ith its famous beaches, mild climate and Hollywood glitz, Los Angeles has long been a destination for the world's megawealthy and jet-set elite.
Yet the city has been more of a vacation destination, a stopover, compared to financial powerhouse New York City, or European capitals such as Paris and London.
There are signs, though, this is changing. Just ask Nick Candy.
An international Brit who makes his home in Monaco, Candy and his brother are building a luxury condo project in Beverly Hills on land purchased last year for half a billion dollars.
And the 35-year-old multimillionaire developer isn't just eyeing L.A.'s well-heeled residents. About half of the buyers are expected to be foreigners seeking second homes everyone from Middle Eastern sheiks, to Latin American businessmen, to new Russian potentates.
"I think it is a great city. One of the great cities on the planet," said Candy, during a recent phone interview from Doha, Qatar, where he was on business. "People across the world want to live in condos there and not worry about having a pool boy, butlers and three housekeepers."
Candy & Candy Inc. is aiming to tap into a growing international population of wealthy individuals, investors and businesses that are giving L.A. a second look, whether as a place to do business, invest or live.
The Dubai royal family recently invested $100 million in downtown's $2.1 billion Grand Avenue project, proclaiming L.A. one of the few "gateway" cities where it plans to invest. Last year, Beverly Hills' Two Rodeo Drive shopping plaza was snapped up by Irish investors.
Meanwhile, businessmen from Latin America and elsewhere have settled here to do business. Case in point: Antonio Cue, the wealthy Mexican businessman who co-founded L.A.'s Chivas USA soccer team four years ago.
Real estate agents who sell homes on the tony Westside and exclusive hillside neighborhoods report wealthy foreigners are snapping up homes for cash amid the credit crunch that has put the squeeze on locals.
So what's at play?
There's a consensus on this much: Spurred by communications advances, increasing liquidity in the world's financial markets and strong growth in trade, there's been a quantum leap in international business.
And this rise of the global economy has minted a vast new class of ultra-rich who are comfortable hopping around and doing business in a growing number of world-class cities, whether it's established ones like New York City or Tokyo, or emerging ones such as Dubai, Shanghai or Sao Paulo.
It's an elite club L.A. has joined, bolstered by a cheaper dollar, its Pacific Rim location, a huge immigrant population and its coming of age as a city of the arts, with the opening of spectacular venues such as Walt Disney Concert Hall.
"There is an increasing level of wealth internationally what we call global families that didn't exist before. These people have had the wherewithal to travel around the world and see other places. And I think L.A. is a very welcoming home," said Clinton Hodges, an international money manager with EFG Capital Asset Management LLC, a unit of Swiss bank EFG International, which opened an L.A. office in March to meet increasing demand.
Sense of freedom
Candy, who runs his namesake company along with his brother Christian, 33, said now that his company has bought the Beverly Hills property he would love to buy a home locally where he could spend up to half the year.
"There are more billionaires and millionaires on the West Coast than the East Coast," said Candy. "I'd like to have a place in Beverly Hills."
Many foreigners who move here cite a feeling that L.A. is a freer place with more opportunities than more established cities like New York.
For example, Richard Schaefer, chief executive of Golden Boy Enterprises, Oscar De La Hoya's boxing promotion and development business, said he came to Los Angeles in 1988 because of its "promise."
Schaefer emigrated from Switzerland, where his father is a leading banker. Once in L.A., he enjoyed a successful career as the head of UBS Warburg's Western U.S. money management unit. Then he joined Golden Boy in 2000, shocking his family.
"If you're an entrepreneur and want to strike it rich, the promise from over 100 years ago when California was covered in gold and people came from all over the world to strike it rich that promise is still alive today," said Schaefer.
In addition to opportunity, Los Angeles offers diversity that is often important for barons looking for a home base. Whether it's a Persian Jew attracted to Beverly Hills or a Korean attracted to Mid-Wilshire's Koreatown, L.A.'s many large ethnic populations are appealing to foreigners.
Take Mexican real estate developer Antonio Cue, co-owner and president of Major League Soccer's Chivas USA, who moved from Mexico City to Brentwood in 2005, one year after the soccer team started play. He chose to live in Los Angeles because of the strong Latino presence here.
"It has great weather, good communication, LAX and a lot of other airports," said Cue, who is the grandson of the founder of Grupo Modelo, the Mexican conglomerate that owns Corona and Modelo beer. "People are interested in a city with this type of amenities."
As a real estate developer and investment banker in Mexico City, Cue is no lightweight; he developed Altus, the tallest condo tower in Latin America.
