Luxury Condominiums What Price a bargain?

The luxury condominium market is certainly taking a beating at the moment. If there is a segment that was most over-built during the boom years, this is it. The slow build time on larger multi-unit developments means there is still a lot of unfinished stock entering the market. When one takes into account the existing inventory, and adds in the still-to-be-finished projects, clearly the problem is going to continue for some time.

We have covered a few interesting sales and situations recently. A bulk sale of luxury condos in Florida – 51 units sold for less than 6% of the original asking price, and another, a luxury condominium in Florida containing 200 units and one tenant. While the vulture funds may be able to pick up a job lot and sit on them for 5 years waiting for a market recovery, this option is not usually available to the individual buyer at these type of discounts.

The problem is by no means limited to Florida, although Miami and las Vegas may be extreme examples, the issue is more widespread. A lot of luxury condominiums around the country and the rest of the world are in similar situations.  ABC news has compiled a list of what they consider to be the best bargains around, including this Park Avenue penthouse, reduced by $20 million. It will still set you back a cool $31 million. So that is what a 31 million dollar view looks like.

Luxury Penthouse on Park Avenue

$31 million view

The credit crunch arrived late in New York, but it has arrived with a vengeance. Bloomberg reports that Fortress have just won the bidding for Sheffield57, a luxury condo development in Manhattan, paying 40 cents on the dollar, after the developer, Kent Swig, defaulted on $272 million worth of loans. This is the third such seizure and sale in the city this year, and if my understanding of the amount of commercial loans going into default is anything close to the truth, we shall certainly see a lot more before 2010 is out. No wonder the banks are keeping close guard of their bailout money – they are going to need it.