Billionaire’s Row, also known as 57th Street in Midtown Manhattan, is the creme de la creme of ultra-luxury condominiums in New York City. Apartments on this famous street are sought after by large corporations, foreign investors, real estate moguls, and high net-worth individuals. Billionaire’s Row is by far the most expensive area in New York City real estate. Beckie Strum of Mansion Global reports that “The average price on Billionaire’s Row hit $7,268 per square foot” which makes the Midtown area of Central Park by far the most expensive area for real estate development in Manhattan (3).
In the past couple of years, while it seems that development in some neighborhoods in New York City leveled off, Billionaire’s Row is the exception. Mansion Global reports that “the number of new development units in Manhattan rose 34.6% in the second quarter over the same quarter last year, to nearly 6,000 units” (1). This was due in large part to a spate of new project approvals, including the trifecta of luxury apartments that comprise Waterline Square on the far West Side, and Central Park Tower, planned to be one of the tallest buildings in the Western Hemisphere on Billionaire’s Row.
Despite the new developments, some ultra-luxury apartments in New York City have been selling for much below their asking price, however, median sale prices are overall still increasing year-over-year, in particular having made a large leap since 2016. The Corcoran Report recently released the statistics that year-over-year condo sale prices in Manhattan have increased 10% and co-op sale prices in Manhattan have increased 12% since the same time a year ago. Also important to note however is that in the ultra-luxury sector north of $10M, apartments have been staying on the market for longer periods of time, and as such property managers and real estate developers alike have begun to lower the price point for these apartments to offset the slowing demand and to attract more buyers. Pertaining in particular to the ultra-high-end market, The Corcoran Report recently released that the market share of apartments selling in the $10,000,000+ category fell from 11% in Second Quarter 2016 to just under 4% this quarter (1).
While this does indicate that it is a good time to buyers to invest in the ultra luxury real estate market, it also alludes to some buyers not being able to keep the existing apartments bought at premium prices. NY Curbed recently reported the very first foreclosure on Billionaire’s Row: an ultra-luxury apartment on West 57th Street. Journalist Rache Sugar writes that “A stunning apartment on the 56th floor of Extell’s 157 West 57th Street will be the first high-end condo to go into foreclosure” (2). Rachel continues to report that “The New York Post has learned that the owner of this One57 penthouse is Nigerian oil tycoon, Kolawole Aluko, who is allegedly involved in international money-laundering schemes, and is also under investigation for allegedly siphoning off money from the Nigerian government.”
While this does reflect a very particular circumstance that may present an exception to the rule – particularly since the vast majority of the ultra high end deals in the $10M+ category tend to be all cash with no financing involved – this instance could force real estate developers to take less risks. Katherine Clarke of The Real Deal quotes Leonard Steinberg, “It’s an isolated incident, but symptomatic of a bigger story. Foreclosures used to be the domain of people who were barely scraping by. This shows it can apply as equally to the very wealthy” (4). In addition, the article reports that “coupled with a series of unprofitable resales, the impending foreclosure — the second at One57 in many months — has cast a shadow over the onetime poster child of the luxury residential boom. And it raises further questions about the health of Billionaires’ Row” (4). All this being said, however, with so much wealth continuing to be poured into Manhattan real estate – specifically the 57th Street corridor – it is more likely that the street with continue to appreciate in value over time, despite this quite unusual foreclosure.