Larry Ellison, the software billionaire, has been doing a little shopping recently. First, he decided he liked the look and feel of Carbon Beach, one of the most exclusive stretches of sand along the Malibu shore in Southern California. So he bought himself not one, not two, but five adjacent properties with private access to the waves and a year-round view of the dolphins dancing in the surf. The price tag was $65m, £37m to you.
Then he cast his eye on a couple of restaurants sitting a little forlornly on the northern end of Carbon Beach. He snapped up the Pier View Café for $9m, and the adjacent Windsail restaurant for $18.5m. That's a lot of money for a diet of fish and chips, even in Malibu.
Local property brokers, whose eyebrows have been rising ever higher as Ellison keeps on buying, the Windsail purchase was possibly the highest price paid for commercial property in their already exclusive beach city.
And Ellison did not stop there. He has snapped up five more luxury homes in the Malibu area, the most recent of which, in a gated community just up a wooded hill from the beach, set him back $20m.
He has spent almost $200m in all, and the buzz in the local property market is that he is not done yet. Might he buy a shopping centre? More beachfront mansions? Has he decided he rather fancies Malibu's entire 27-mile stretch of coast and wants to claim it all as his own?
The speculation has been heightened by the fact that nobody knows exactly what Ellison wants the properties for. He lives in northern California, just south of San Francisco, which is where Oracle is based. In fact, he just completed a $200m Japanese-style villa in Woodside, in the hills straddling the Pacific and San Francisco Bay. So he clearly is not planning a move to Malibu, or not for more than a few weeks a year at most.
True, he has a son who is studying at the University of Southern California, but it seems doubtful that even the most spoiled of spoiled brats would require his pick of 10 choice properties on the beach to make life bearable during his years of undergraduate study. (And besides, the USC campus is 30 miles away, south of downtown Los Angeles, so traffic would be a bitch.)
For the present, just one of the Ellison properties has been rented out and the rest, to the best of anyone's knowledge, are empty. Since the start, the assumption has been that he wants to combine the five Carbon Beach properties into a single compound, as David Geffen, the film and record producer, did with his four Carbon Beach parcels 21 years ago. (Other neighbours on the beach include Jeffrey Katzenberg, the film producer and co-principal with Geffen and Steven Spielberg of DreamWorks; Haim Saban, the television financier who grew rich on Power Rangers; and Richard Riordan, the former mayor of Los Angeles.)
But that project, if it exists at all, is showing no signs of coming to fruition. One story has it that Ellison bought one of the houses exclusively for the swimming pool. He liked the pool so much he did not even bother to look inside the house, which is probably destined for demolition at some point.
Things are equally nebulous with the two restaurants. Both were shuttered almost as soon as they were acquired and, despite a lot of rumours, there are no signs of planning applications to combine them into a single venture, no talk of high-profile chefs being hired. The only two things everyone can agree on are that one, Malibu's strict planning regulations make it unlikely Ellison can do anything with the properties except run a restaurant and two, given the purchase price, it is going to have to be one hell of a restaurant to meet the annual $425,000 property tax and still turn a profit.
So what is going on? Perhaps the best interpretation is that this is a manifestation of the sheer irrationality of the global property market. Ellison is one of the world's richest men, and Malibu has long been one of the hottest - and also one of the most irrational - places on the planet to acquire land and housing. If there was any logic in property acquisition, then nobody in their right mind would want to buy into a precariously perched beach community at the mercy of the elements and southern California's propensity for natural disasters.
Malibu is hit regularly by devastating wildfires raging in across the tinder-dry chaparral of the Santa Monica mountains. In rainy winters, it is hit almost as regularly by landslides, floods and beach erosion caused by El Niño tides. There is barely a house in the whole place that has not been affected one way or the other, and hundreds have been destroyed. The main road in and out of town, the Pacific Coast Highway, is frequently reduced to one lane or shut. To make matters worse, the geology of the place does not permit for a proper sewage system, so everyone operates on septic tanks that have a nasty habit of spilling and polluting the waters everyone flocks here to admire in the first place.
But logic, of course, does not enter into it. Los Angeles is a city built on dreams more than substance, and nowhere is that more true than in Malibu, where the desirability of being within nodding distance of the Hollywood elite and the awe-inspiring beauty of the natural surroundings trump all other considerations. The economics of the place are crazy, and the steady escalation of home prices so unstoppable, that in almost any given year you could lose your home in a wildfire, rebuild it from scratch, sell it and still turn a profit.
