It used to be that a quick walk around downtown Greenwich could pass for an exotic car show but those days seem to be coming to an end as hedge fund returns have suffered and, as one jewelry store owner points out, "one doesn’t want to become the next episode of ‘Billions.’”
As recently pointed out by Bloomberg, Greenwich has long been one of the most prosperous communities in America with one out of every $10 in hedge funds in the country being managed there by the most elite funds like Viking Global, AQR and Steven Cohen's Point72.
But these days, as hedge fund returns have suffered and banking bonuses have remained stagnant for years, the trophy items like expensive jewelry and exotic cars are just piling up in luxurious Greenwich showrooms.
The lonely $250,000 S-Class coupe at Mercedes-Benz of Greenwich says it all. For six months, it’s been sitting in the showroom, shimmering in vain.
“We haven’t had anyone come in and look at it,” says Joey Licari, a sales consultant at the dealership, looking over his shoulder at the silver beauty. “I feel like normally they would, maybe a few years ago.”
Ten-carat diamonds that can cost in the six figures collect dust in stores on the main drag.
But exotic cars and jewelry aren't the only items not moving as real estate brokers say that Greenwich mega mansions are sitting on the market for years amid collapsing prices. As head of Starwood Capital Group, Barry Sternlicht, said the rich are being maddeningly frugal "you can’t give away a house in Greenwich." In fact, according to Houlihan Lawrence contracts for homes between $5 million and $5.99 million are down 80%.
Many continue to try to sell their real estate holdings. As of Sept. 14, there were 46 homes at $10 million or more on the market, some that have been lingering since 2014, according to data from Miller Samuel and Douglas Elliman.
Back in the day, “everybody in the world wanted five acres and pillars on their driveways, because that’s what you got when you ‘made it,”’ says Frank Farricker, a principal with Lockwood & Mead Real Estate who’s chairman of the Connecticut Lottery board. “Now, ‘made it’ means on the waterfront -- on a small lot with a brand-spanking new house.”
On example of the tanking Greenwich real estate market is the following 19,773-square-foot mansion once owned by Republican presidential candidate Donald Trump that has been looking for a buyer for nearly two years. It’s now on the market for $45 million or about 17% less than its original listing price of $54 million. Shockingly the house has garnered limited interest despite a 3,000-bottle chilled wine cellar, a tennis court that converts to a hockey rink and a globe-shaped observatory with a retractable roof and high-powered telescope.
For those interested in something a bit more "affordable", former Citigroup CEO Sandy Weill is also trying to offload his 16,460-square-foot home at $9.9 million, a "bargain" at a nearly 30% discount to the original listing price of $14 million two years ago.
Of course, new Connecticut tax hikes are part of the problem as several hedge funds have shut down shop in Greenwich and moved to Florida where they can take advantage of better weather and cheaper real estate...oh, and a 0% state income rate doesn't hurt either.
In 2015, Connecticut boosted the income tax for individuals making more than $500,000 and couples above $1 million to 6.99 percent from 6.7 percent. Levies on luxury goods rose to 7.75 percent from 7 percent on cars over $50,000, jewelry over $5,000 and clothing or footwear over $1,000.
Sternlicht said at a conference two weeks ago that this was why he relocated to the sunshine state. “We used to have no taxes,” he said wistfully, recalling Connecticut before it enacted its income tax in 1991.
Ah, the Sunshine State, Gorgeous!