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NY Real Estate Market: Luxury Real Estate Is Dropping

Posted by Staff Reporter on Apr 14, 2016 08:23 AM EDT
New York Construction Boom Cut Short By Economic Crisis more big
A man walks by a new condo in the East Village in Manhattan December 29, 2008 in New York City. As a result of the global financial crisis, nearly $5 billion in development projects have been postponed or cancelled in New York City. This downturn in construction has affected all types of construction including luxury high-rise buildings, banks and office renovations. (Photo : Spencer Platt/Getty Images)

New York real estate market had seen some recent developments, beginning with Toronto's Urbancorp which discreetly cancelled previous work in a condo complex, rather than convert the projects into rental apartments. This move had been among the first signs that the demand for the luxury real estate was dropping. 

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Another troubling news item for the NY real estate market had been reported last week when the legal counsel of Urbancorp severed their ties with the company. Also cutting relationships was board member James Somerville, who announced he had quit his post, two weeks following his appointment.

Moreover, Tarion Warranty Corporation of Canada had announced that they will discontinue issuing insurance for deposits from the buyers of Urbancorb properties. This suggests that those who are paying for units being developed by the Urbancorp would be on their own once the firm discontinues the project and no longer has the ability to return their payments. It also implied that the insurance companies are worried over the ability of the developers to return the deposits.

Given the fact that the Urbancorp had not released its 2015 financial report yet following its audit committee's vote to postpone because of open questions and issues, every concerned individual would be eager to know what happens behind the scenes, according to a feature from Haaretz. Like when Urbancorp bonds that were traded on the Israeli Stock Exchange, the sale landed all over the news, as creditors refused to wait for a possible filling of bankruptcy. 

This issue of bankruptcy comes immediately after the foreclosure attempts by Gamma Real Estate, which suspects that the Bauhouse had failed to pay a loan amounting to $147 million.  

As developers benefit from the soaring prices and demand for the past years, they've bought properties which they would not complete, and make developments which have produced an extension of inventory, according to a feature from the Wall Street Journal

The NY real estate market is expected to experience more bankruptcies among developers, more debt by lenders and a drop in the luxury real estate prices as the market begins to realize that it is unlikely to sell available units in a market where there are no potential buyers at the current prices. 

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