There are plenty of property vendors around Australia who can sympathise with the corporate undertakers from insolvency firm PPB, who are trying to sort out the $1 billion collapse of coal and cattle baron Ric Stowe.
As residential markets around Australia cool, sellers are suddenly discovering that buyers are just that bit harder to find, and their cheque books are that bit harder to open.
That’s exactly the problem confronting Perth real estate agent Andrew Porteous. He’s been engaged by PPB to try and sell Ric Stowe's sprawling mansion Devereaux Farm, which has five separate houses, two pools and a chapel.
The pile has a price tag of about $68 million, but Porteous is struggling to find a buyer. Things have got so grim that he’s now talking about subdividing the property into 16 separate parcels in order to get the best return.
Porteous might be struggling to pull off what would be Australia’s most expensive ever house sale, but it would be wrong to think that Australia is in the middle of prestige property sales drought.
The last 12 months has seen price records set for home in Perth, Melbourne and Canberra, and a string of big sales in Sydney.
And this week came the news that confirms that Australia is holding its own in the prestige property world, with Sydney’s richest strip holding its place on the annual list of the world’s most expensive streets.
The list, compiled by website Financial News with some help from top-end real estate companies Knight Frank and Savills, has become something of a barometer of how the ultra-rich are travelling.
In 2009, the value of homes on the pricey strips fell by an average of 12 per cent as the GFC rocked wealthy entrepreneurs all over the world.
This year, average values are down 15 per cent, but a closer inspection of the list highlights the gap between the wealthy of the West (Europe and North America) and those of the East (Asia).
For example, topping this year’s list is Hong Kong’s Severn Road, where property has been valued at $US70,000 per square metre this year after valuations plunged to $US40,000 last year. Hong Kong’s property market is flying, spurred by booming wealth levels in mainland China. Last week, a development company paid a staggering $1.5 billion for a plot of land at prestigious Victoria Peak.
On the other side of the world, in beautiful France, luxury property prices are heading the other way. Chemin de Saint-Hospice, as 15-house street in Cap Ferrat, just east of Nice, fell from second on the list to fifth, after valuations tumbled 45 per cent. Avenue Montaigne, which is in the heart of Paris’ 'Golden Triangle' of luxury addresses, has also seen valuations drop 40 per cent to $US32,000 per square metre.
As well as the generally poor state of the European economy, commentators say the strength of the Euro over the last year has also been a deterrent for buyers.
Things have been better at two of the world’s best-known prestige strips, London’s Kensington Gardens (where prices have been steady at $US65,000 per square metre) and New York’s Fifth Avenue (where prices fell 10 per cent to $US65,000).
The only other street to increase in value this year was Ostozhenka in Moscow, where prices increased 14 per cent to $US40,000 per square metre.
Coming in again at number 10 on the list was Australia’s only entrant: Wolseley Road in the ritzy Sydney suburb of Point Piper, where prices were steady for the second consecutive year at $US28,000 per square metre.
The street, which is home to wealthy entrepreneurs including John Symond and Frank Lowy, is known as Australia’s premiere address thanks to its stunning harbour views.
The price tags are astronomical. Financial News says recruitment entrepreneur Andrew Banks listed his mansion earlier this year with an asking price of $US53 million, while a mansion owned by the late rich list members Peter and Ruth Simon was put on the sale block for $60 million last year (apparently it remains up for sale).
According to a recent list of the biggest sales in Sydney last financial year, published by the Sydney Morning Herald, Wolseley Road was home to the seventh biggest sale of 2009-10, with one home selling for a reported $11.9 million.
Tony Crabb, national head of research at Savills Australia, says conditions at the top end of Australia’s residential market – which he categorises as the $2 million-plus bracket – have recovered well since the GFC and are now stable.
"The top end of our residential market took a fair old beating at the height of the GFC and we saw drops as high as 30 per cent in some areas,” Crabb says.
He says the big problem was margin calls, which forced wealthy entrepreneurs to offload equities and properties.
"As equity prices declined in 2008 and 2009, those top end suburbs were shattered, particularly in Sydney. There were sellers everywhere, and of course no buyers,” he says.
But things are now back to normal.
"The forced sellers have all been forced, and the market has rebounded and then some. We’re seeing normal trading conditions and there is depth in the market and a better balance between buyers and sellers," he says.
It’s a similar story in Brisbane, where buyers’ agent Scott McGeever of Property Searchers says the $1 million-plus segment of the market remains strong.
"The top end of the market is just not susceptible to interest rates,” he says.
"Those sort of marquee properties that people tend to pay the big money for always do well – properties that have fantastic views, big land and are close to the city.”
A string of recent mansion sales support the view that prestige property remains buoyant.
In November 2009, a Perth mansion belonging to billionaire mining heir Angela Bennett was sold for an Australian-record price of $57.5 million to Chris Ellison, founder and major shareholder in mining services company Mineral Resources.
In March, the Inge family set a Melbourne record when they sold a mansion in the up-market suburb of Toorak to property developer Harry Stamoulis for $25 million.
Even Canberra has seen a record price, when a businessman paid $7.3 million for a five-bedroom mansion in the suburb of Red Hill.
According to the SMH list, the top seller in Sydney last financial year was a three-level 'European-style' villa called Carrara, in the suburb of Vaucluse. It was offloaded by private equity investor Patrick Keenan and his wife Elizabeth for an estimated $26.75 million.
Of course, that is still well below the biggest ever sale recorded in Sydney, which was set back in 2008 when currency trader Ivan Ritossa and his wife paid $45 million for a Vaucluse mansion called Coolong.
However, that record may be tested this spring, when Point Piper mansion Altona, owned by Deke and Eve Miskin, is put up for sale with an asking price of $40-45 million.
Looking forward, Tony Crabb is confident the top end of the market will remain stable, providing share prices and company profits remain relatively strong.
"There certainly isn’t reluctance at the top end of the market. Consensus is that the economy is continuing to recover and gaining strength. There doesn’t seem to be anything on the horizon that would see that being de-railed,” he says.
He says a new mini mining boom and improving financial services profits could even see more buyers emerge.
Andrew Porteous and the insolvency experts trying to sell Ric Stowe’s Devereaux Farm certainly hope he is right.