South Florida Business Journal
June 15, 2012
Price Of Versace’s Former Home Raises Question Of A New Bubble
By Oscar Pedro Musibay
Billionaire art aficionados or free-spending, globe-trotting gamblers known as whales may be the best hope for getting anywhere near the $125 million listing price for the onetime Miami Beach home of Gianni Versace.
The listing price for Casa Casuarina has put the national spotlight on the skyrocketing mega-mansion prices in the Miami area, including a CNBC report that asked whether there is an über-rich housing bubble fueled by foreign buyers.
The Business Journal’s weekly SoFla Luxe column has seen a parade of eye-popping sale prices, with many of the Miami sales belonging to Coldwell Banker brokers Jill Eber and Jill Hertzberg, who have trademarked “The Jills.”
Their listing price for the 19,000-square-foot Casa Casuarina, as Versace dubbed the 1930 property, works out to $6,578 a square foot and represents the top listing for a property on one luxury homesite in the Miami area. The next three properties – all on Indian Creek, near Miami Beach – were going for $38 million to $52 million, or $1,733 to $2,365 a square foot.
Still, they don’t offer the 54-foot-long mosaic pool, lined in 24-karat gold, and a garden area created by Versace, who invested $33 million in upgrades. The home features 10 opulent bedrooms and 11 bathrooms, along with numerous frescos and ornate statues.
Privacy might be a downside: Tourists frequently snap pictures by the front gate where Versace was slain in 1997 by serial killer Andrew Cunanan. The actual oceanfront sand is across the street.
Very little can be changed on the property because it has been classified as historic by the city. Even Versace faced a lot of opposition when he added a south wing, the pool and garden area.
Commercial use possibilities
Buyers would have to consider whether they want to live there exclusively, or use it as a commercial operation.
The property, at 1116 Ocean Drive, is zoned as mixed-use entertainment, which is in line with its current use. The property is home to a Barton G-operated restaurant, which has a long-term lease, and hotel rooms.
Kevin Tomlinson, VP with One Sotheby’s International Realty, estimated the commercial value of the property would be no higher than $60 million, if it could be converted into a super-exclusive, high-end boutique hotel for celebrities and other financial juggernauts.
Miami-Dade’s luxury residential market is outpacing Palm Beach in pricing, Tomlinson said, so the right buyer might in the wings.
It would be hard to imagine any commercial strategies that would generate an adequate return on investment, said Charles Foschini, vice chairman of South Florida markets for CBRE, who is not involved with the sale.
“While I don’t know the hotel and restaurant business well, as they are more operating businesses than real estate plays, in my opinion, at $125 million, the property is valued more like a piece of art than something that can be purchased on an income stream,” he said. “The buyer is going to be focused first on the mansion’s view, irreplaceable location and the rich history of the property and its exquisite details. Any income that the property generates will just defer, in part, the cost of ownership by that lucky buyer.”
One appraiser reviewed area rents and came to the same conclusion: It’s a trophy property for a trophy buyer. Commercial property rents in the Ocean Drive neighborhood are $30 a square foot, but the new owner would need to increase that tenfold just to come close to covering the cost, if the purchase was made using credit, one appraiser said.
But a prospective buyer need not worry about filling out a lengthy mortgage application because no lender worth their Brooks Brothers suit would touch the property: Miami-Dade property records indicate Casa Casuarina is assessed at $10.62 million, and was sold for $19 million in 2000.
So, the most realistic scenario for the buyer involves cash – or a bag of Krugerrands from the trunk of a bulletproof Maybach limo.
So the one workable scenario is that the buyer, likely someone who could afford to fly a private jet and sail a football-field sized yacht afterward, would pay cash.
If the seller can get anywhere near that $125 million, it could conceivably solve some of the litigation that has surrounded the property.
In January, the Business Journal reported that owner Casa Casuarina LLC is in a legal dispute with an affiliate of New York-based Jordache, which bought the property’s $25 million mortgage in December.
“It’s the perfect time to find the right buyer for this magnificent home,” Hertzberg said in a statement. “Whoever buys it will have instant celebrity.”