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Even at Marquis Trump Properties, Your Lyin’ Eyes are Belying the Real Estate is Bottoming Mantra
Last year I took the readers of my blog through a visual tour of the
condo market in NY from Chelsea Pier to Prospect Park Brooklyn. Even the
born and bred NYers were flabbergasted. See (again) “Who are ya gonna believe, the pundits or your lying eyes?”, “Who are you going to believe, the pundits or your lying eyes, part 2″.
Well, things aren’t looking much better a year later. They are still
doing construction next to sites that still can’t sell out their
inventory next to sites that are falling into disrepair due to unpaid
maintenance charges, next to sites that owe the city money, next to… You
probably get my drift by now.
Well, the WSJ reports…
Trump SoHo, the flashy 46-story
downtown hotel and condominium, is taking another unusual step to boost
sluggish condo sales—offering substantial discounts to buyers who have
already signed contracts but not yet closed.
These
discount offers run to around 25% of the agreed-upon purchase price,
according to documents reviewed by The Wall Street Journal. They’re
being used as a special encouragement to convince buyers who might be
getting cold feet to close their deals.
Discounts are being offered to prod Trump SoHo buyers to close.
Rodrigo Nino, president of Prodigy
International, the sales and marketing company for Trump SoHo, declined
to discuss the size of the discounts or how many buyers have accepted
them. He said Trump SoHo “is not unilaterally offering concessions. The
requests have been handled on a case-by-case basis.”
Even taking into account these
markdowns, Mr. Nino added, “the average net closing price is in excess
of $2,500 per square foot.”
The price cuts aren’t the first
measure Trump SoHo has taken to get committed buyers to close on their
deals. The developers, the Sapir Organization and Bayrock Group, are
putting together a plan to offer direct financing to potential buyers
who can’t secure enough credit to purchases condos. Mr. Nino said the
program would be implemented “shortly.”
Granted, the condotel market experienced its own mini-bubble which is
still being deflated, but it is only a microcosm of the larger condo
glut. After benefiting from government bubble blowing, commercial and
residential real estate should continue on its downward trajectory until
true equilibrium between supply and demand is achieved, affordability
being the key, and rental yields come into line with prevailing interest
rates - AS ADJUSTED PROPERLY FOR RISK!!!
More on commercial real estate:
- Even With Clawbacks, the House Always Wins in Private Equity Funds
- Commercial
Real Estate Continues to Dropped into Foreclosure as the Landlords of
Said Properties Enjoy Skyrocketing Share Prices? Yep, Makes Plenty of
Sense - The
Conundrum of Commercial Real Estate Stocks: In a CRE “Near
Depression”, Why Are REIT Shares Still So High and Which Ones to Short? - The Shortlist of the Shortlisted “Stocks to Short for 2010″: What We See as the Most Profitable Bear Postions for 2010
- Developing Implications on Loan Accounting Law: Mark to Market, Mark to Model, or Mark to Market Crash?
More on residential real estate:
- I
Told You Housing Was Going to Take a Downturn for the Worse. I’ll Tell
You Something Else, We Are in a Housing Depression! It’ll Get Worse
Until Market Forces Rule Over Government Bubble Blowing! - Anecdotal Evidence That Banks Are Hiding Depressed High End Real Estate
- As I Made Very Clear In March, US Housing Has a Way to Fall
- Australia: The Land Down Under(water in mortgage debt)
- Australia: The Land Down Under(water in mortgage debt), pt. Deux: Which Banks to Short?
- Aussi Bubble Video to Go With You Aussie Bubble Speculation?
- Recent Mortgage Loss and Credit Performance Commentary
- advertisements -
$2500 per sq ft... WOW 2.5 million to live in a nice box in NYC (not including fee, which are likely crazy high). I won't cry when they have to reduce margins a bit, a 25% discounts still means they are over 100% margin on the project.
Having lived (as a teenager) through the last NYC property bubble, arguing with RE fanatics during the 2000-2006 bubble was a delight. In 2003 through 2005 the mantra was, "But property NEVER goes down!!" In 2006-2007, suddenly the same people were shouting, "Ok, property prices fluctuate, BUT NEVER IN NEW YORK!!!!"
As a life-long Park Sloper I loved watching the condos popping up along the least attractive roadway in NYC, 4th avenue in Brooklyn, and am now watching with great interest to projects right down the road from me - smallish apartment buildings being built on Carroll and Garfield. They don't seem to be moving forward. And I am just waiting for the entire property built on the least attractive triangle of land anywhere -the tower on Flatbush, down across from the Metrotech area- to go into foreclosure. Who would live in these places for the amounts they need to cover their construction costs?!?!?
Alas, being "smart" I don't own property.
Ugh.
Hey RM,
I haven't been to you sight in a while... I like the updates. (scrolling stories, etc...)
Also checked out those links from 2009 article with pictures... funny, I could name practically every picture's location.
I went to LIU, 4 years (baseball ride), came back and lived on President street and 5th, then when I move to Bay Ridge, My downtown office moved to 7 hanson place (above the Atlantic /Flatbush station. (BNY)
I had chills looking back at those shots.
Have you been to Bogata? (restaurant in the slope.) Maybe we can meet up some time.
All the best, MA, Rich H
I'm around, shoot me an email. If you take pics of that location right now, you would never guess that we are in a real estate depression with all of the construction still going on (and the unsold condo units).
Thanks Reggie...
I really liked this posting & appreciate all the added links that I can refer to. Thanks to ZEROHEDGE I a becoming an educated person.