How Bitcoin Billionaires And Crypto Kings Took Over Luxury Real Estate

The staggering amount of money invested in “ultra luxury” real estate in 2021 has set a new record.

This three-floor, $49 million penthouse at Atlantis The Royal Residences, Palm Jumeirah in Dubai, is listed with Chris Whitehead of Luxhabitat Sotheby’s International Realty
(Luxhabitat Sotheby’s International Realty)

The numbers are staggering: according to a recent report by Coldwell Banker Global Luxury, the amount of money invested in luxury real estate in 2021 was greater than 2019 and 2020 combined. And according to data compiled by appraiser Miller Samuel, at least 40 residential properties sold for more than $50 million in the U.S. alone, setting a new record in the ultra-luxury sector.

The Lion Heart estate in Virgin Gorda, listed at $39.5 million with Lucien Valade of British Virgin Islands Sotheby’s International Realty, is one of the Caribbean’s most impressive properties
(Oil Nut Bay for British Virgin Island Sotheby’s International Realty)

Helping it all along, the world’s 500 richest people added more than $1.2 trillion to their fortunes in 2021, according to the Bloomberg Billionaires Index, “powered by booming stock markets and central banks flooding economies with new money,” a trend that looks set to continue.

This mansion in Park City, listed for $29.95 million by Valen Lindner and Jamison Frost of Summit Sotheby’s International Realty, is a masterpiece of ruggedly elegant design
(Summit Sotheby’s International Realty)

In addition, dozens of new billionaires were minted in 2021 thanks to “initial public offerings, SPAC deals, and cryptocurrencies,” Bloomberg notes, the latter in particular responsible for adding many billions in net worth. And while crypto markets have experienced a correction in the past few months, Bitcoin is already on the rebound amid growing opinion that it may well be a “safe-haven asset” in this time of economic uncertainty.

(Summit Sotheby’s International Realty)

While many are in the market for properties in the most desirable areas of the USA, global luxury real estate markets have seen amazing growth as well, particularly in places with advantageous tax arrangements. The new crypto rich and their ilk are “taking a page out of hedge funds’ books” in this regard, Bloomberg notes. While “high earning investors in the U.S. pay up to 20% in capital gains tax and as much as 37% on short-term gains,” in Puerto Rico, for example, they pay nothing.

(Summit Sotheby’s International Realty)

“And [while] companies based on the American mainland pay 21% in federal corporate tax plus an individual state tax,” Puerto Rico’s take is just 4%. That makes a move to a tax haven that also happens to be a beautiful place “a no-brainer for some investors, especially [given] the crypto market’s meteoric growth… and Democrats’ push for higher taxes on the rich.”

Hampton Hall, a truly impressive manor house in London, England with over 70 rooms, is listed for about $38 million by Jason Corbett of United Kingdom Sotheby’s International Realty
(Courtesy of Stately Homes for United Kingdom Sotheby’s International Realty)

One bellwether for trends in ultra-luxury real estate has always been Southern California. Natalie Todd, Malibu-based realtor and resident specialist with world-class firm Douglas Elliman, tells us that “the ultra-luxury market has been exceedingly strong for the last several months with several record-breaking deals”; most notably, the record-shattering $177 million purchase of the Azria Estate in Malibu in 2021 by venture capitalist Marc Andreessen, who the New York Times reported “aims to own a huge part of the digital currency world” via his firm Andreessen Horowitz, “the largest crypto investor globally.”

This $32 million estate in Santa Barbara listed by Shelton Wilder and John McNicholas of Sotheby’s International Realty – Brentwood Brokerage, represents the ultimate in Southern California oceanfront living
(Neue Focus and Epic Drone Tours for Sotheby’s International Realty)

Across Douglas Elliman’s portfolio, “Palm Beach Florida, Montana, New York City and Los Angeles are the location front runners, with the highest concentration of wealthy buyers for the most expensive residential sales” in recent months, Todd says—noting that “several discreet ultra-luxury real estate purchases last year were made by cryptocurrency billionaires.” As for the year to come, “if the [recent] past is any indication, in 2022 we will continue to see a strong, ever-evolving and growing luxury market for the ultra-wealthy with more record-breaking sales,” she concludes.

The views of Mt Yotei at this $7 million property in Hokkaido, listed with List Sotheby’s International Realty, Japan, are worth the price of admission alone
(List Sotheby’s International Realty, Japan)

Guy Bradshaw, managing director of United Kingdom Sotheby’s International Realty, is equally bullish. “The last six months has seen continued appetite for best-in-class and trophy homes,” he told us in late 2021. “In the UK, we have seen increased requirements for large houses with ‘fun zones,’” or play spaces, with pools, gyms, spas, cinemas, etc., as “lockdown living is on people’s minds,” even on a grand scale; while “tech and crypto buyers are coming forward more and more.”

This $24 million contemporary masterpiece in Colorado, listed by Blake Greiner of Douglas Elliman, was designed by the top architectural firm in nearby Aspen
(Blake Greiner/Douglas Elliman)

Urban listings are also back in a big way, Bradshaw of Sotheby’s notes: “Two years ago people fled the cities for space, now they are flocking back. Culture vultures have missed the theatre, restaurants and the social aspect a city life offers. Therefore centrally located penthouses, or large houses with gardens or terracing have become the go-to request for buyers.”

(Blake Greiner/Douglas Elliman)

As examples, in 2021 private equity titan Leon Black reportedly paid $28 million for a mansion in one of London’s most exclusive neighborhoods. Across the pond, former Google CEO and leading light of Artificial Intelligence Eric Schmidt was said to be the buyer of a $27.5 million penthouse in downtown New York City, according to the New York Post.

(Blake Greiner/Douglas Elliman)

With interest rates hovering near record lows, “the ultra-rich are frequently turning to credit” to fund such purchases, as Bloombergreports. “Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. are among the banks that reported jumps [in 2021] in the value of asset-backed loans they’ve extended to clients,” they relate.

This movie star-worthy Los Angeles mansion on a hillside above Sunset Boulevard is listed at $28.8 million with Joshua Altman of Douglas Elliman
(Joshua Altman/Douglas Elliman)

“The loans, usually borrowed against homes or stakes in public or private companies, provide the wealthy with cash to pay for their lifestyles without having to sell assets.” Lending balances at UBS Group AG’s U.S. wealth-management business meanwhile “grew to $87.5 billion in the third quarter [of 2021], a 27% increase from a year earlier.” 

And the numbers for 2022 so far look set to be no less stratospheric.