11 kilometers off the coast of Cape Cod, Brahmin culture runs deep in Martha’s Vineyard; a mercenary enclave where the able-bodied don’t show off and flashy real estate deals are rare.
But over the past few years, local investor David Malm has quietly amassed close to $100 million in luxury real estate on the island and neighboring island of Nantucket.
Most recently, in a deal that closed on Jan. 20, Mr. Malm confirmed he had paid $15 million for a historic home in Edgartown’s inner harbor. He said he tapped his longtime collaborator, architect Patrick Ahearn, to redesign the house, which he plans to renovate and add to his growing luxury rental portfolio.
“I don’t invest in the stock market,” said Mr Malm, a private equity investor in the healthcare industry. Instead, he bet heavily on luxury real estate, turning what he calls a fun “creative selling point” into a fast-growing business as property values soar.
Over the past five years, Mr. Malm has purchased a dozen properties in Martha’s Vineyard and Nantucket, the vast majority of which he has bought in the last two years. According to records, it has spent more than $80 million purchasing nine properties since 2021. At Martha’s Vineyard, local real estate agents said there are few investors as active as he is.
“He’s acting fast,” said LandVest’s Gerret Conover, who represents Mr. Malm in several deals, including the most recent purchase, which he brokered with Mr. Conover’s colleague Thomas LeClair. “We have others who have invested entirely in Vineyard,” he said, “but as of the last few acquisitions, David is probably the largest single condo owner in town.”
Living in the Boston suburb of Dover, 58-year-old Mr. Malm attended Brown University and joined Bain Capital in 1987. He is the managing partner of Webster Equity Partners, which currently invests in the healthcare industry.
He said the main investment strategy there is “the same” as that of real estate: bet on areas with supply-demand imbalance, strong growth, and high barriers to entry. In real estate terms, this means highly-exclusive properties with tight inventory in prime markets – the very definition of luxury housing stock on the two Massachusetts islands. “It worked well,” he said. “The stock market crashed last year,” he said, while property values remained in place.
Mr. Malm’s first real estate purchase in the 1980s was a one-bedroom house on Pinckney Street in Boston’s Beacon Hill, where he used credit cards to prepay the $200,000 purchase. A few years later he sold it for $400,000. “I should never have sold it,” he said, estimating it would be worth $1 million today.
According to the records, his first raid on Martha’s Vineyard was around 2000. Since then, his portfolio has grown to 10 properties on the island, including two neighboring homes in Edgartown Harbor, which he bought for $9 million in 2021.
That year he also paid $10 million for a six-bedroom house in Edgartown that Mr Ahearn has since restored. In Nantucket, a premium holiday market with limited inventory like Martha’s Vineyard, Mr. Malm owns a small cottage on the island’s historic Old North Wharf, which he bought for $6.5 million last year. In November, he paid $19.9 million for a sea view home in Nantucket.
In Martha’s Vineyard, the $15 million historic home that Mr. Malm most recently purchased is on South Water Street, two blocks from Edgartown Main Street. According to the records, the seller was Ruth Grace Jervis, a Los Angeles resident who paid $2.7 million for the property in 1997. Mr Conover said the property was quietly listed for $21 million in 2021, with the latest asking for $19.5 million.
At Martha’s Vineyard, the current record $32.5 million in sales was set in 2019 by the sale of a property that was once owned by the late Washington Post publisher Katharine Graham. In 2020, the property of former First Lady Jacqueline Kennedy Onassis, once offered for $65 million, was sold for $27 million to a pair of nonprofits who plan to turn it into a conservation area, according to groups’ records and public statements.
Like other luxury markets, real estate at Martha’s Vineyard has soared during the pandemic. “The real estate market has become a cuckoo here,” said Nevette Previd, managing director of the Vineyard Preservation Trust, which owns and maintains historic properties on the island. “Of course, there are people entering the market with the knowledge, tools and connections to grab properties during this turnover period.” In this context, he said that although the timing and number of properties stood out, Mr Malm’s investment was not unusual.
