Recently, a 1 ft x 1,855ft strip of land (0.30m x 565m) was the subject of a bidding war between to Wall Street millionaires in the Hamptons, a popular East Coast retreat for the wealthy in the United States. The strip of land effectively gives the owner access to the beach, which is is around 50m away. The land was owned by the county, who wished to dispose of it. They invited a number of owners in the area to bid, of which two responded.
The bidding was initially set at $10, with the expectation of the final price at $1,500. What ultimately transpired is that the two interested Wall Street millionaires entered into a bidding war, driving the final price to $120,000! The image below shows the strip of land and the land owned by the two rival bidders:
Ultimately, Helie, the owner of the portion highlighted in red above, won the bidding war, and has now hemmed in Cruz, the owner of the yellow portion.
But this example illustrates how the value of land and property is sometimes difficult to determine, and the value can be vastly different to different stakeholders. As this land is useless to most people, the County estimated that the value would be between $10 and $1500, however as the two bidders eventually made clear, is that the value of the land to them was far, far greater, almost 100 times the County's upper limit.
This phenomenon is found often in the property market, where for example, an existing shopping centre or commercial office may value land adjacent to their site fair higher than its perceived market value, and are therefore willing to pay a premium to secure the site for future expansion or to reduce the possibility of competing developments.
Here at Tenurey we understand the intricacies of the property market well, and are able to assist you in making sure your property decisions are well informed and efficient.
Images and original news article obtained from:
http://www.dailymail.co.uk/news/article-2412468/Manhattan-financiers-raise-34-times-auction-buy-piece-Hamptons-beach.html
http://www.businessinsider.com/two-wall-streeters-in-hamptons-bid-war-2013-9