Earlier this month, a buyer plunked down $32.5-million (U.S.) for a luxury condominium overlooking Manhattan’s Central Park.
Nobody batted an eye. To earn headlines in New York these days, a transaction has to be bigger than that – much bigger.
The broader U.S. housing sector may be entering a slow and unsteady recovery, but in a tiny sliver of the market something very different is happening.
Manhattan is in the throes of a boom in ultra high-end condos that has drawn wealthy people from around the globe and shattered previous sales records.
The four most expensive home sales in New York’s history have all taken place in the last 14 months – one for $70-million, one for $88-million and two others for more than $90-million.
At the forefront of the trend is a brand-new glass skyscraper called One57, now the tallest residential building in the city. Buyers have signed up to pay tens of millions of dollars each for apartments there – many without setting foot in the building, which is still unfinished.
The appetite to buy is not simply driven by the opportunity to own an apartment outfitted with opulent materials and offering one-of-a-kind views. Many of these purchasers are looking for a safe place to park their cash in an uncertain world.
“I’ve never seen a larger group of uber-wealthy people chasing real estate” in Manhattan, said Pamela Liebman, president of The Corcoran Group, a property firm. “The demand is unprecedented.”
In 2012, the number of homes in Manhattan that sold for more than $15-million doubled, according to figures from The Corcoran Group.
Through a combination of luck and audacity, Extell Development Co., the developer behind One57, was the first to tap into a well of demand that few believed existed so soon after the global financial crisis. But now others are racing to catch up; several other new super-luxury condos are under construction, including one at 432 Park Avenue that will eclipse One57 in height.
Unlike in the past, the purchasers aren’t concentrated in one region of the world. At One57, the buyers come from China, Russia, South America, Africa and the Middle East. There’s even at least one Canadian: Lawrence Stroll of Montreal, who made his fortune through fashion brands. His estimated net worth is $1.8-billion.
Many ultra-wealthy buyers are interested in preserving their capital outside the country where they earned it, said Edward Mermelstein, a real estate lawyer in New York who represents clients from Russia and former parts of the Soviet Union. These buyers have plenty of cash and “the U.S. is a great location to minimize risk.”
Condos, which are in short supply in New York, are in high demand among this crowd. Buyers can preserve anonymity and skip the trouble of getting screened by a nosy co-op board.
One57, which cost an estimated $1.3-billion to build, hits the sweet spots: It is a condo comprised of 92 trophy apartments and also a five-star Park Hyatt hotel. No pesky one-bedrooms share the space. “It’s a very exclusive club,” said Ms. Liebman, who acts as a consultant to the building. “The only way in is writing a big cheque.”
Last year, two buyers agreed to pay more than $90-million each for the two huge duplex apartments in One57. One is at the top of the building, and the other – featuring a giant glassed-in terrace – on the 75th and 76th floors.
It took a decade just to assemble the plots of land that make up the site where the building now sits, said Jeff Dvorett, Extell’s vice-president of development. The project required a good amount of “very politely put, patience,” he said. The building is also backed by Aabar Investments, a fund in Abu Dhabi.
More than 60 per cent of the apartments in the building are already sold. The cheapest one still available is listed at $17-million. Some owners will be able to move in later this year, Mr. Dvorett said.
Last fall, a major mishap occurred when Hurricane Sandy snapped the building’s construction crane, leaving it dangling high above the busy streets below. The crane was later secured.
Extell declined requests to go up in the building, but a recent visit to the sales gallery revealed a sense of the pitch to potential buyers.
Visitors are ushered into a room with a huge, curved, floor-to-ceiling screen. A video – shot from a small drone with a camera – shows the stunning view from the building’s upper floors: Straight up the length of Central Park and high above it.
The precise nature of the view, at least from some of the lower apartments, was the source of a minor controversy. One would-be buyer enlisted a construction worker to take an iPad up to the 47th floor, where he was considering a purchase. The resulting video, he said, showed the view was partially obscured by a sign on a neighbouring building (the transaction didn’t go ahead).
Residents will have their own dedicated concierge services (“in case you need tickets to Barbara Streisand or a helicopter,” the amiable sales agent offers). There are bathrooms where the walls are slabs of green onyx and the tubs are solid marble, all of the stone hand-selected by Extell’s director of design.
For some purchasers, the building already appears to be a good investment. Elizabeth Sample, a broker at Sotheby’s International Realty who has sold two apartments in One57, said that one of her clients bought a half-floor condo there about nine months ago.
“He is a very, very wealthy guy, who just wanted a place to park the money,” she said. Since the contract was signed, she said, the price on similar apartments went up by almost $4-million.
With prices for super-luxury buildings increasing, brokers are already talking about potential froth in the market. So when does the dance stop? “That’s the hundred-million dollar question,” said Ms. Liebman . With a pool of buyers from the U.S. and abroad across a range of industries, she doesn’t see demand slackening any time soon. “This market is bigger than any one segment.”