Indeed, when the sovereign fund of the Dubai royal family decided earlier this year to invest $100 million in the stalled Grand Avenue project, the family declared L.A. one of the world's "gateway cities" where they plan to invest some of their oil money.
Nelson Rising, chair of the Grand Avenue Committee overseeing the project, said the investment underscored L.A.'s growing stature.
"I'd suggest that L.A. is a world-class city and a gateway city and very attractive to foreign investment of all kinds," said Rising, who believes sovereign wealth funds will become more important global financing sources.
The liquidity injection by Istithmar underscores another point: In the current real estate market, which has been rocked by the credit crunch, foreign investment is sometimes needed to get the job done. "We ran into a situation in our economy where it is fair to say there is a lack of liquidity. To have access to a sovereign wealth fund like Istithmar is very healthy for growth in our city," he said.
Perry Wong, a senior managing economist in regional economics for the Milken Institute, said it's important not to underestimate the dollar's value in attracting this kind of investment.
"The recent value of the dollar has declined, but over the long haul if you look back from the 1950s to now, we are very safe, a lot safer than many other countries," Wong said. "That is a big driving force. They know that legally we are safe, we have a stable government. You aren't going to see the rules change in the middle of the game."
He said that Los Angeles is particularly attractive to foreign wealth from new Asian powers like China and Taiwan. Many Chinese and Taiwanese go to school in the United States and familiarize themselves with the business system while getting their education or starting their careers. And because of Los Angeles' relative proximity to Asia, the city is a good bet. "It's the closest to Taiwan, also Hong Kong too," he said.
Wong said he expects significant foreign wealth to continue to flock to L.A. "I think so, unless we hit a big wall and our financial community is near the condition of being shut down," he said.
Location, location, location
Gary Fleishman, manager of the Coldwell Banker office in tony San Marino, said that the city and the surrounding San Gabriel Valley appeals to Chinese nationals who are scooping up second homes because "there are local relatives and friends, so there is a comfort level."
That appeal extends far beyond Asians in the San Gabriel Valley to the entire region.
Drew Fenton, a broker and senior vice president at Hilton & Hyland who specializes in high-end homes, said that he has begun marketing his listings in London and Dubai newspapers. What's more, the asking prices are listed in pounds.
"We've gotten calls from it," said Fenton, who added that one current $25 million listing, for an estate at 1310 Tower Grove Drive in the Beverly Hills area, is being marketed in this manner. "We've gotten interest from everywhere."
And once the well-heeled international buyers have their homes, they start spending money here. Cars, art and wine are often at the top of the list. Jon Boardman, the sales manager of O'Gara Coach Co. in Beverly Hills, which sells exotic vehicles like Lamborghinis, said he is seeing more foreign buyers.
"There are certain areas we are seeing additional funds coming from Russia and China. Those are the obvious growing economies that exist," said Boardman. The hot model is the Bentley Brooklands, a large coupe with a base price of $341,000.
And then of course there is Hollywood which still draws jetsetters who want to soak up the movie star lifestyle.
"The one thing you can never take away from L.A. is the allure of Hollywood and celebrity especially with nouveau riche," said nightclub impresario Sam Nazarian, the multimillionaire chief executive of SBE Entertainment Group. "It may seem shallow but it's a reality."
Nazarian is of Persian and Jewish descent and emigrated from Iran as a young boy. His latest project is the SLS hotel on La Cienega Boulevard near San Vicente Boulevard at the former Le Meridien hotel site.
SLS will include 297 rooms and food service from renowned Spanish chef Jos & #233; Andr & #233;s. The hotel will cater to posh locals and the international jet-set crowd. Guests of the hotel will have special privileges at Nazarian's various nightspots.
"We've specifically embraced everyone always and appreciated them and given them a level of service that they are used to," said Nazarian, who added that the first generation of Iranian immigrants who came to L.A. in the late 1970s often didn't feel welcome at some nightspots.
Expect more of these luxury offerings as international wealth continues to flow into the local economy.
Seth Polen, a commercial broker with Ramsey-Shilling Commercial Real Estate Services Inc., said that half of his business is with foreign investors. Five years ago it was just 20 percent.
He has a cadre of Australian clients and one Korean client who splits time between Houston, Dallas and L.A. The Korean investor has acquired more than $10 million in Koreatown property in the last year. Polen said the investor likes the sense of community there.
Nick Candy likes that sense of community too. He said more and more of his British business associates are opting to do business on the West Coast instead of the East Coast.
One major attraction is the fact that high-end L.A. real estate although seeming in the stratosphere these days from a local perspective is still a relative bargain compared to places like New York City or London.
And that's a direct reflection of L.A.'s short time on the international A list.
"We love the way of life," said Candy. "We believe it is undervalued as a global city."
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