Even with fewer foreign buyers in New York, the billionaire line is holding up

For a year, the demand for New York City The luxury market has soared from its 2020 lows as affluent buyers have returned to the city, looking to both expand and take advantage of a comparative buyer’s market in the city.

To wit: Manhattan’s luxury market had its busiest week of the year last week, according to a report from Olshan Realty. In late April, a penthouse at 432 Park Avenue sold for $79 million in the most expensive sale of the year to date.

“The luxury market had a really fantastic year 2021, closed strong, and that continues somewhat in [2022]said John Walkup, co-founder of New York-based real estate data site UrbanDigs.

With international travel still arriving only in spurts, much of that demand has been driven by American shoppers who have seen a huge accumulation of wealth over the past two years. This marks a dramatic change of pace for high-end Manhattan properties, which have long been popular with international investors (an issue that has come to light in recent months as pressure mounts for seize assets held by Russian oligarchs).

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A corridor of the city’s luxury market that’s particularly known as a haven for international investors: Billionaires’ Row, the stretch of 57th Street that houses the majority of Manhattan’s super-tall luxury towers.

“Billionaires’ Row has always attracted more foreign and non-New York buyers,” said Kimberly Jay, broker at Compass in New York. “This area certainly hasn’t seen the type of demand like the Upper East Side for example, which attracts a different type of buyer, and it’s a lot more locals buying these units.”

A change in priority induced by the pandemic

As more buyers focused their searches on spacious family homes in classic residential neighborhoods within walking distance of their children’s schools, neighborhoods like the Upper East Side were among the first in the city to see reinvigorated demand from luxury buyers after a pause during the worst of the covid19 pandemic.

“After the summer of last year, we saw tremendous activity in areas like the Upper East Side, Upper West Side and Downtown,” said Charlie Attias, a Compass agent in New York. “These are families, not foot-to-earth buyers. People realized they didn’t want to be in Florida, they wanted their kids to go to school here. They did very well financially and came back and bought bigger homes in those neighborhoods.

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Yet even with a dearth of overseas buyers and an increased focus on residential neighborhoods (compared to the office-centric Midtown East), Billionaires’ Row has staged its own comeback. In January, a penthouse in 220 Central Park South sold for $188 million after being purchased for $92.7 million just over a year prior, making it the second most expensive residential sale on record in New York City.

“Since Covid, Billionaires’ Row has been pretty slow, but since the fall of last year we’ve seen a pretty good pick-up in activity in those buildings,” Mr Attias said. “At the Plaza, I’ve sold eight apartments since the start of last year, and at 220 Central Park South, we’ve seen lots of incredible sales at record prices.”

The billionaire line bounces… and higher

Even without the opening of new buildings in the hallway of Billionaires’ Row, sales appear to be rebounding not just from their pandemic-induced slump, but from a slowdown over the previous several years.

“What we’ve tended to see in the past on Billionaires’ Row is a real spike when a new building opens,” said Pam Liebman, president and CEO of The Corcoran Group. “Now, even without new launches, you have a steady stream of resales and developer inventory absorption. There were 117 deals signed in 2021, one under the record, which was 118 in 2015. C That’s pretty impressive considering stocks are 22% lower than they were then.

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Although the data may be difficult to parse for a relatively small subset of the luxury market, prices on the Billionaires’ Row corridor largely appear to be recovering more slowly than those in the broader New York luxury market, but at higher points than in the years leading up to the pandemic.

“For Billionaires’ Row condos and Manhattan overall, prices are up from 2020, but Billionaires’ [Row] condos are even higher than before 2019,” said Ondel Hylton, chief content officer of real estate data site New York CityRealty. “Still, [prices are] under the more heady days of 2014-2017 when One57 and 432 Park [two of the most prominent and high-priced developments on Billionaires’ Row] came online for the first time.

After peaking during the most effervescent days of the last luxury boom in New York around 2015, “The [price] declines were much more frequent [on Billionaires’ Row] in the few years leading up to the pandemic,” said Jonathan Miller, president and CEO of valuation firm Miller Samuel and author of market reports for Douglas Elliman in New York. “It was a really dark time for this type of building. However, like apparently everything else [right now]conditions under [sales] activity are significantly better than they were in the previous two years.

A comparative wealth of options

While Billionaires’ Row offers higher levels of inventory than the entire Manhattan luxury market, availability continues to drop as shoppers return to the city in force.

“We’re seeing inventory absorption and shrinkage, and that shows that supply is starting to be consumed and we’re tightening up,” said Frances Katzen, agent at Douglas Elliman in New York. “And I think Midtown East and Billionaires’ Row will hold together and continue to grow as we see more people returning to work, and more international travel and trade.”

For ultra-luxury shoppers looking for their moment to buy the drop, it may be wise to strike as soon as possible, and before overseas buyers make a full return to the market.

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“People who hesitate end up kicking themselves,” Ms Katzen said. “In 2020, when people were asking, ‘Do you think [New York’s market] will crater more,” it was a time when people didn’t know how to assess long-term values, and it was time to get in. People who [did] are the people who made money during the recovery.

Among Billionaires’ Row’s most recent buyers, “Some of them have landed incredible deals during the pandemic,” Mr. Attias said. “Those who were very aggressive and not afraid to buy in New York, they were convinced that New York would be resilient and they were right.”

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