The city’s high-end market was dealt an unprecedented blow by the coronavirus lockdown. Can it ever fully recover?
The Covid-19 crisis has delivered a stunning gut-punch to the New York City luxury real-estate market, applying downward pressure at a rate that surpasses both the 2008 financial crisis and the period immediately following the 9/11 terrorist attacks.
In the West Chelsea district, a recently built ultra high-end boutique condominium known as the Getty slashed prices for its remaining units by as much as 46%. One full-floor, four-bedroom apartment at the Peter Marino-designed building was lowered to $10.475 million from $19.5 million.
“Truth be told, you need to do something drastic and dramatic to attract attention,” said Ran Korolik, a partner at Victor Group, a developer of the project. “I didn’t want to reduce prices by 15% or 20% and then have someone come along and try to negotiate another 15% or 20%.”
The current level of delinquencies even surpasses the $13.5 billion that lenders were owed during the Great Recession that started in 2008…
Payments on nearly one-fourth of all loans backed by hotel real estate are delinquent by at least 30 days, signaling an imminent and unprecedented wave of foreclosures, according to the American Hotel & Lodging Association (AH&LA).
It notes that the $20.6 billion in delinquent payments on commercial mortgage-backed securities (CMBS)—23.4% of all CMBS loans extended to hotels—compares with overdue payments of $1.15 billion at the end of 2019, or 1.3% of outstanding CMBS loans at the time. The current level of delinquencies even surpasses the $13.5 billion that lenders were owed during the Great Recession that started in 2008, according to the association.
As the widening gyre that that is 2020 continues to turn, it seems that every day some new disastrous and ill-thought-out proposal is made or policy implemented.