Rich people buy New York City apartments and then don’t live in them. This is not new; it’s something that’s been happing for a long time, and it’s something that’s served said rich people well in the past few years as New York City real estate was on the up and up.
But that’s falling apart a little bit now that that upward trajectory has come to a halt and there’s a flood of fancy apartments owned, but not lived in, by rich people on the rental market. (The distinction must be made—the truly rich do not need to rent the multi-million dollar apartments they don’t live in.)
Many of the other rich people out there looking to make a buck on their investment are finding themselves in a financially undesirable position. Maintenance and taxes don’t pay themselves, and if there’s no renter to shoulder that burden then it’s on them.
Example: The Wall Street Journal chronicles a Beijing couple’s inability to rent their 40th-floor one-bedroom with Central Park views at One 57, an apartment they bought as a “long-term plan” for their children to use when they go to college.
“They are unhappy,” Douglas Elliman broker Sherri Shang who has the unenviable job of trying to rent the apartment tells WSJ, “They have to pay the monthly common charges, they have taxes and expenses. They want to get their money back as much as they can.”
The couple purchased the 1,000-square-foot apartment in 2013 for $3.95 million and have been trying to rent it ever since. It’s now on the rental market for $12,950/month, down from $15,000.
“The market has changed completely,” Shang tells WSJ. “I never expected three years later that even with a Central Park View, that it would be so hard to rent out now.” According to data wiz Jonathan Miller, more than 20 percent of new condo sales in Manhattan are to investors, an uptick that’s reflected in the number of new leases listed with the brokerage community.