New York City will be home to the world’s largest number of super-rich by 2025, surpassing the current leader London, representatives from global property consultancy Knight Frank said at a discussion Tuesday. A driver of this shift is the increased emigration of multimillionaires from certain countries such as Russia and China, according to Knight Frank’s head of research, Liam Bailey. A staggering 33 percent of Russia’s ultra-wealthy, for example, are considering moving to another country.
At a panel discussion on the 64th floor of One World Trade Center today, leaders in the luxury business discussed some of the ramifications of this trend. While the influx of foreign wealth has been an obvious boon to New York’s real estate industry, it has also created difficulties, such as worries over a luxury condo bubble.
“One area of weakness are the $100 million penthouses,” said Howard Lorber, chair of Douglas Elliman, which formed a partnership with Knight Frank in October. He argued that there isn’t enough demand for the number of units in this price class that have hit the market.
He also cautioned that some wealthy buyers may not have the patience to wait for a new skyscraper’s completion. “Most buyers want instant gratification, and the long lead time sort of hurts new development,” he said.
Lorber shared the stage with David Friedman, president of research firm Wealth-X, Marc Kushner, co-founder of architecture firm HWKN and Netjets’ head of U.S. sales, Patrick Gallagher. The discussion was moderated by Robert Frank, wealth editor at CNBC.
The panelists were bullish about the flow of private wealth into New York real estate, and predicted that it would continue to grow. But their discussion also betrayed the unease that appears to have gripped the luxury real estate industry in the wake of a major New York Times investigation into foreign condo buyers and an anti-corruption crackdown in China.
CNBC’s Frank explained that the Chinese government has begun seizing apartments abroad amid its campaign against corrupt officials, although the panelists deferred judgment on how this might affect New York City.
A central theme of the Times’ investigation was trying to unearth the buyers who purchase condos anonymously through LLCs — a very common practice in New York. “If you really want to know who lives in these buildings,” Lorber joked, “just give the doorman 50 dollars.”