According to real estate appraiser Jonathan Miller, there are now nearly 100 single-residence listings in Manhattan priced at $30 million or more. How much would you have to make to afford one of these ultra-luxury condos? The Real Deal estimates that you’d have to have a personal wealth of at least $500 million in order to purchase such an enormously expensive asset. If this seems like a tall order, you’re right.
Worldwide, there are less than 10,000 people valued at more than $500 million. This is leaving many market analysts concerned that developers in New York City are supplying the market with extremely valuable assets for which there is very little demand. Luxury condo developers seem to have adopted an “if you build it, they will come” mentality, betting their investments against an expected influx of wealth into the city.
Granted, Manhattan has seen a marked increase in its per capita income in recent years, but not on a scale that would demand an overwhelming need for hundreds of $30 million condos. Some analysts argue that developers would have better chances of success by turning their attention to the lower-end of the luxury market ($5 million condos, as opposed to $30 million) where there is a more favorable demand-to-supply ratio. Meanwhile, other analysts are concerned about the relative lack of affordable housing in Manhattan.
Part of the problem lies in the land values in Manhattan. Land prices are so expensive that it’s often simply not feasible for developers to build affordable housing and turn a profit on their investments. As a result, they’re willing to take this gamble on building ultra-luxury residential space instead.
Stay tuned for more updates from Robert Khodadadian of Skyline Properties!