Atherton – a sleepy town of just 7,000 residents – is not an obvious choice
for the ultra wealthy. There are no sweeping vista views or sandy beaches,
nor are there any Michelin-starred restaurants or upmarket boutiques. The
five-mile-square wooded plain has little more to offer than a town hall and
a library, due to strict local building codes prohibiting any commercial
development.
Yet property values in the area have shot up by more than 40 per cent in 12
months. Last year the average cost of a house was $6.7million, now it will
set a buyer back more than $9 million.
Facebook COO Sheryl Sandberg (Justin Sullivan/Getty Images)
The town is just a stone’s throw from Stanford University and a short drive
from Palo Alto and Mountain View – home to Facebook and Google headquarters
and some of the biggest venture-capital firms on the planet.
“We are in the tech innovation capital of the world,” said Eugene Korsunsky,
of Intempus Realty, a local property firm. “There are many exclusive
communities for the elite in the Bay Area, but Atherton is by far the most
sought-after.
“The town was already known as a place for old money, which the nouveau riche
love.”
Postcode 94027 is now undergoing something of a “super-gentrification”, where
an entirely new strata of super-rich are taking over already affluent areas.
Eric Schmidt, CEO of Google (Rob Kim/Getty Images)
The modern-day California gold rush has seen companies in Silicon Valley chalk
up $400 billion in new market capitalisation in the last few years alone, a
good chunk of which is finding its way into the local housing market.
Ken DeLeon, whose firm DeLeon Realty has sold $500 million worth of property
in the area in the 12 months, said he could not keep up with demand.
“There is no doubt it is the best market in America, even better than
Manhattan,” he said. “We posted a property there recently and had 10 offers
in the first 24 hours. Out of those, four or five of them were Googlers, the
rest were foreign investors.”
Bidding wars can often ensue. In one recent sale in Atherton, a modest family
home went for nearly $500,000 over the asking price after just a few hours
on the market.
With Silicon Valley a seemingly safe bet, Chinese investors are also taking
notice. Mr Korsunsky says the parents are also keen to have a base near
Stanford University, where many hope to one day send their children.
Estate agents say many of their Chinese buyers looking for homes here are
happy to buy sight-unseen and almost all pay upfront in cash – some 80
percent of the $10million homes they sell.
Business is doing so well that earlier this year Mr DeLeon bought a Cirrus GTS
plane to give foreign clients an aerial tour of the area. “The Chinese want
something grand, they like to entertain and really showcase that they’ve
made it with a statement home”, said Mr DeLeon. “My tech buyers are almost
the polar opposite, they want a beautiful home but one that’s much more
low-key and family-friendly. It’s all about privacy with them.”
Microsoft co-founder Paul G. Allen (Mark Wilson/Getty Images)
Atherton has now become a town under construction. Every other house on the
main boulevard has tarpaulin shielding builders working furiously in the
scorching Californian sun.
The area is particularly appealing because of its relaxed housing development
laws, which has allowed homeowners to build higher and bigger than they
could in major cities such as New York and Los Angeles.
However, growing wealth discrepancy between the town and its neighbours has
already started to cause conflict.
Rants against the wealthy “one per cent” were spray-painted on the walls and
garages of homes in the area earlier this year.
Marion Oster, president of the Atherton Heritage Association, also fears that
the ostentatious wealth is changing the character of the town: ‘We are
disappointed that a lot of older homes are being knocked down to be replaced
by bigger places,” she said. “A lot of the ranch-style homes are going to be
replaced with two-storey houses with a basement.”
But can it last?
“I think we have several more years of growth left,” said Mr DeLeon.
“It’s a real property boom and not just a bubble.”
‘It’s the curse of Silicon Valley,” added one long-time resident. “I just pray
that before long, they’ll move on to the next shiny penny.”
Some of the richest residents of Atherton:
Paul Allen, co-founder of Microsoft $16 billion
Eric Schmidt, CEO of Google $9.3 billion
Charles Schwab, founder of Charles Schwab bank $5.8 billion
George Roberts, co-founder of private equity firm KKR $5 billion
Meg Whitman, president of Hewlett Packard $2 billion
Mark Stevens, a venture capitalist at Sequoia Capital $1.5 billion
Sheryl Sandberg, COO of Facebook $1.05 billion
Tim Draper, venture capitalist $1 billion