$45 Million Penthouse Split In Two

Currently there is a huge strain on the ultra high-end real estate luxury market in Manhattan. Condo prices are being scaled back, sales are slow and luxury developers are pumping the brakes. A developer of a new building had to split the building’s crown jewel in two because so few buyers are in the market for such a premium property. Why did the developer do that? Was this unit so big that buyers only wanted half of it? Or could it be buyers are not willing to pay the asking price? For whatever reason, this developer decided to split the mansion which was worth $45 million, and as large as 8400 square feet. The unit would have been split into three, but since development was already quite far along, it was only split into two.

In New York, sellers have been forced to retreat due to a glut of luxury high-rises and a slowdown in global markets. This is a bit unexpected, considering the fact that there were ground breaking records made in this same market last year when about 40 units of property, each at the cost of more than $20 million, were sold.

There will be quite an addition to the inventory this year as 5,126 newly built apartments will be added to the market. This is slowing the sale of luxury homes and luxury developers are responding; they are not rushing to develop new buildings, they are taking their time and being observant.

The economy is playing a big part in all of this. It is slowing down and as a result, foreign buyers are being scared off. China has experienced the country’s weakest growth in the past 25 years. Venezuela is considered one of the worst economies in the world right now. Brazil is experiencing a huge financial recession the likes of which they have not seen since 1930 and the oil market, the central bank, and the currency there, are roiling, volatile, and in a bind, respectively. Also, as a way of curbing money laundering, the U.S. federal government has decided to track all cash purchases that are more than $3 million. The government is also on the lookout for sales made under limited liability companies.

All hope is not lost as there are indications that the high-end real estate market might soon come back to life. But for now, in Manhattan alone, there are dozens of homes listed for more than $20 million. The paradigm shift, the splitting of a penthouse in two, the deep economic strain in different countries - all of these signs are very troubling. Could the overstuffed real estate market be buckling under its own weight? Is this the beginning of the end? These are the questions on people’s lips, but for now we’ll have to wait and see.

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