Hard times have been hitting New York’s “Billionaire’s Row” – aka 57th Street from Park Avenue to Columbus Circle in Manhattan, with sales at luxury condo projects along the exclusive strip of Manhattan real estate disappointing in 2016, after years of scorching results.
Now at least one prominent New York broker believes the sales slowdown at such high-end condominium properties as One57 and 432 Park Avenue, and other projects along Billionaire’s Row, can be traced to new levels of caution from Chinese buyers.
The locations along the street generally feature homes that list for more than $10 million (or RMB 6.5 million), which translates to $4,375 per square foot (RMB 307,000 per square metre).
Mainlanders Among the Early Buyers at One57
When One57 kicked off its sales in December 2011, the project was one of the early targets for China’s uber-rich, with a co-founder of China’s Hainan Airlines having spent nearly $100 million to purchase two whole-floor units in the luxury tower, and other mainland investors reportedly among the early investors.
By the beginning of this year, however, One57 was still struggling to sell off the last 22 units in the building, and had resorted to spending $1 million to fit out a single unit in the hopes of enticing a buyer, according to a report in the Wall Street Journal. They have also reached out to prominent real estate agency Douglas Elliman, New York’s largest broker, and Sotheby’s in hopes of goosing interest after several years of in-house marketing.
One57 is not alone, though. Lately, many of the available properties in the area are not moving as quickly as earlier in this decade, particularly among the Chinese buyers who have been pouring money into the world real estate market.
More Competition in NY’s High-End Market
The New York “pause,” says one prominent real estate agent, can be attributed to three factors: competition, new Chinese laws, and domestic market pressures in the Chinese mainland.
Dolly Lenz runs Dolly Lenz Real Estate, a luxury consulting, sales and marketing firm. A veteran of more than 25 years as a senior executive, Lenz has worked with mogul Donald Trump on projects and sold several notable high-end properties during a career that has seen her sell more than $7 billion in real estate. Her team of 20 professionals has sold more than $11 billion in their careers.
Lenz said several factors have stolen some of the momentum from Billionaire’s Row, and specifically from the projects at 432 Park Avenue and One57.
“There is a large amount of new, very competitive inventory coming on the market, with better finishes, architecture and design,” she said.
Chinese Home-Buyers Take a Step Back
The stresses of fast-rising prices along Billionaire’s Row run into the face of downward pressures from the Chinese market, Lenz said. The result has been less buying power for potential purchasers, with exchange rate fluctuations a particular thorn.
Combine that with new disclosure laws, and that has given a few buyers pause, Lenz said. “Most are very private and want to share information only on a need-to-know basis,” she said. New US federal regulations that went into effect in March require the disclosure of the ultimate beneficiary owners of limited liability companies, with such shell corporations previously being used to shield the identity of many high-end property buyers.
What can change the sales momentum on Billionaire’s Row? “Better marketing to distinguish (the properties),” Lenz said. “Perhaps slightly improved pricing.”
And perhaps one more thing: “I could turn it around, but can’t provide my secrets unless I’m hired,” she joked.