Empty Mansions in the Sky

This story might only interest those who have more than a passing interest in the vagaries of New York City real estate, but, still, it’s worth a post.

During the Bloomberg years-- which were considerably better than the de Blasio years-- real estate developers had the brilliant idea to build ultra luxe ultra expensive condos around the city. Most especially, they  built up West 57th St, which people started calling billionaire's row. Yet, these massive buildings popped up all over the city.

They were priced to sell to people who had nothing but money. Thousands of dollars a square foot was the average price. They were marketed toward American billionaires but also to Russian oligarchs, Middle East oil magnates and Asian plutocrats. 

As it happened, some people did buy them. But then, people stopped buying them. As of today, half of the units remain unsold. One can only wonder about the solvency of developers who are stuck with unsellable units, but about the bankers who loaned them the money.

Anyway, for those who care, the Daily Mail has the story:

Manhattan's ultra-high-end condo market appears to be in a slump, with nearly half of all units built in the past five years sitting unsold.

Of new condo units in Manhattan that came to market after 2015, 48 percent, or 3,695 of 7,727 apartments, remain unsold, according to an analysis of sales data by Nancy Packes Data Services, a real estate consultancy and database provider.

The story suggests that other segments of the Manhattan real estate market are doing fairly well, though that probably means that prices have descended to the point where they can find some bids.

How much do the mega mansions in the sky sell for?

Last month, one penthouse on Billionaire's Row was sold to hedge-fund billionaire Dan Och for a staggering $92.7 million, making it the third-priciest unit ever sold in New York City.

Nearby, computer mogul Michael Dell spent $100.47 million on a penthouse at tower One57 off West 57th Street, and another unit in 220 Central Park South, the same building as Och's, sold for close to $240 million to hedge fund manager Ken Griffin. 

However, the foreign billionaires that the buildings were intended to attract do not appear to be flocking in as expected. 

'Developers bet huge on foreign plutocrats—Russian oligarchs, Chinese moguls, Saudi royalty—looking to buy second (or seventh) homes,' writes Derek Thompson for The Atlantic.

But then, reality bit:

'But the Chinese economy slowed, while declining oil prices dampened the demand for pieds-à-terre among Russian and Middle Eastern zillionaires,' he says.

In addition, the U.S. Treasury Department in recent years began to aggressively crack down on attempts to launder foreign billions through the U.S. real estate market. 

The result: some of the most expensive real estate on the planet sitting empty, and half-vacant skyscrapers gazing over Central Park. 

For the record, most of the condos that sold are also sitting empty. They are being used to park money, just in case.