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Tough Times Befall Billionaires: Luxury Real Estate Is Pumping The Breaks

Luxury real estate appears primed up for a slow down, and the indicators are all looming in the headlights.

By Team Agorafy August 29, 2016
Courtesy of 432parkavenue.com

If you’re someone who keeps an eye on the city’s luxury real estate market—be it for a prospective apartment or because you have a masochistic streak—then you might have already seen the signs of change. Luxury real estate appears primed up for a slow down, and the indicators are all looming in the headlights.

Related: Karl Lagerfeld To Design The Lobbies For One Of Miami’s Luxury Beachfront Condos

One need look no further than the listings themselves, for a start. Take the real estate website StreetEasy, for example. In the recent months, a dozen listings in the $20 million and up range have been subject to a five percent reduction in price. By comparison, only two listings in that same range had price hikes. One such unit is a 1 Central Park South condo that, after sitting on the market for the better part of a year, has dropped from over $50 million to $45.5 million (still not exactly a bargain, but you get the idea).

Yes, it’s a sad time for billionaires. Here are some more signs that it won’t be getting easier any time soon.

Yes, it’s a sad time for billionaires. Here are some more signs that it won’t be getting easier any time soon.

Going Halfsies

You know the market is pumping the breaks when those sprawling penthouses start turning into multiple, “smaller” units. An 8,400 square-foot, $45 million dollar listing at 10 Sullivan is off the market, but not because it sold. In its place are two separate apartments—3,000 square feet and 5,400 square feet—for $11 million and $29.5 million, respectively. Maybe a couple of more attainable condos (“attainable” being used very loosely, here) will be a little more digestible for the current, less than hungry market.

Playing the Waiting Game

“If you have a market where you think marketing would be ineffective for now, why would you launch and spend the money?” A valid point raised by one developer who, despite having everything in place to begin listing luxury units at 111 W. 57th, has decided to wait this slow down out. Much like the falling tree in the forest, if a luxury property hits the market, and no buyers are there to see it…well, you get the idea.

Throwing in the Towel

If you can’t beat them, join them…or quite the game entirely. Yep, due to the stalling market, some developers are giving up on real-estate projects outright, as was the case with the Sony Building. Rather than convert the building into uber-luxurious condos, as was the original plan, the involved developers ditched the property instead, selling it for over $1.4 billion dollars.

No One Likes a Debtor

The only thing that might be harder to come by than a closing on a luxury apartment these days might be the financing required for the luxury buildings themselves. As one might imagine, all those shining glass and steel spires aren’t cheap, and developers are having a rougher go than usual lining up the necessary funds. Take Extell Development of One Manhattan Square, for example. When financing hit a snag, timelines had to be pushed back, and adjustments made. Said president Gary Barnett, “We’ve had to reduce the amount we’re looking for and we’ve had to increase the rate that we’re willing to pay.”

Bottom line—if you’re in the market for a deal on a fancy apartment, now is a good time to start paying attention…pretty soon, we might be seeing Groupon deals for luxury condos.

Team Agorafy

ABOUT THE AUTHOR Team Agorafy

ABOUT THE AUTHOR Team Agorafy

Our mission is to be the most accurate resource for commercial listings, residential listings, and property information, allowing users to make highly-informed decisions based on current market data.

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