Mr Malm said he started buying seriously in the early days of the pandemic, when interest rates were low and there was widespread uncertainty in the market. “Buying time is when things are really low,” he said.
The pace of sales has slowed across the island in recent months. According to Warren Group, a real estate research firm, sales in Edgartown in December 2022 fell 92.3% compared to December 2021. In Dukes County, which also includes Martha’s Vineyard and the Elizabeth Islands, sales were down 55.2% year-over-year in December. However, the median selling price increased 28.7% year over year. And luxury rental demand has remained strong.
Mr Malm estimates he has spent more than $25 million renovating island properties, excluding his home on Herring Creek Farm. Some said his income from renting properties for up to five figures a week covers financing and maintenance costs. He said they pay for themselves.
The six-bedroom Edgartown home he bought for $10 million is selling for $45,000 a week this summer, according to the listing. A couple of homes in Edgartown Harbor are selling for $25,000 and $27,500 per week. Mr Malm said his Nantucket home, which cost $19.9 million, was selling for $75,000 a week. He said it was already taken a few weeks. When their home isn’t rented out, he offers them to friends or stays at them himself, even though his family’s home base is the property at Herring Creek Farm.
Mr Ahearn, a Boston-based architect known nationwide for designing classic New England-style homes on Martha’s Vineyard and Cape Cod, said he has worked on at least half a dozen properties for Mr Malm.
According to the records, Mr. Malm purchased a car barn from Mr Ahearn at the Boathouse & Field Club, a community in Edgartown, in 2019. Mr Ahearn said he designed the barn for himself with no intention of selling it until he made a non-market deal with Mr Malm. Mr. Malm has since built a new house attached to the barn on the 0.75-acre property, as well as a pool and gazebo.
Mr Ahearn also recently designed Mr Malm’s personal home at Herring Creek Farm in Edgartown – the first property he bought on the island. He demolished the existing house and rebuilt it with a pool and a shed overlooking the water.
“He is proud and embracing this aesthetic that I have designed,” said Mr Ahearn.
The recently completed project was the subject of a 2021 dispute with neighbors over the size of the house, which neighbors claimed violated Herring Creek Farm landowners’ association building restrictions.
LOA rules limit the interior living space of homes built in the community to 7,500 square feet. According to Edgartown tax inspector records, Mr. Malm’s home was built with approximately 10,500 square feet of interior living space as defined by the LOA. In 2018, it applied for a building permit for the house, listing its living space as 7,497 square feet and a total building size of 11,603 square feet.
Mr Malm said the LOA’s architectural review committee unanimously approved his plans for the house. He did not respond to a request for comment on how many square meters of interior living space were shown in the plans approved by the committee. According to association documents, Mr. Malm was chairman of the LOA when the construction plans were approved by the review committee.
Land records show that the dispute with its neighbors was resolved in early 2022. Other than that dusting, locals say Mr Malm’s estate footprint hasn’t left goosebumps.
Representative Mr Conover said the 0.67-acre South Water Street home is located in the heart of Edgartown’s historic district. According to a plaque on the property, in the 1640s the property was the home of Martha’s Vineyard and one of Nantucket’s first settlers, Thomas Mayhew. Mr Conover said the house was razed at one point and a new house was built in the early 1900s. Spanning approximately 4,400 square feet, the house has a six-bedroom main house and a one-bedroom apartment and a separate carriage house. It has a private jetty and the main house has a wraparound porch overlooking the water.
Mr Ahearn’s plans call for the removal of some 1970s additions and the enlargement of the house. Ideally, the architect said, he wanted to extend the original roofline and preserve the overall view of the harbor.
“The goal is to create something that was there 100 years ago,” said Mr Malm, who said he could use the property personally rather than adding it to his rental portfolio. “One of those iconic properties in Edgartown where you want to be a really good butler.”