Possible glut of Luxury apartments

[alex ballard]

whit all these luxury developments, will the market overrun demand? After all, is there reall yhtat many rich people moving to NYC?

[billyblancoNYC]

whit all these luxury developments, will the market overrun demand? After all, is there reall yhtat many rich people moving to NYC?

No one can ever tell, but there are a lot of rich IN New York. Also, European, Asian, and Russian buyers now think NYC is cheap and are buying up properties accordingly.

[Pottebaum]

I don't know if I'd say rich people are moving the NYC; people go to NYC to become rich :P

[alex ballard]

Well, the increase has to be coming from somewhere. It could be NYers becoming rich. It just seems the amount of weathly (and weath in general) has been growing in NYC. Which is odd considering the economy.

[TLOZ Link5]

Real estate often does well in economic downturns.

[alex ballard]

Real estate often does well in economic downturns.

But it still doesn't quite make sense to me. Yes, I can imagine the people who got rich or where already rich during the last boom times (1990's) would buy up a lot of real estate, but the current rate of luxury building in NYC is beyond what I personally would expect is normal. Also, it's not just new construction. In the outer boroughs, neighborhoods are seeing their property values soar and the houses are still being gobbled up like a kid gobbles down candy. Plus, this current downturn seems to buck the trends of other NYC downturns (1930's, 1970's, early 1990's). NYC in many respects as faired way better than many parts of the nation.

[krulltime]

It seems that more rich people are buying at the highest prices, here is a story:

No Price Too High for a Lap of Luxury


By MOTOKO RICH
Published: December 23, 2004

In a city where the price of luxury seems to march inexorably upward, wealthy apartment buyers are showing they are just as prone to the herd mentality as mere mortals rushing to buy the same iPod or pair of Diesel jeans.

Last week the media billionaire Rupert Murdoch agreed to pay $44 million for a co-op on Fifth Avenue. It turns out that sale was no fluke. From Manhattan to Woodside, Calif., the market for multimillion-dollar properties is increasingly buoyant.

In October, Ronald O. Perelman, the Revlon chairman, sold his Mediterranean-style house on seven acres in Palm Beach for $70 million. That same month, a 16-room triplex penthouse at the Pierre hotel in New York went on the market, also for $70 million.

In Manhattan the number of sales of condos or co-ops at $5 million or more rose to 163 in 2004, a record number, said Jonathan Miller, president of Miller Samuel, a New York real estate appraiser. Brokers say that since Thanksgiving apartments selling for more than $10 million have ignited bidding wars and frantic showings.

"It's a peculiar behavior," said Kirk Henckels, the director of Stribling Private Brokerage in Manhattan. "It's as if they all go to the same cocktail party and say `Are we going to shop tomorrow?' "

Because the stock market has been more volatile than real estate in recent years, "people feel more comfortable than ever before having a higher percentage of their portfolio than ever before in their home," said Hall F. Willkie, president of the real estate firm Brown Harris Stevens in Manhattan.

According to a survey by Capgemini, a consulting company, and Merrill Lynch, high net worth individuals — those with assets of $1 million or more — put 17 percent of their portfolios in real estate in 2003, up from 15 percent in 2002.

Louise Sunshine, president of the Sunshine Group, a luxury condominium marketing company, said she was locked to the phone all of Sunday, negotiating with three bidders vying for a penthouse condominium atop the new Bloomberg Tower on 58th Street with an asking price of $26 million.

While low interest rates have kept the market for one- and two-bedroom apartments humming for four years, the highest reaches of New York's rarefied real estate market softened after the Sept. 11 attacks, the dot-com bust and a string of accounting scandals that sent the stock market spiraling.

At a time of relentless speculation over whether a bubble in real estate prices could be ready to pop, the wealthiest buyers are shopping for living space again, lured by the general pattern of rising sales prices over the last four years.

Pamela Liebman, chief executive of the Corcoran Group, the New York real estate company, said more than 20 people had asked to see a $30 million six-story town house on 64th Street near Fifth Avenue. "Normally we would get half that," she said. "In my 20 years in the business, I've never seen as many qualified buyers for $20 million apartments as I'm seeing now."

Michele Kleier, a co-president of Gumley Haft Kleier, a real estate brokerage firm in New York, said what many people are thinking: "There seem to be more and more rich people. Where are they all coming from?" Successful hedge fund managers, bankers who expect huge Wall Street bonuses and Europeans capitalizing on the weak dollar, other brokers say.

The revived market seems to have motivated the seller of the penthouse at the Pierre. The apartment features a living room, once a ballroom, with 23-foot ceilings; five wood-burning fireplaces; and four corner terraces. Oh, and did someone mention monthly maintenance fees of $47,767?

In the Hamptons, said Diane Saatchi, a broker in the East Hampton, N.Y., office of Corcoran, buyers snapped up 37 homes priced at $5 million or above through October, compared with 29 during all of last year.

In Northern California, where the bursting of the tech bubble in early 2000 humbled the real estate market, high rollers are back. "A lot of people who were sitting on the sidelines after 2000 now have the confidence to buy in that price range," said Avram Goldman, president of Coldwell Banker San Francisco Bay Area. He pointed to the initial public offering at Google this fall, a bonanza for about 1,000 employees who are now millionaires. In just the last month, Mr. Goldman said, two homes sold in Woodside, south of San Francisco, for close to $10 million each. "We haven't seen a lot of those sales in a while," he noted.

Copyright 2004 The New York Times Company

[muscle1313]

Prices have to level off eventually. There has been a real estate boom here in Brooklyn for about 7 or 8 years now. I think its great but eventually capital investment shifts. The stock market (S&P 500) was up about 28% last year and about 10% so far this year, after a really bad 3 year slide in 2000-2002. I see investment slowly shifting back to stocks as real estate levels off. Nothing goes up in a straight line. I do believe that Brooklyn is benefiting greatly from people getting priced out of Manhattan and developers seeing Brooklyn as the next Manhattan. I mean what average person can afford a million dollar apartment in Manhattan? Prices can't go up indefinitely.

[muscle1313]

http://newyork.construction.com/features/archive/0501_feature2.asp

Interesting excerpt -

Meltzer, who used to be a developer but now works solely as an architect, said he also has been busy on multiple projects across the city.

"In my opinion, you will never satisfy the need for housing in New York," he said. "The only thing I've ever seen stop housing is the rising of interest rates in the late [19]80s."

[Gulcrapek]

Another excerpt:

Diehl recently completed the design of two buildings in Lower Manhattan, another busy area. One is 133 Water St., a 12-story, mixed-use condominium tower being developed by the Guttman family of New York. It is the first new building constructed alongside the Manhattan Bridge in 100 years.


Wrong - 133 Water Street is in DUMBO in Brooklyn.