William Ackman is a wildly successful hedge fund manager. He oversees $17 billion of mostly other people’s money. Forbes estimates his personal net worth at $1.7 billion. These facts alone would make him a prime candidate to buy the penthouse condominium at One57, the new luxury tower on West 57th Street.
And indeed, Mr. Ackman told The Times in a fascinating profile Sunday that he is the buyer of the 13,500-square-foot condo with an estimated price of $90 million. What is more shocking is what he plans to do with it.
Apparently content living with his family on the Upper West Side, he told The Times he was purchasing one of the most expensive properties in New York because “I thought it would be fun” and he and some close friends “bought into this idea that someday, someone will really want it and they’ll let me know.” They may throw the occasional party there.
– From the New York Times article: A $90 Million Condo Flip Shows What’s Wrong With Financial Capitalism
Last fall, I published several posts detailing the clear evidence that London’s luxury home market had topped, as news emerged that sales for the most expensive units had plunged 26% year-over-year. This was significant since London represents the ultimate prize in the corrupt foreign oligarch/dictator portfolio. It was the canary in the coal mine for the entire global ultra-luxury real estate market, and we’re now seeing indicators that this trend is also becoming entrenched in America’s oligarch crown jewel: Manhattan.
A few weeks ago, Bloomberg published an important article that many of you may have missed since it came out on Christmas eve. It was titled, Manhattan Luxury-Home Prices in a Slide, Defying Broader Market, and here are a few key excerpts:
The median price for the borough’s most-expensive homes fell to $3.59 million in October, down 2.2 percent from a year earlier, according to an index by StreetEasy measuring resales in the top 20 percent of the market. Prices have been dropping every month since February, when they reached their highest point on record, a median of $3.72 million, an analysis of data from the listings website shows.
Prices for luxury homes are moving in the opposite direction from the broader Manhattan market, where values are still rising and discounts are few. New York’s high-end inventory has ballooned in recent years as developers focused on building large and lavish units in an appeal to wealthy investors, who now appear to be more hesitant to buy. Listings for more moderately priced homes, meanwhile, haven’t been replenished because the high cost of land makes building in that range unprofitable, and owners are reluctant to sell because they can’t afford to trade up.
The result is a pool of listings that’s light on the properties that more people want to buy, Lightfeldt said. In the third quarter, the supply of homes for sale in the top fifth of the the market rose more than in any other segment, jumping 8.9 percent to 4,055 units, according to StreetEasy. For the other four levels combined, listings declined more than 3 percent.
This is what happens when you build supply based on the money laundering habits of foreign criminals.
Sellers are already adjusting their expectations. Toll Brothers Inc. plans to “price accordingly” to move the 30 remaining condominiums at 400 Park Ave. South, a tower it completed last year, Chief Executive Officer Douglas Yearley said on a conference call earlier this month. The builder will also be “a bit more aggressive in pricing” at 1110 Park Ave., where five of the nine units hadn’t found buyers, he said.
A three-bedroom apartment at 400 Park Ave. South was marked down by 4 percent this month to $5.75 million, according to the listing on StreetEasy. At 1110 Park Ave., the asking price for the 7,000-square-foot (650-square-meter) penthouse was cut 10 percent last week to $31.5 million.
The following paragraph is the most telling part of the entire article. Recall, One57 is the hideous monstrosity that Bill Ackman boasted about buying a $90 million penthouse in “for fun,” implying that he would flip it for a profit one day.
At Extell Development Co.’s One57, the skyscraper near Carnegie Hall that ignited the high-end construction boom, the initial buyer of a 51st-floor apartment is reselling his unit at a loss, according to StreetEasy. The owner, who bought the 3,466-square foot condo in April for $20.4 million, listed it for sale about a week later for $21.9 million, then dropped the asking price in October to a little less than $19 million. The home went into contract last week, according to StreetEasy.
The luxury market “has been over-served and the demand seems to be fully satiated,” said Lightfeldt of StreetEasy. The firm’s price index is based on a representative sampling of resales in a given month, which are compared to their previous sales prices.
I doubt anyone will shed any tears for Ackman, the only man who can make Martin Shkreli seem likable.
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