Since the fall of Lehman Brothers in September 2008, hundreds of ambitious property projects in New York City have either stalled or been abandoned. But now, thanks to funding from Abu Dhabi's Aabar Investments, one developer is returning to the high-risk game of building sky-rises in the Big Apple.
The 306-metre Carnegie 57, located at 157 West 57th St, will not only be the tallest residential tower in New York, with designs by the "starchitect" Christian de Portzamparc, but the site is one street back from Central Park. Residents of the 136 premium flats on the top 52 floors will have views that stretch the length of the park. The lower part of the building will be a five-star Park Hyatt Hotel. The project's total price tag: US$1.3 billion (Dh4.77bn).
Gary Barnett, the president of Extell Development, said the foundations had been poured and the main construction work was expected to start this week. Mr Barnett predicted the tower, with a completion date of 2012 or 2013, would open just as the economy was starting to pick up. "If you can raise the money, now is the time to begin investing in New York," he said. "There is a realisation from the Middle East that this is an opportune time to invest."
Mr Barnett, who has held talks with major investors around the Gulf, said he was trying to raise more funds for future New York City projects from investors in Abu Dhabi, Dubai, Oman and Saudi Arabia. Aabar, an Abu Dhabi investment company owned by the Government and public investors, has specialised in taking stakes in high-profile companies. Last year it teamed with Mercedes-Benz to buy the winning Formula 1 team Brawn GP, now rebranded as Mercedes GP Petronas.
It also owns parts of the space tourism company Virgin Galactic and the luxury car maker Spyker. As well, the company has signalled its interest in becoming a major property developer in Abu Dhabi, buying up Dh5bn of land and hiring a chief executive of property, Ibrahim Eskiocak. This latest investment compares with Abu Dhabi Investment Council's purchase of 75 per cent of the Chrysler building in New York in 2008.
Aabar paid for three quarters of the initial financing of Carnegie 57, giving it a "significant equity stake" in the project, said Mr Barnett, who is now beginning discussions with banks to obtain a construction loan to finance the rest of the building. "We expect financing to be available on a conservative basis," he said. Mr Barnett speaks of the new tower in superlatives: it is located on the "best site in New York"; it will have the "best apartments"; the hotel will be "amazing".
"I think it's going to be one of the best, if not the best, buildings in New York City," he says. One unrivalled feature will be the $50 million penthouse, whose owner will have the highest apartment in the city. So-called "super-tall" buildings are typically not residential, but there is a growing trend toward having high-altitude apartments as construction technology allows developers to stop the top floors swaying in the wind.
The Burj Khalifa in Dubai, well over twice the size of Carnegie 57, is the most important example of a super-tall residential building. Apartment prices will start at about $3m, with a sales push expected to start next spring. "I think it caters to a tremendous mix," Mr Barnett said. "From wealthy families to people who have done exceedingly well in business to retirees who want to live in a vibrant city. We expect buyers from China, India and the Middle East.
"It's about people who want to own something in one of the two universal cities in the world." Mr Barnett's optimism about the project comes as small signs of recovery begin to show in the New York property market. Several of the city's established funds have acquired buildings in deals worth as much as $500m. Noah Rosenblatt, an analyst at the property consultancy UrbanDigs, wrote in a blog post last week that he expected "upward pressure in quarterly reports into late 2010 or early 2011".
Second-quarter prices stabilised,while transactions were up, according to the brokerage Prudential Douglas Elliman Real Estate. The average price of an apartment in Manhattan was $1,432,712 - equal to prices at the end of 2007 but a drop of 21.5 per cent from the peak at the end of 2008. "Since the beginning of the year, sales activity has been significantly higher compared to the early quarters of 2009, immediately following the Lehman Brothers bankruptcy - the credit crunch tipping point of September 15, 2008," the brokerage said in its second-quarter report.
"High unemployment levels, 'shadow inventory' and tight credit are challenges that continue to face the market, but general market conditions are significantly improved over the same period a year ago." @Email:firstname.lastname@example.org