Jonathan Miller, CEO of Miller Samuel, says, “Many people thought the super-luxury market was wider and deeper than it actually was. There just aren’t as many billionaires looking for real estate to park $30 or $40 million as developers thought there were.” As a result, we’ve been seeing many of these units discounted,some as high as 40 percent.
Initially, the ultra-luxury sky-high units saw high demand from the mega-wealthy, driven by a desire for top-tier excellence and the potential for lucrative returns. That is until the market became saturated, redesigning the status of previously premium properties and signaling a shift in the ultra-luxury real estate landscape. As more luxury skyscrapers emerged, the exclusivity waned—unique features that once appealed to wealthy buyers have now become more commonplace.
Gary Barnett, President and Founder of Extell Development Company, seeks to rationalize the decline in prices at Central Park Tower by asserting that the initial pricing of the trophy units served as "headline prices" intended to attract potential buyers to explore the building. Barnett contends that this strategy has effectively contributed to nearly 60 percent of the building being sold. Nonetheless, it is worth noting that Miller Samuel's analysis reveals units are selling at approximately a 25 percent discount.
Compounding the sluggish activity in the ultra-luxury market is the underperformance of newly developed luxury districts, such as Hudson Yards, failing to meet expectations. The allure of these areas has faded or may have never been there to start. It also overestimated the demand for luxury units, which is a reason many of the units remain vacant.
I suppose one way to look at this if you’re in the market for a “trophy apartment” is that you don’t have to wait for Black Friday next week for a good bargain. These deep discounts look like they’re going to stick around for a while.