Luxury Manhattan Condos Pile Up As Foreigners Lose Buying Power

Manhattan real estate agent Lisa Gustin listed a four-bedroom Tribeca loft for $7.45 million in October, expecting a quick sale. Instead, she cut the price this month by $550,000.

“I thought for sure a foreign buyer would come in,” said Gustin, a broker at Brown Harris Stevens who is still marketing the 3,800-square-foot (353-square-meter) apartment at 195 Hudson St. “So many new condos are coming up right now. They’ve been building them for the past few years and now they’re really hurting the resales.”

A flood of new high-priced condominiums and mansions are coming to market in New York, Miami and Los Angeles just as international buyers, who helped fuel demand in the three cities, are seeing their purchasing power wane with the strengthening dollar. Signs of a pullback may already be showing in Manhattan, where luxury-home sales have slowed amid a surge in construction of towers aimed at U.S. millionaires and foreign investors.

This year, 2,386 newly built Manhattan luxury condos will be listed for sale, the most on record, data compiled by Corcoran Sunshine Marketing Group show. The brokerage defines luxury as units priced at more than $2,300 a square foot.

“We’re building a very narrowly defined super-luxury product with a fairly deep pool of buyers, but the challenge is going to be the mere fact that it’s all coming at the same time,” said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. and a Bloomberg View contributor.

Longer Time

With the increased supply, buyers are taking longer to make deals. New and resale apartments that went into contract in the fourth quarter for $10 million or more spent an average of 147 days on the market, almost twice as long as a year earlier, according to real estate website StreetEasy.com.

Weakness in economies outside of America, a plunge in oil prices and surging dollar may be hurting demand from international buyers, who have set records in their hunt for trophy American real estate as a haven for their money. The U.S. dollar has strengthened against all of its 16 major peers except for the Swiss franc in the past 12 months.

While foreigners account for about 15 percent of total Manhattan sales, they make up about 30 percent of high-end condo purchases, according to Miller. Developers of the ultra-luxury Midtown skyscrapers One57 and 432 Park Ave. have touted their sales to buyers from around the world, including South America, the Middle East, China and Russia.