So while the property market across the world continues to demonstrate symptoms of a South Sea Bubble-like frenzy, and stories accumulate of insane property sales at insane prices (heard about the house in the Hamptons going for $90m?), nowhere will ever be able to match the topsy-turvy market realities of Malibu.
This is a town where summer rentals are routinely priced at several tens of thousands of dollars a month. You could stay in the world's most luxurious hotels for less, and jet from one to another in first-class airline seats, but then you wouldn't have the access, and the social status, that enables Hollywood's elite players to chum up to each other over the dinner table and on long, lazy walks along the sand.
This is a town where even the trailer homes are starting to sell for more than a million dollars, yes, there are a couple of trailer parks, even in Malibu, where diehard surfing addicts are slowly being bought out by the not-quite-so-rich with social aspirations.
The median price of a stand-alone house in Malibu is a bit higher, at about $1.75m, says a leading pricing agency called DataQuick Information Systems. That is roughly four times the median price of a single-family home in the whole of southern California, and eight or nine times the median price nationwide. In the words of Mike Davis, a writer with a less than charitable view of the property frenzy on the shores of the Pacific, Malibu is truly the place "where hyperbole meets the surf".
Curiously, the parts of Malibu for which humans bear responsibility - the houses, roads, business and shopping facilities - do not exactly meet the standards of beauty one might expect of such a fabled enclave. The development along the Pacific Coast Highway tends to be straggly and almost shockingly lackadaisical. Seen from the street, the luxury compounds of Carbon Beach, Broadbeach and the Malibu Colony form a characterless wall of breeze-block and plaster at best. Some of the beach properties present themselves as little better than shacks.
The reason for this is, of course, that Malibu was a city conceived by private property speculators with little or no consciousness of a broader public good. The beach-house owners do everything they can to keep the masses away from their private view of the ocean, occasioning regular fights with the California coastal commission and die-hard public access advocates who point out, correctly, that there is no such legal entity as a private beach, and reserve architectural beauty and fine furnishings for the parts of their houses that cannot be viewed by the uninvited.
Money and the ethos of private property have been Malibu's guiding principles from the beginning. In the 1890s, a Boston robber-baron called Frederick Rindge bought the entire place for $10 an acre and fancied he could hog the beauties of the coastline for himself.
But he, and more especially his wife May, who outlived him by several decades, had to battle the determination of the state and the Southern Pacific Railroad company, which both saw Malibu as an area ripe for development and windfall profits. May Rindge mounted an almighty legal battle but ended up losing, and going broke.
The coastal highway arrived in 1928, followed in short order by a devastating wildfire that destroyed 13 new homes at the so-called Movie Colony - later simply known as the Colony - next to the Malibu lagoon. May Rindge started renting properties to the likes of Jack Warner, the studio boss, "It" girl Clara Bow, Ronald Colman and Barbara Stanwyck to help pay her legal fees. By 1940, her precarious finances forced her to auction the whole of Malibu, which broke her heart and she died two months later.
Then Malibu developed much like the rest of Los Angeles, as a bonanza town for property speculators with deeply conservative politics and an unquenchable thirst for profit, without heed for environmental protection or any other consideration. Only rich whites were welcome at first - when Nat King Cole considered buying a place in Malibu in the 1950s, he was threatened with vigilante justice by the local homeowners' association and backed off.
Successive Hollywood generations, starting with Peter Lawford in the 1950s and 1960s, and continuing with the class of Spielberg, Geffen, Katzenberg, Barbra Streisand and friends, have helped give Malibu a distinctly liberal hue when it comes to national politics: John F Kennedy and Bill Clinton both liked to fundraise and frolic here. But the property market has kept Malibu distinctly conservative, and many have had cause to be grateful for its sometimes voodoo-like economics.
Ronald Reagan owed his entire political career to a distinctly fishy deal involving a ranch he once owned in the Malibu mountains and his old friends at Twentieth Century Fox, to whom he had been unstintingly loyal during his years as head of the Screen Actors Guild. Reagan bought the Yearling Row Ranch for $225 an acre in 1954, then sold it to Fox for $8,178 an acre in 1966, within a month of being elected governor of California, not only paying his campaign debts but turning him into an instant multi-millionaire. In Governor Reagan's final months in office, Fox sold the ranch to the state, for $1,800 an acre.
Only Milo Minderbinder could see the financial logic in all that. By Reagan's standards, Larry Ellison's buying spree does not seem weird. Malibu tends to look after its own, and the Oracle chief executive is no doubt assuming he will be no exception.Reuse content