Does the $1.3 billion sale of 650 Madison Avenue, which entered contract last week, herald a commercial real estate bubble? Not quite, Thor Equities CEO Joseph Sitt told Bloomberg News.
Its buyers, Crown Acquisitions and Highgate Holdings, see value in the property’s retail component, he said. (Indeed, they do expect to dramatically hike the value of the retail within five years, as The Real Deal reported this week.)
However, a bubble will inflate when sovereign wealth funds begin seriously investing in New York City, Sitt said. As opposed to Korean and Israeli sources, the next wave of funding will come from young money from Azerbaijan, Angola and Malaysia, among others, he said.
“That’s what’s going to really end up bubbling,” Sitt said. [Bloomberg News] –Zachary Kussin