New York’s luxury property market is cooling
Prices for top-end real estate apartments in Manhattan have dropped about 5-7 per cent from a peak last September, and they will probably keep falling for a while. Developers talk about a series of reasons for this trend: faltering flows of money from China, Russia and Brazil; the recent expiry of a citywide tax abatement program; and frequent calls to the banks from the regulators, telling them to rein it in a bit.
The result is that banks have pulled back from providing construction finance.
The core problem is too much supply. There were about 5,250 apartments available to buy in Manhattan this week which is the most since 2007. But analysts expect stocks to double by next year, as more buildings reach completion. That keeps apartments on the market for longer. Apartments in the $1m to $3m bracket are now taking more than 50 days to sell — twice the average last year.
In the super luxury bracket — $10m and above — there are currently 531 apartments to choose from. For $85m, for example, you can buy an eight-bed, eight-bath condo on West 42nd St, which includes a million-dollar yacht with docking fees for five years as well as two Rolls-Royce Phantoms (one convertible, one hardtop).
However, Gary Barnett, CEO of Extell Development, a major luxury builder is not worried about this. The firm has started construction at Central Park Tower but has yet to secure construction financing. It’s being advertised as the Tallest Residential Building in the Western Hemisphere, and is due for completion in 2019. Mr Barnett says: We think that is going to be the trophy, top-quality building for the next five to ten years,” he says. “It’s just made it more challenging, so only the best, most conservative projects will get financed.”
Source: Financial Times