Sunday, March 18, 2012

Even the bankrupt rich have more money

The New York Times Sunday Magazine has a nice article about the Centria apartment building in midtown Manhattan as a parable for the Irish property boom. You go in thinking that it's going to be about the parade of suckers who paid too much for prestige real estate  (the "we flew the Tricolour over the Savoy!" mentality), but in fact it's about the resilience of the New York City property market. Although the Irish who bought into this building probably spent more than they should have, the apartments have held their value, are generating income, and there's a ready market in the latest wave of foreign buyers for those who need to sell. And those who need to sell are in trouble due to their balance sheets back home in Ireland, not because of their Manhattan apartments.

But of course the typical Irish boom-era overseas buyer (those apocryphal taxi drivers with 6 or 7 properties mentioned in the article) weren't buying in midtown. They were buying off-plan in Spain, Bulgaria or Dubai and now are saddled with places in busted property markets and, for the latter two, unfamiliar and even capricious legal systems. The people who could afford to buy in New York and London may have lost their shirts. They're still a lot better off than the average buyer.

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