Direct impact of Dubai crisis on New York City is limited, experts say

As the international credit crisis spread into the kingdom of the United Arab Emirates, real estate experts said that while any direct impact on New York would be limited, it may signal the inability of sovereign wealth funds to bail out distressed assets here. The financial world briefly shuddered last week after Dubai World, the main investment arm of the powerful Gulf region city-state, asked lenders for a six-month suspension of nearly $60 billion in debt payments. Analysts say the suspension may force Dubai to sell many of its trophy assets around the world, including several high-profile buildings in New York, like the Jumeriah Essex House, the former Knickerbocker Hotel and the flagship W New York-Union Square hotel, whose mezzanine debt is scheduled for a Dec. 8 foreclosure auction. “Dubai got drunk with debt just like we did here in New York,” said Dan Fasulo, managing director of research at Manhattan-based investment research firm Real Capital Analytics. “A lot of people think Dubai [was financing its deals with] oil. In actuality, it was very much of a debt-fueled building boom.” [more]

From left: Yair Levy, Michael Shvo, and Rector Square at 225 Rector Place

A group of 45 unit owners at Rector Square condominium in Battery Park filed a $100 million lawsuit against developer Yair Levy, superbroker Michael Shvo and building manager Cooper Square Realty, alleging widespread fraud, negligence and misrepresentation. According to the suit filed yesterday in New York State Supreme Court, Levy, the owner of YL Real Estate Developers, defaulted on the mortgage loan with Anglo Irish Bank, failed to complete construction of the building, converted reserve funds for his own use and failed to make PILOT payments to the Battery Park City Authority. The plaintiffs claim the sponsor and broker misrepresented the quality of the building to potential purchasers. “Instead of a building of their dreams they bought into a building of nightmares,” said Marc Held, attorney for the unit owners. Levy also allegedly sold a block of 15 apartments to an Italian university for use as dorm rooms for exchange students and rented out apartments to Marriott for use as extended-stay hotels, violating local zoning laws. [more]

Last week, Steven Gaines, best-selling author of “The Sky’s the Limit:
Passion and Property in Manhattan,” answered readers’ questions about
covering high-end real estate in Manhattan, the Hamptons and South
Beach, on Twitter. Gaines has interviewed some of the most high-profile brokers selling
real estate in New York City, the Hamptons and South Beach. He is also
author of New York Times bestseller “Philistines at the Hedgerow:
Passion and Property in the Hamptons,” and “Fool’s Paradise: Players,
Poseurs, and the Culture of Excess in South Beach.” He lives in Long
Island. Today, The Real Deal is sharing some of Gaines’ best responses. TRD [more]

From the July issue: No one personified the excesses of mid-2000s New York City quite like Michael Shvo. The slick-haired Israeli émigré burst onto the real estate scene in 1998, an audacious 20-something who quickly climbed the ranks of Manhattan’s biggest sales firms before starting his own, self-titled new development marketing company. Famous for his bad-boy antics, celebrity-studded parties and inspired collaborations with the likes of Philippe Starck, Giorgio Armani and Jade Jagger, Shvo became synonymous with the over-the-top condo amenities — and prices — of the era. Much like the New York City condo market, Shvo’s rise has been followed
by an equally spectacular fall. The credit crisis has turned once
sought-after new condos into the black sheep of the real estate
industry, and the few buyers who are still looking at new construction
seem to care only about getting a good deal. Celebrity connections and
glamorous “lifestyle” amenities are now, as it were, out of vogue. [more]