While a luxury-condo glut spurs some of New Yorkâ€™s biggest developers to re-evaluate their plans, a relative newcomer is plowing ahead with confidence.
Michael Shvo, a former real estate broker who closed his eponymous firm during the financial crisis, says he has about $4.3 billion worth of apartments under development and two more sites in contract. Heâ€™s trying his hand at building lavish homes for wealthy buyers just as sales start slowing, four years into a gilded construction boom thatâ€™s flooded the market with choices.
As developers who built many of those properties scale back, delay or cancel new high-end projects, Shvo expects to have almost 400 units listed for sale by August if all goes according to plan.
â€œIn order to sleep well at night, I try not to guess market cycles,â€ said Shvo, 43, who embarked on his development career with the 2013 purchase of a gas-station lot along the High Line in Chelsea. â€œWe focus on building the right thing, at the right place, for the right person, at the right time.â€
Shvo is making his debut in a year in which Manhattan is slated to get the most listings of newly built condos since 2007. A majority of those units will be considered â€œluxuryâ€ â€” priced at $2,400 a square foot or higher, according to brokerage Corcoran Sunshine Marketing Group.
Demand is already faltering, with contracts to buy Manhattan homes for at least $4 million tumbling 29 percent in the first quarter from a year earlier, data from Olshan Realty Inc. show.
Global investors, whose appetites for Manhattanâ€™s priciest homes seemed insatiable just two years ago, now are holding back. A stronger U.S. dollar, the slump in oil prices and economic slowdowns in emerging markets such as China and Brazil are all giving buyers pause on discretionary real estate purchases, said Nancy Packes, a marketing and design consultant to New York residential builders. â€œThese people are investors,â€ Packes said. â€œAnd if they think these homes arenâ€™t going to increase in value because of global economic issues, theyâ€™re not buying, period. They donâ€™t just buy because theyâ€™ve got the money.â€
Weakening demand for high-end homes has prompted some builders to delay sales, aim for a lower price point or change course. Last week, partners led by Joseph Chetrit scrapped plans for a condo conversion of Midtownâ€™s Sony Building that would have included a $150 million listing, and instead sold the building to investors who intend to keep it as offices.
Shvo isnâ€™t letting market pressures or the competition deter his plans.
â€œThere is an oversupply of overpriced, mediocre product,â€ he said in an interview last month at his Midtown office. â€œThereâ€™s still an under-supply of great product in great locations, and that is really where I see the opportunity.â€
Shvo said heâ€™s focused on data showing potential for a growing pool of buyers. The number of individuals worldwide with more than $30 million of assets, excluding their primary home, jumped 61 percent in the past decade and is projected to rise 41 percent by 2025, according to the latest Wealth Report by Knight Frank and Douglas Elliman Real Estate. Within the next 12 months, 29 percent of these â€œultra high net worth individualsâ€ will consider buying another home, the report showed.
At his Chelsea site â€” a former Getty gas station on 10th Avenue near 24th Street, purchased for $23.5 million â€” sales are set to begin on the six luxury units by July at prices Shvo declined to disclose. The project, designed by Peter Marino, whose credits list stores for luxury brands Chanel and Dior, will include art galleries at its base. The building will have five full-floor apartments and one duplex penthouse, which will be bigger than 6,000 square feet (557 square meters), according to early filings with the New York State attorney generalâ€™s office.