July 14, 2024

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Prices and surprises are falling on Billionaires Avenue…

Prices and surprises are falling on Billionaires Avenue…

Bloomberg – A penthouse apartment overlooking Central Park in Manhattan has been put up for sale at a price 250 million US dollars It attracted attention at the time as the most expensive home to hit the US real estate market. But since then, The price of the apartment was reduced to US$195 million, in recognition that the original figure, intended to create a shock effect, did not attract any buyers.

The 22% reduction and 15% reduction to $149.5 million on a duplex in the same building, Extell Development’s Central Park Tower, is a reminder that selling in one of the world’s most exclusive housing markets is no easy feat. Attracting wealthier buyers for ultra-luxury apartments could be particularly difficult in a market that has slowed after its frenetic pace during the pandemic.

There’s been a tendency to raise prices higher, higher, higher, assuming that these prices go up 10%, 20% every year, regardless, and that’s not realistic.“It’s not easy to convince the affluent market to spend much more than something is worth,” said Leonard Steinberg, director of luxury sales at Compass.

The buildings along Billionaires Row, a strip of skyscrapers built after the financial crisis near the south end of Central Park, have been trying to attract buyers for years. The area has gained a reputation for having large vacant lots, but many properties have filled with more units in recent years.

Penthouse apartments can be the most difficult to sell due to the need to attract the wealthiest people, e.g Ken Griffinwhich set a record with the purchase of 220 Central Park South for $238 million. Extell is now increasing its focus in hopes of attracting the right buyers for its Central Park Tower units.

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“The original prices for these units were the prices that attracted the headlines.”said Gary Barnett, Founder and President of Extell. “We recently sold a significant amount of inventory in the upper part of the building, and now we want to get serious about selling these two listed homes as well, so we are lowering the prices closer to where we think they will trade.”

The senior market as a whole is not as strong as it has been in recent years. Jonathan Miller, president of appraiser Miller Samuel, has tracked 13 sales worth $50 million or more in the U.S. so far this year, well short of the record 49 sales in 2021. This year, three of the high-end sales took place in Manhattan, compared to 12 in 2022.

This year’s performance is less of a collapse and more of a return to pre-pandemic levels, when the median number of home sales of $50 million or more were often in the top 10 or 20, Miller said.

“I would look at ’23 as a normalization rather than an exception to the last three years,” Miller said. “This applies to this market and also to housing for humans only.”

While the market for nine-figure properties is slow, the market for slightly cheaper luxury properties is actually selling well. High-rise sales on Billionaires Row are stronger than they have been in years, driven by condominium deals priced under $50 million. According to Marketproof, An average of 3.7 apartments have gone under contract each month so far this year. This is the highest since 2019, when the stock of new developments was much higher.

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Price reductions

Owners of other luxury units have recently reduced prices. The Wall Street Journal reported in August that a roughly 8,000-square-foot (743-square-meter) unit at McCullough Properties’ 432 Park Ave., previously listed for $135 million and then reduced, is now under contract for about $70 million. .

The price of the building’s top penthouse, which was on sale two years ago for $169 million, has been reduced to $130 million.. An apartment in Extell’s One57 went under contract last month, shortly after the list price was reduced to $34 million, from $45 million in 2022.

“There was a perception that the market was much broader and deeper than it actually was for this high-end price density,” Miller said. “The proof of this is that sales are carried out at deep discounts.”

It’s not like the luxury market is dead. A unit at Vornado Realty Trust’s 220 Central Park South, where developer Steve Roth’s parkfront location and developer Steve Roth’s handpicked pool of buyers kept prices high, sold earlier this year for $80 million.

Central Park Tower has sold about 55% of its apartments, according to Marketproof. The penthouse, now listed for $195 million, is approximately 17,500 square feet over three floors, starting at the 129th floor.

“The original selling price was a marketing trickSteinberg said. He sees that house, and the duplex below it, finally selling for the right price.

The more expensive unit may need another significant price reduction before finding a buyer, according to broker Donna Olshan.

I’m sure they’d be happy to get $150 million for it.“The $150 million sale will reflect a 40% discount on the original sales price,” said Olshan, whose Olshan Realty produces a weekly report on luxury sales in New York.

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Homes with “aspirational prices” often sell at deeper discounts, Miller said. Many have found buyers when sellers were willing to accept discounts of 60% to 70%.He said.

“There are still a lot of units for sale” on “Billionaires Row,” Miller said.

Read more at bloomberg.com