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Wall St. Has 'Buy' Rating on Hamptons

June 12, 2004|From Bloomberg News

Demand for homes in the Hamptons, the New York summer retreat of celebrities such as Calvin Klein and executives including Goldman Sachs Group Inc. President Lloyd Blankfein, is rebounding with Wall Street bonuses.

The average sales price rose 29% to an all-time high of $1.1 million in the first quarter, said Dianne Saatchi, a vice president in the East Hampton office of Corcoran Group, the area's largest brokerage. Rentals for the 14-week season that began Memorial Day weekend were going for as much as $550,000.

"It had become fashionable in the lean years to boast about how little you paid for a Hamptons house," Saatchi said. "We seem to be moving back to the pre-recession market, with people boasting about how much they paid."

Compensation levels on Wall Street are climbing as companies including Goldman Sachs and Citigroup Inc. report record profits. Pay for investment bankers will rise 22% on average this year.

The Hamptons, on the eastern tip of Long Island and about a two-hour drive from Manhattan, offer a haven where year-round homeowners such as Hollywood mogul Steven Spielberg and fashion designer Klein mix with the financial elite, including Blankfein and hedge-fund managers George Soros and Stanley Druckenmiller.

A new five-bedroom house that is a two-mile bike ride from Main Beach in East Hampton, home to actress Renee Zellweger and billionaire financier Carl Icahn, is on the market for $1.97 million. A four-bedroom house with half an acre of land in the Springs area of East Hampton, where the town's lower-income residents live, is for sale at $535,000, Saatchi said.

In Bridgehampton, where residents include Cable News Network founder Ted Turner and model Christie Brinkley, it costs about $950,000 to buy a 1-acre building lot with distant ocean views, she said.

Prices in the Hamptons dwarf those paid by most home buyers in the U.S. According to the National Assn. of Realtors in Washington, the median selling price of previously owned houses across the nation in April was $176,000, up 7.3% from $164,100 in the same month a year earlier.

The demand to buy homes in the Hamptons partly reflects summer rental rates in this popular resort area, said Tony Cerio, a broker with East Hampton Village Realty.

"Someone dropping $50,000 or $60,000 on a summer rental -- that's a down payment on a house, and with interest rates so low now, everyone wants to buy," Cerio said.

Full-summer rentals start at $15,000 for a one-bedroom cottage with no pool and no air-conditioning, located three miles from the beach, Cerio said. Lease prices for waterfront homes start at $150,000, he said.

Denise Rich, former wife of pardoned fugitive commodities financier Marc Rich, rented her Southampton estate on Cooper's Pond for $550,000 for the summer, the most ever paid for a Hamptons rental.

The home, a short distance from the town helipad, has a seven-bedroom mansion, a four-bedroom guesthouse, tennis courts and a reverse-current lap pool that allows swimmers to exercise in place.

The top sales price during the last six months was $23 million for Academy Award-winning producer Martin Richards' Southampton mansion, bought by former NetOptix Corp. Chief Executive Gerhard Andlinger.

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