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432 Park Avenue, #66AB (The Corcoran Group) 432 Park Avenue, #66AB (The Corcoran Group)
New York City has always supported strong super-prime ($10 million +) and ultra-prime ($25 million +) real estate markets. Although both the super-prime and ultra-prime markets did momentarily slow at the start of the pandemic, both markets are now performing better than ever. This article explores why the city's robust super- and ultra-prime real estate markets matter to all New Yorkers, not simply those who can afford to invest in luxury properties.

New York City’s super-prime market

According to Frank Knight’s 2023 Wealth Report, globally, the super-prime market declined in 2022 but only compared to 2021, which saw a spike in transactions due to pent-up buyer demand resulting from 2020’s restrictions on in-person property showings and global travel. In fact, despite the year-over-year decline, 2022 super-prime sales were 49% higher than 2019 levels. New York was the top-performing city globally, with 244 sales of US$10 million or more, with Los Angeles reporting 225 closes and London reporting 223 closes. On the ultra-prime market, New York and London were the top-performing cities worldwide, each recording 43 sales of US$25 million or more in 2022.

Still, whether New York City holds its top spot in 2023 is yet to be seen. A June 1 report, based on data collected by Douglas Elliman and Knight Frank, found that in Q1 2023, New York City only reported 58 super-prime closes, compared to 88 in Dubai and 67 in Hong Kong. London’s super-prime market also declined in Q1, experiencing a much sharper decline than New York (London only recorded 36 super-prime transactions in the year’s first fiscal quarter). While this may be an indication that both New York’s and London’s super-prime markets are slipping, Q1 is a historically slow sales period in both of these world centers. A stronger indicator of current super-prime and ultra-prime market trends will be what ultimately unfolds in Q2.

Why the super-prime market matters to everyone

Even if most New Yorkers will never own or rent a home on the super-prime or ultra-prime market, the strong performance of these markets matters more than one might assume. It primarily boils down to the taxes the owners of these properties contribute to the local economy. In New York City, roughly 41,000 tax filers in the top 1 percent pay over 40 percent of all income taxes. This is why the departure of many of the city’s wealthiest residents in early 2020 was viewed as cause for alarm. At least one late 2020 study speculated that the loss might end up totaling up to $34 billion.

In the end, the city’s feared tax losses were buffered by two factors. First, many New Yorkers physically left the city but only to live in second homes, so they continued to pay local taxes. Second, many of the New Yorkers who did leave for good were high-income earners, which meant that when their properties eventually sold, the city was able to collect additional mansion taxes on the sales. This also explains why the performance of the super-prime and ultra-prime markets matters to all New Yorkers.
High-net-worth individuals who own but rarely live full-time in the city's super-prime and ultra-prime properties have a disproportionate impact on New York City’s much-needed revenues derived from property taxes. As a result, when the super-prime and ultra-prime markets are doing well, the city itself also stands to benefit, and theoretically, so do all New Yorkers.
While the tax revenues derived from the sale of super-prime and ultra-prime properties and the ongoing tax revenues derived from the owners of these properties have an impact on the local economy, this isn't the only reason these markets matter. The presence of high-net-worth individuals also supports the local economy on a myriad of other levels ranging from job creation to philanthropy.

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Additional Info About the Building

Contributing Writer Cait Etherington Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.