Gary Barnett is losing money. Over the past decade, the chairman of Extell Development, New York’s foremost developer of super-luxury properties, has bequeathed to the Manhattan skyline not one but two of the super-tall towers that have rechristened 57th Street as “Billionaires’ Row”.
In one of those towers, One57, Extell sold the penthouse to computer mogul Michael Dell for a then-record $100.5m in 2014.
But now the city’s luxury property market is in the grip of a once-in-a-century pandemic. With foreign buyers unable or unwilling to even visit the US to shop for real estate, Barnett expects to take a hit on three of his residential projects — he won’t say which. On others he may just break even after undertaking the Herculean task of erecting a new building in Manhattan.
“It’s very, very, very frustrating to build the most beautiful buildings in the world — super quality, super finishes — and to have to sell at a loss,” he laments.
But to property buyers, a luxury developer’s pain may well be their gain. Across New York City, developers are cutting prices on luxury properties in a desperate attempt to move inventory. They are also picking up closing costs and throwing in other inducements for those brave — or foolish — enough to jump into a market and commit to a multimillion-dollar purchase just as a second wave of Covid-19 is bearing down on the city.
“It’s a golden opportunity to buy now,” Barnett says, estimating that “bottom fishers” were benefiting from price cuts of about 20 per cent. “The only reason not to buy now would be if you think that either the pandemic is going to continue for a much longer time, or you think that the world won’t come back to more or less normal post-pandemic.”
Whether the market will come back — and over what time period — is hardly certain. New York City’s luxury property sector had been mired in a slump before Covid-19. Some properties were so wildly overpriced, developers admit, that even a 20 per cent discount may not be much of a bargain, after all.
Then there is the pandemic. It has closed en masse restaurants and theatres that supply joy to the city, while pushing up crime and homelessness. It might seem obscene even to contemplate buying a luxury property during a week in which governor Andrew Cuomo warned of a wave of coronavirus infections that threatens to overwhelm New York’s hospitals.
Or it might be just the time. Frances Katzen, a broker at Douglas Elliman, sold a penthouse this month for $18m. It had been listed at $19.9m. Another
client submitted an offer last Friday for a different property. Three others are looking, she adds.
“The big money really wants to