For luxury-home developers and brokers in Miami and Manhattan who are already contending with slumping prices and slowing demand, the U.S. government’s decision to start scrutinizing all-cash buyers was more bad news.

The Treasury Department’s Financial Crimes Enforcement Network said Wednesday that it will seek out the identity of individuals behind limited-liability companies that pay cash for high-end residential real estate in Manhattan and Miami-Dade County. Starting in March, title insurers will be required to name the true “beneficial owner” behind the anonymous entities, FinCen said in a statement.

FinCen is concerned that such opaque deals -- used by wealthy investors seeking to avoid the public gawking that comes with buying expensive property -- may also be made by people attempting to hide assets and launder money, according to the statement. By casting such a wide net, the new disclosure rules may discourage legitimate purchases and further damp interest in high-end sales in the two markets, which are already bracing for a slowdown.

“Part of the large swath of people who purchase under LLCs do it for privacy -- celebrities, the wealthy -- and are not doing something illegal,” said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. “I’m not downplaying that there aren’t people who are using ill-gotten gains to purchase apartments, but it stereotypes the whole segment and it seems to be some kind of overreach by the federal government. In a cooling market, it certainly isn’t helpful.”


Prices Slipping


Demand for Manhattan’s most-expensive homes is slipping while apartments from a high-end construction boom aimed at wealthy investors pile up on the market. Resale prices for the top 20 percent of the market peaked in February and have fallen every month since then, according to an analysis through October by listings website StreetEasy.

In Miami-Dade County, the stronger dollar is turning away Latin American buyers while 36,000 new units are in the construction pipeline, according to an estimate by South Florida development tracker CraneSpotters.com. The U.S. government measure will hurt sales and may drive investors to other locations such as Panama, said Peter Zalewski, owner of CraneSpotters. Their disappearance may lead to price declines in the market because overseas buyers, seeking a haven from the financial turmoil of their home countries, are often willing to pay more, Zalewski said.

“It’s a killer for Miami -- not because we’re afraid of drug buyers,” said Related Group of Florida Chief Executive Officer Jorge Perez, the billionaire developer known as the state’s “Condo King.” “You have to remember that a lot of wealthy people, particularly in South America, are very, very shy about disclosing their wealth.”


One57 Penthouse


Many deals at New York’s ultra-luxury towers are made by LLCs, including the first to close at 432 Park Ave., the tallest completed residential building in the Western Hemisphere. The 35th-floor condominium was purchased in December for $18.1 million, according to city property records made public last week. The most expensive closed sale of an apartment in New York City, the $100.5 million purchase of a penthouse atop Extell Development Co.’s One57, was to a buyer known only as P89-90 LLC.

First « 1 2 3 » Next