2020-12-06 — ft.com
Over the past decade, the chairman of Extell Development, New York's foremost developer of super-luxury properties, has bequeathed to the Manhattan skyline not one but two of the super-tall towers that have rechristened 57th Street as "Billionaires' Row". In one of those towers, One57, Extell sold the penthouse to computer mogul Michael Dell for a then-record $100.5m in 2014. But now the city's luxury property market is in the grip of a once-in-a-century pandemic. With foreign buyers unable or unwilling to even visit the US to shop for real estate, Barnett expects to take a hit on three of his residential projects -- he won't say which. On others he may just break even after undertaking the Herculean task of erecting a new building in Manhattan.
"It's very, very, very frustrating to build the most beautiful buildings in the world -- super quality, super finishes -- and to have to sell at a loss," he laments. But to property buyers, a luxury developer's pain may well be their gain. Across New York City, developers are cutting prices on luxury properties in a desperate attempt to move inventory. They are also picking up closing costs and throwing in other inducements for those brave -- or foolish -- enough to jump into a market and commit to a multimillion-dollar purchase just as a second wave of Covid-19 is bearing down on the city.
"It's a golden opportunity to buy now," Barnett says, estimating that "bottom fishers" were benefiting from price cuts of about 20 per cent. "The only reason not to buy now would be if you think that either the pandemic is going to continue for a much longer time, or you think that the world won't come back to more or less normal post-pandemic." Whether the market will come back -- and over what time period -- is hardly certain. New York City's luxury property sector had been mired in a slump before Covid-19. Some properties were so wildly overpriced, developers admit, that even a 20 per cent discount may not be much of a bargain, after all.
Extell's first super-tall, One57, is now flanked by a half-dozen others in and around 57th Street. Among them is Extell's soon-to-be-completed Central Park Tower, a gleaming, 1,550ft dagger in the skyline that is the city's tallest residential building and cost a reported $3bn. Most of its 179 units are unsold. Developers were encouraged by signs of a pick-up in business at the beginning of the year -- only for Covid-19 to effectively close the shop. Activity slowed to a trickle over the summer. Some buyers actually sacrificed their deposits to walk away from deals. The mood was not helped by reports -- some hysterical -- about surging crime and an exodus of wealthy residents from a decaying and dystopian metropolis. "I mean, who wants to buy in a city that everybody's trying to move out of?"
Fox quips -- quickly making clear that she does not actually believe that's the case. Business has since stabilised. From October 1 through November 15, the volume of deals in Manhattan was $2.54bn, a 2 per cent increase over the same period a year earlier, according to Serhant, a New York broker. The number of deals in the $5m to $10m range was up 7 per cent, while those in the $10m to $20m range were down 44 per cent. "The fact that the city is above the Q4 number to date in the midst of a pandemic is promising in that it shows buyers are still circling the market," says Garrett Derderian, Serhant's director of market intelligence. He predicts that the arrival of viable vaccines could be a "game changer".
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