and games room. On the ground floor the atrium's walls were opened up to the light and view with huge panels of glass, and a "garden room" extension was added to the beach facade, emphasising the intimate contact with the beach and sea.
Standard doors were replaced with full-height double doors of solid wenge wood, custom-made in Austria, right down to the stainless steel handles and hinges; the atrium floor is black Italian marble, book-matched so that its natural white veining runs diagonally across the space; elsewhere, hardwood floors were hand-cut and laid - broad planks inset with a subtle pattern that creates a three-dimensional effect. Some feature walls downstairs have been finished in pillow-quilted velvet, subtly graduated in colour from a silvery cream to pale beige; upstairs in the gallery and master dressing room entire walls of cupboard fronts have been finished in the same Poltrona Frau leather used for Ferrari seats, with discreet saddle-stitching and polished stainless steel handles. The kitchen is by Minotti and the bathrooms bear no resemblance to standard UAE fare. Such attention to detail makes it one of the most expertly crafted private houses in the UAE.
"To get an accurate price I need to calculate not just how much money has been spent on the villa since it was originally bought but also how much time, because as this work was going on, of course there was no rental income coming in," says Engels.
Some properties have some of these aspects, which can increase value, but it is rare to find one that has them all. A property might have a big and expensive footprint but views of a cement factory or the dodgy joinery and grouting of cowboy builders will send the price tumbling.
The Emirates Hills villa had some strong selling points, too: 3,500 sq m of land set directly on the edge of The Montgomerie golf course, a ballroom-cum-nightclub in the basement for 200 people, eight bedrooms, a nine-seat private cinema (maybe for those waiting to get into the nightclub), a state of the art CCTV network and smart technology system, French and Italian marble flooring, a large, two-level pool, a separate pool house with spa and gym and a cigar lounge with billiards table.
According to one of the agents who was handling the villa before the sale, Gregory Antioch of Cluttons in Dubai: "There's nothing in that villa that is standard; it is truly a unique property and people pay a premium for anything that is rare or one of a kind. Almost everything was custom-made for the original owner and imported, some at great expense."
The best example is the stone entrance fountain in the form of an oversized chessboard and pieces hand-carved from chunks of Italian travertine.
"All these things add immense value to the property and help us to estimate the total worth," says Antioch.
Let's say - just for fun - that you have a spare Dh75 million fluttering about somewhere but Palm Jumeirah and Emirates Hills are not quite your scene. Maybe London's stockbroker belt would appeal: a fully restored six-bedroom country house, with 16th-century origins, set on a 8.5-hectare estate in Surrey is jointly listed by the agents Hamptons and Savills. If you'd rather remain tax-free, Knight Frank has a newly built five-bedroom waterfront house of 1,000 sq m on the island of Jersey. Prefer warmer weather? The same money will buy you a 3ha estate in Marrakech with two independent houses comprising nine bedrooms in total (Savills); a front-row villa overlooking the sea in Camp de Mar, Mallorca, with six bedrooms and two swimming pools (Engel & Völkers); a five-bedroom house with sweeping sea views and a lovely 0.5ha garden near the heart of St Tropez, or a classically styled four-bedroom house on Indian Creek Island, a golf estate of just 40 properties near Miami, with a 0.8ha garden, 61m water frontage and private dock (both Knight Frank).
Look at it another way: if those Dh75m houses are the top of the range here and it's "best in the location" that you're after, rather than something that fits a rigid budget, two contenders in the UK are Gordon House in Richmond, south-west London, for £15m (Dh87m) and Upper Ribsden in Surrey for £25m. The former is a fully renovated Grade II-listed building with more than 80m of Thames embankment, seven bedroom suites, a basement garage for seven cars, separate annexe, converted chapel and a drawing room originally designed by the noted 18th-century Scottish architect and interior designer Robert Adam. Upper Ribsden is a brand new country manor house in 2.4ha of prime Surrey real estate, with similar facilities but also rubbing shoulders with the famous Sunningdale Golf Club.
Both are the domain of James Crawford, a partner with 23 years of experience in the country department of Knight Frank. To him, the valuation of prime country property is an art rather than a science.
"Valuing houses and apartments in more built-up areas is less challenging because the volume of sales is higher and there tend to be established market rates to compare with, but in more rural areas and where the properties are over £5m or £10m, it can get much harder and more complex," he says.
"One crucial thing we look for is 'comparable evidence' so that if, for example, a five-bedroom Old Rectory in Gloucestershire sold for £4m, another one in a neighbouring village might go for a similar price, but only if it has comparable attributes to the one sold earlier.
"If one has 200 acres [80ha] and the other has five acres, it's obvious which will command the higher price."
There are numerous factors that affect value and marketability: for example, whether a property has unsightly pylons spoiling the view, noise from a nearby motorway, or a public footpath running near the house or through the land. Equally, living near a high-profile neighbour or being of historic importance can raise the value.
The job of valuing high-end homes becomes even more complex when the price rockets to dizzying heights.
Take the Portabello, a property spanning three prime ocean-front lots in Orange County, California. For $75m (Dh275m) you get a sprawling white-roofed building designed by the architect Brion Jeannette in a contemporary style influenced by Gaudí's Barcelona triumphs, with flowing walls and hardly a straight line in sight. The eight-bedroom house covers almost 2,800 sq m and has three pools, lush gardens, a small waterpark (with slides), a huge saltwater pool and uninterrupted Pacific Ocean views. In the basement, the owner has recreated part of the main street of his home town of Charleston, West Virginia, by adding a diner with a working kitchen, vintage milkshake machines and a soda fountain, a two-lane bowling alley, and a 12-seat cinema called the Rialto, complete with a ticket booth and a small stage. The basement is shared with a huge garage where the owner keeps his classic car collection and has installed a small repair centre and a hydraulic lift to bring the vehicles floating serenely to street level.
Climbing the price ladder still higher, we come across Hearst Mansion in Beverly Hills, which was offered for sale in 2007 for $165m but this September came back on the market for the knock-down price of merely $95m. As well as offering 29 bedrooms, three pools, a 15m-high entrance hall, a library, billiard room, nightclub, eight-car garage and two screening rooms, the Mediterranean-style pink stone mansion has the all-important X-factor: it was built for the publishing tycoon Willam Randolph Hearst (the inspiration for Orson Welles's Citizen Kane); John F Kennedy and Jacqueline took their honeymoon here and fans of The Godfather will recognise it as the location of the famous "horse head in the bed" scene. It's impossible to put a figure on such a unique history but it is certainly a significant factor in the pricing.
Somehow, the price of the villas on Palm Jumeirah and in Emirates Hills doesn't seem so high after all.