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Luxury ranches in US still come at a premium despite lowered prices

While 6 of 38 ranches listed for sale at more than US$10 million have been marked down in the past 90 days, their limited supply allows sellers to command high prices

New York

BUYERS looking for the perfect luxury ranch, that billionaire's take on American rural life, may have to hold out to get what they want.

Whether it is sky-high in New York or in the Big Sky country of Montana, high-end properties seem to be hitting a soft patch: they are harder to sell unless they come with an exclusivity where price matter less. But that means paying a premium for that perfect combination: from mountain views at sunset to proximity to well-stocked towns to wildlife or the cachet of neighbours.

While six of 38 ranches listed for sale at more than US$10 million have been marked down in the past 90 days, there is a limited supply of properties that cover the full range of features, according to Billings, Montana- based broker Hall and Hall.

"When you get all of those things working together, if you really want that, you have to pay up if it comes available," said Hall and Hall managing director B Elfland.

That has some sellers betting that bigger is better. Morton Fleischer, chairman and co-founder of Store Capital Corp, is marketing his Arizona and Montana ranches together for US$50 million. One selling point, he said, is the millions poured into the area by GoDaddy Inc's billionaire founder Bob Parsons.

"If I was younger, I wouldn't sell that ranch," Mr Fleischer, 82, said of his Scottsdale home. "It's a good investment for someone."

"I got out of the pressure cooker and could get on my horses," he said. "Perhaps someone running a hedge fund who's in their 40s and wants to live a lifestyle out west and has enough money to have a jet plane to get back and forth could do the same."

Nearly doubling the price to attract a buyer may seem counterintuitive. Take West Creek Ranch in Colorado, with no buyer since John Hendricks listed it for US$149 million in 2017. Now, the Discovery Channel founder is combining the offer with his guest resort and car museum down the road for US$279 million, according to Sotheby's International Realty.

Also on the market in Colorado for US$46 million is Henry Kravis' Westlands Ranch. Mr Kravis has a net worth of US$6.2 billion, according to the Bloomberg Billionaires index. Private equity executive Charlie Gallagher is asking US$36 million for his Elk Island Ranch.

That is a far cry from what NFL and Premier League team owner Stan Kroenke paid in 2016 when he bought the WT Waggoner Estate Ranch in Texas listed for US$725 million, which is bigger than New York city and Los Angeles combined. Mr Kroenke has a net worth of US$8 billion, according to the Bloomberg Billionaires index.

In Montana, "in each 2016 and 2017, there were only four sales US$10 million and above", said Hall and Hall broker David Johnson. "The next year, there were eight. It wasn't a double in demand. It was a double in supply."

Hall and Hall sold 16 ranches for more than US$10 million in 2018, compared to six so far in 2019. While that may suggest a slowdown, ranch sales cannot be compared to the frenzy of big cities.

"Our market doesn't have the dramatic swings that New York and California residential markets have," said Mr Elfland.

Owning a rural slice of heaven runs deep in the psyche of even the biggest victors of capitalism. Shining examples of the American Dream are the country's biggest individual landowners: John Malone, who has a net worth of US$8.6 billion, according to the Bloomberg Billionaires index, and Ted Turner, founder of CNN.

Buying a ranch can be a matter of timing, of having a job on autopilot and kids out of the house who want to visit. "The clock is  running, so if they're going to enjoy it, it's an incentive to pay a premium," said Mr Johnson.

When the kids stop visiting, it can be sad. "We sold one last year that had been on the market for 10 years," he said. "The price had come down by two-thirds to where the buyer would pick it up." BLOOMBERG

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