Financial Times Europe - 26.10.2019 - 27.10.2019

6 ★ FTWeekend 26 October/27 October 2019

Tech tonic

A

s prices fall at their fastest

rate in a decade in Manhat-

tan, the prime property

market in San Francisco is

holding up. Median sale

prices in the county of San Francisco

in the three months to September

2019 were 1.8 per cent higher than

theyearbefore,accordingtoCompass—

with local property experts suggesting

that a recent flush ofinitial public offer-

ings from the tech sector has helped

keepthemarketbuoyant.

Price gains in San Francisco aveh

touchedsome areas of the city more

thanothers.Averagepricesforhomesin

the plush northern neighbourhoods

includingPacificandPresidioHeights—

which contain many of the city’s oldest

and grandest detached period homes —

have grown only 0.6 per cent since 2015

according to Compass. Those in the

southern neighbourhoods, including

Noe, Eureka and Cole Valleyrose 14.3

percentoverthesameperiod.

Residentsandagentssaythisispartof

a longer-term trend for the newly

wealthy to concentrate their homebuy-

ing in San Francisco’s south, closer to

traffic routes out of the city and where

laxer building restrictions allow them

morefreedom.

Philip Rosedale, 51, creator of Second

Life, an early internet phenomenon

once hailed as the future of the digital

economy,boughtalargeperiodhomein

Pacific Heights in 2001.He and his wife

have since raisedfour children. But

despite the transformation of San Fran-

cisco’s fortunes caused by the tech

boom,his neighbourhood has changed

little,hesays.

“I’d say that largely it has remained

unchanged with respect to who my

neighbours are. By being so expensive, I

think the homes are bought and sold by

a smaller number of more diverse peo-

plefromallover,”hesays.

Nina Hatvany, a local agent, says

that because the houses in these

areas are older, owners arerestricted

by zoning requirementson the altera-

tionsthey can make. For today’s top-

end buyers “it is much more typical

to see homes demolished to be replaced

bybrand-newhomes”,shesays.

As a result, the super-rich are moving

This year, gains have been driven

by the market forproperty priced

between $2m and $3m. Sales in San

Francisco of houses in this bracket

rose 7 per cent between April and June

comparedwith last year. At the same

time, there was a fall of 3 per cent

in sales priced between $1m and $2m,

and an 11 per cent drop-off in sales

pricedbelow$1m.

Local agents attribute this to the

raft of local companies going public.

“The spring IPOs have helped hold

Francisco, collectively accounted for

$12.3bn, 69 per cent of the total $17.9bn

of IPO cash raised across the US in that

period,accordingtoPwC.

Hatvany says buyers who are more

price-sensitive feared the new wealth

created by a raft of IPOs would create a

frenzy of demand, driving prices out of

reach. “I had buyers calling me up say-

ing they needed to buy a house in the

next30daysotherwisetheywouldn’tbe

abletoaffordone,”shesays.

The futureis less certain, however.

The postponement of New York-based

company WeWork’s IPO in September

maysuggestachangeinappetiteamong

investors — in the third quarter of this

year lobal IPO proceedsg were 22 per

centlowerthanthesameperiodin2018,

according to PwC. If fewer Bay Area

executives are receiving big payouts, it

could hit the values of San Francisco’s

primehomes.

i^ /B U Y I N G G U I D E

The median house sale price for a house in

San Francisco in the three months to

September was $1.578m.

The average price of a home inthe prime

northern neighbourhoods in the year to

September was $4.975m

Direct flights connect New York with San

Francisco in 6.5 hours

What you can buy for...

$1mA two-bedroom period apartment in

Noe Valley

$3m four-bedroom condoA in

Pacific Heights

$10m five-bedroom detached house inA

Presidio Heights

More atpropertylistings.ft.com

US propertySan Francisco

is seeing prices rise in its

southern neighbourhoods

as IPOs generate wealth.

ByHugo Cox

NOE VALLEY

EUREKA VALLEY

COLE

VALLEY

PACIFIC

HEIGHTS

PRESIDIO

HEIGHTS

Diamond

Street

MISSION

DISTRICT

THE CASTRO

Chattanooga

Street

Golden Gate

Bridge

mapsnews.com/©HERE

 km

SAN

FRANCISCO

Homes with

views of the bay

in San Francisco

Nicolas McComber/ Getty

Images/iStockphoto

House Home

market values and sales relatively

steady in San Francisco while they have

droppedinmostother[BayArea]coun-

ties,” says Patrick Carlisle, chief market

analystatCompass.

This year’s IPOs have been concen-

trated among companies based in

San Francisco, rather than in Silicon

Valley, the area to the south-east of

the city that was the traditional epicen-

tre of the tech industry. In the first half

of 2019, the IPOs of Uber, Lyft and

Pinterest,all headquartered in San

south. “You do hear a lot about Noe Val-

ley as an upwardly mobile sort of desti-

nation,” says Rosedale. “I know of one

friend who built a large house there. It is

certainly the case that making changes

to houses in our neighbourhood is very

hardtogetapprovalforandIdon’tthink

that has changed.” On Diamond Street

in Noe Valley, Sotheby’s is selling a two-

bedroom apartment for $1.695m. nO

Chattanooga Street in Eureka Valley,

Compass is selling a three-bedroom

condofor$2.395m.

Three-bedroom condo, $2.395m —Lunghi Media Group Two-bedroom apartment, $1.695m

OCTOBER 26 2019 Section:Weekend Time: 23/10/2019- 17:44 User:elizabeth.robinson Page Name:RES6, Part,Page,Edition:RES, 6, 1