Manhattan’s $10 Million Apartment Market Offers No Bargain Buys

It took Stephane Melloul three days to learn he’d need about $50 million for the New York home of his dreams: four bedrooms, a terrace and Central Park views.

 

Melloul, president of London-based credit rating company Notalia, started this week expecting to spend as little as $20 million. He raised his target after seeing just five Manhattan properties that met his criteria.

 

“I thought when I came here that the prices would be more compelling and more attractive, and actually they weren’t,” Melloul said, speaking in French in a telephone interview. Real estate broker Charlie Attias, a senior vice president of New York-based Corcoran Group, interpreted.

 

“There is always going to be demand for those units in the sense that they’re hard to come by,” said Gregory Heym, chief economist for Terra Holdings LLC, owner of property brokers Brown Harris Stevens and Halstead Property LLC. “Park and Fifth avenue buildings, the rarity of getting an availability in them, make them very desirable.”

 

Leonard Steinberg, a managing director at New York-based Prudential Douglas Elliman Real Estate, said he sold two properties this year for more than $10 million and is working on another two. Buyers who once limited their search to the Upper East Side are now spending equivalent amounts in the city’s TriBeCa, Greenwich Village, SoHo and Chelsea neighborhoods, he said.

 

Dramatic Turnaround

 

“The market has done a 180 from last year, when you had it drop pretty dramatically,” Steinberg said. “Buyers need confidence to buy, not money, and confidence has returned.”

 

The median price of 77 apartments sold for $10 million or more in 2009 was $12.8 million, according to the analysis of Miller’s data. So far in 2010, 28 units sold for a median of $13.2 million.

 

The median price of apartments in the $10 million-plus range has been pretty steady, between about $12.5 million and $13.6 million since 2002, with the exception of 2007 and 2008. In those years, the median hit $14 million, an anomaly set by sales at the Plaza and 15 Central Park West, two buildings that opened at the same time and together more than doubled the typical number of $10-million-plus transactions in Manhattan.

 

Blankfein’s Building

 

At 15 Central Park West, the condominium towers that rock star Sting and Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein call home, a 25th floor unit sold for $13.7 million in January. That’s more than double what the previous owner paid in 2007, according to city records.

 

Apartments in the building, designed by architect Robert A.M. Stern, include some with panoramic views of Central Park and all originally featured herringbone wood floors and six- burner Thermador ranges.

 

At nearby Time Warner Center, where owners share services with the Mandarin Oriental Hotel, a three-bedroom condo just went into contract for $5,400 a square foot. It marks the second-highest amount paid by that measure for any unit in the complex, said Elizabeth Lee Sample, president of the building’s board and a managing director at broker Brown Harris.

 

“We have nothing to sell,” Sample said. “It’s just completely limited inventory.”

 

Melloul, 43, is helping his company open a New York office and would like to move from Paris with his wife and two daughters as soon as possible, he said.

 

Finding Perfection

 

He saw a “perfect” unit at 15 Central Park West for about $50 million, he said. He declined to be more specific.

 

Inventory in the general luxury market, defined by Miller Samuel as apartments of more than $2.87 million from March 31 through June 15, declined 13 percent in that period to 1,302, company president Jonathan Miller said. Overall city inventory rose 1.6 percent to 8,157 properties.

 

“The first quarter of 2010 was when in my view the luxury market really woke up,” said Miller. “The pace of growth wasn’t because of appreciation, it was because of the shift in the mix to larger units.”

 

Leighton Candler, a senior vice president for Corcoran who works exclusively on the Upper East Side and around Central Park, said her 25 years in the business have taught her the key to a healthy high-end market is property owners being willing to list their homes.

 

“In a bad market, the buyers aren’t looking, but just as important, the owners aren’t selling,” she said.