- After a brief boom in luxury condo sales to beat a new tax hike, the high-end real-estate market in New York City hit its lowest point in six years in July, according to The Wall Street Journal.
- The city has a surplus of exorbitantly expensive, ultra-luxury penthouses.
- Many of them sit on the market for months and eventually sell at heavily discounted prices.
- But some real-estate developers take more drastic measures and split these massive penthouses into multiple smaller, cheaper units to get them off the market – and often, it works.
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The prospect of a July 1 tax hike prompted a boom in luxury condo sales in New York City in June 2019, The Wall Street Journal reported.
But the surge of high-end sales didn’t last. In July, sales of Manhattan homes priced at $US2 million or above dropped to their lowest levels in more than six years, according to the Journal.
New York City has more super-expensive and ultra-luxurious penthouse apartments than it knows what to do with.
In Manhattan, there are currently more than 50 penthouses on the market for $US20 million or above, according to StreetEasy.
“Like any commodity, when the market is saturated with them, their value declines,” Jason Haber, an agent at Warburg Realty in Manhattan, told Business Insider. “If under every rock you found a diamond, diamonds would decline in value. That’s what is happening right now.”
Other sellers offer wild perks to sell their extravagant penthouses, such as the $US85 million Hell’s Kitchen condo that comes with tickets to outer space and a couple of Rolls Royce luxury cars.
Developers are breaking up massive penthouses to get them off the market.
But sometimes discounts and perks are still not enough, and with the traditional penthouse losing its allure for many buyers, developers are carving up penthouses into multiple cheaper listings to get them off the market.
At 432 Park Avenue, New York City’s tallest completed residential building, the 95th-floor penthouse was originally listed for $US82 million for the full floor, but it sat on the market for more than two years. In late 2018, the condo was split into two separate listings – penthouse 95A for $US41.25 million and penthouse 95B for $US40.75 million, as Curbed reported. One faces north and one faces south, but the layouts aren’t much different.
Just a few blocks away at 520 Park Avenue, developers split a 12,398-square-foot triplex penthouse, first listed in 2014 for a staggering $US130 million, into two separate units: One simplex listed for $US40 million and one duplex penthouse asking between $US80 million and $US100 million, according to The Real Deal.
The Real Deal pointed to this as part of a trend of “developers opting to split once-massive penthouses into two or more smaller units.”
Splitting huge penthouses into smaller apartments often gets them off the market.
If past sales are any indication, this strategy might be a good one.
A few months after being split into two separate listings, the $US82 million penthouse at 432 Park Avenue finally sold as two apartments: for $US30.7 million and $US30.2 million respectively.
And back in 2016, a 12,000-square-foot, $US80 million penthouse at 160 Leroy Street in the West Village was split into two smaller units: One asking $US31.5 million and the other $US48.5 million, according to Curbed. And it worked – the cheaper one sold in 2017 and Michael Rubin, part owner of Philadelphia’s 76ers and the New Jersey Devils, bought the larger unit in 2018 for $US43.5 million, Forbes reported.
That being said, the penthouse has not entirely lost its appeal, or its status, in 2019. Ken Griffin’s $US238 million purchase of the penthouse (floors 50 through 53) at 220 Central Park South shattered the US real-estate record in the first weeks of January. The record had previously been held by Barry Rosenstein’s $US137 million Hamptons home purchase in 2014.