A tumultuous year, 2020 has been rife with dramatic changes across all industries, and Manhattan’s luxury properties were no exception. However, a recent surge in buying activity indicates that a rebound from the initial drop seen during the early stages of the pandemic in spring is now taking place. Specifically, luxury property sales at the end of November continued on an upward trajectory, which started at the beginning of September.
So, to further gauge the luxury market’s pulse, we turned to Shlomi Reuveni of brokerage firm Reuveni Real Estate. Reuveni has more than 30 years of experience in Manhattan’s luxury residential market and, in addition to sales and brokerage. His knowledge of the market is further illustrated through his credentials, which stretch across such varied aspects as development, leasing, property management and more. Reuveni’s mission is to stay abreast of market developments and to be “on the cutting edge” of Manhattan’s luxury market.
With projects such as the ultra-luxury Getty Residences, Reuveni says that those looking for luxury apartments in Manhattan, are “on the hunt and transacting.”
He also advises that, “Regardless of recent press reports about buyers leaving NYC for states like Florida because of favorable tax structures, there is loyal and consistent demand for NYC real estate.”
Reuveni shared with us his thoughts on the trends and challenges of today’s Manhattan luxury real estate market.
Q: Describe today’s NYC’s luxury market; what are some trends and challenges?
The trends point towards large, highly designed and, often, turnkey homes in less dense, super-prime residential neighborhoods asking $10 million or more. These are often townhouses or boutique luxury buildings with full floors (or only a few units or floors) where you can control your own environment.
Challenges persist with many of the less-established neighborhoods that are chock-full of properties in the $2 million to $5 million range. And, despite the record-low interest rates on mortgage loans, these tertiary sub-markets have seen less sales post-COVID, while their inventory continues to pile on. Even with prime locations and properties — such as the ones mentioned above — buyers expect a substantial discount.
Q: How has the pandemic reshaped the way in which luxury properties are sold?
The pandemic has indeed changed the process. For example, selling luxury properties via Zoom or similar platforms is not that uncommon now. We recently sold a penthouse listed over $15 million “sight unseen” through Zoom at 90 Morton Street.
Q: What is the demographic of clients buying properties worth more than $10 million? Has it changed at all due to the pandemic?
The majority of buyers that I am seeing are local, affluent families who have not transacted in the past few years due to high price points, but who are now committing because they perceive value. Specifically, they are people who live and work in Manhattan, who send their kids to schools here, and who believe in the long-term value of their purchase and the inherent investment. The other type of buyer is typically also from the U.S. — typically from the West Coast — and looking for a pied-à-terre in Manhattan.
At Getty Residences, I am seeing most interest (around 75% of inquiries) from affluent NYC locals — both families with kids due to proximity to Avenues School, and adults whose kids have already left the nest — and about 25% of inquiries from bi-coastal buyers looking for a larger home/pied-à-terre in NYC.
Q: Can you tell us how the mansion tax affected sales — both with the rush to buy in June 2019, as well as developments since then, particularly after the pandemic hit the market?
There was certainly a rush to buy leading up to July 1, 2019, followed by a noticeable slowdown in Q3 2019 through the end of the year. The market seemed to be showing signs of life in early 2020 and then COVID hit, so I don’t know if it ever had a proper amount of time to really digest the changes which would have naturally resulted from the mansion tax prior to the pandemic.
However, at this point, I think many sellers and developers have accepted the fact that the new taxes are just another one of the many costs of doing business. In fact, many sellers and developers were already covering transfers/mansion before the first of July 2019 in order to get deals completed. Now, they’re still doing the same, it’s just costing them more.
Q: Have you noticed any up-and-coming areas? If so, please elaborate.
With the development of Hudson Yards, Hudson Square and the anticipation of new employees moving to NYC for employment in these locations, we have seen higher demand in the west side of Manhattan — from TriBeCa all the way to the West 90s. Also, West Harlem 110-125 and Gowanus are a few of many up-and-coming areas.
Q: What are some key selling points for luxury real estate clients — such as square footage, architectural style, amenities, or proximity to certain places?
All the above definitely play a role, but to me, it all comes down to layout and price. Just because something has the “right” square footage doesn’t mean that it lays out well. Regarding price, it’s easy to get hung up on price per square foot but, at the end of the day, it’s really about price point.
With COVID, we are seeing higher demand for boutique buildings and/or buildings with a small unit count per floor. Also, homes with outdoor space and separate home offices are increasingly in demand.
Q: How do you think the current pandemic situation will affect the future development of luxury properties?
This might be a contrarian view considering what we’ve all been reading in the past few years about the decline of NYC’s luxury market, the over-supply of large units and so on, but, based on what we’ve seen in the data and from the ground recently, going forward, I believe developers are pulling away from the “efficiency” model that drove the planning of many projects circa 2015-2020 and circling back to the extra-large, luxury unit model that fueled 2012-2015 or so.
Overall, there may be less new development projects planned or launched in the next two years. However, once absorption of existing inventory takes place and a COVID vaccine is readily available (and safe), I see the demand spiking again and a new cycle of new projects developing.