Rick Caruso redefined shopping in Los Angeles.

Rick Caruso redefined shopping in Los Angeles.

The rich keep getting richer, especially if they’re involved in real estate in Los Angeles.

For many of L.A.’s billionaires, not surprisingly, real estate is a key source of income, either because it’s their primary business or because a large part of their portfolio is invested in commercial or residential properties.

 
Real estate experts say L.A. remains an attractive real estate market when it comes to investment. Rising property valuations and a lack of new supply coming online continue to drive the market in Los Angeles County.


According to Stuart Gabriel, director of the Ziman Center at UCLA, “there’s a whole bunch of reasons,” why someone would want to invest in L.A. real estate.


“It’s more like why wouldn’t they want to invest in real estate in L.A.,” Gabriel said. “L.A. is an extremely dynamic metropolitan area; it’s one of the superstar cities of the world. There are reasonable, if not high, rates of return on real estate here in L.A.”


He added that the area’s innovative companies, along with its sunny weather and its access to other areas make the market desirable. So does limited inventory.


“People like to invest where supply is strained,” Gabriel said. “L.A. is characterized by the type of supply constraints that investors like.”


Industrial appeal

Ed Roski Jr., the president and chairman of Majestic Realty, saw a big bump in his overall wealth this year due to an increase in the size of his portfolio and the rising value of industrial properties.

As more companies have turned to ecommerce and look to meet demand for fast delivery, the desire for industrial space has also increased. Majestic Realty added millions of square feet of space to its portfolio over the past year.


As a result, Roski’s wealth increased by 13%.


Some L.A. real estate veterans with other types of holdings saw more modest growth on their assets.


Rick Caruso, for example, saw his wealth increase by 2% over the previous year to $5.9 billion. He is best known as the developer of high-end retail properties, including the Grove, the Americana at Brand and the Palisades Village.

 
Retail sales at Caruso’s properties are three times higher than the industry average, according to Green Street Advisors.


People like Vera Guerin and Donald and Shelly Sterling, who accrued their wealth from real estate holdings and other means, saw small increases in their real estate holdings and larger gains in other areas.


Home sales soar

The residential real estate market has been on fire in L.A., where median sale prices in the county increased 23% in March alone, according to data from Redfin Corp.

“I understand why home prices have risen dramatically in terms of pricing. People desire to have space, and one way to get space is to be in your own place,” said John Loper, an associate professor at USC’s Price School of Public Policy.

 
He added that there was a lot of interest in the suburbs as well.


While a lack of housing may mean safe investments for the wealthy, Gabriel cautioned it could cause some firms to relocate or grow elsewhere.


Still, he expects interest in L.A. real estate to remain high.


“Numerous factors are at play, and in general, the interest in Los Angeles real estate will continue to be strong and should be an ongoing, highly desirable place to be,” he said.


Keep reading the 2021 Wealthiest Angelenos special edition.

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