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The best—though still fuzzy—global estimates say as much as $1.5 trillion in criminal proceeds is laundered each year. The United Nations figures that as little as one-fifth of one percent of that is ever recovered. Levin has proposed legislation to extend the Patriot Act’s regulations to real-estate closings and to require disclosure from LLCs, but the bill has gone nowhere. Real-estate attorneys say such rules would violate their legal privilege, and brokers insist the marketplace already provides an incentive to keep transactions clean. “No building wants to have people who have made illegal money,” says Mark Reznik, a broker at A&I Broadway Realty, a firm that primarily serves Russian-speakers. Reznik says he provides a “prescreening” service for developers. “They want to have some kind of filter,” he says. “Like somebody said, Karl Marx or whatever, if the capitalist is going to see a triple return, he’s going to close his eyes. But we are trying not to deal with scumbags.”

Prevezon has been liquidating its New York holdings, though the proceeds have been frozen by the government. Its remaining 20 Pine units are listed with A&I Broadway Realty.

PART V.
THE NEW MARKET

The concentration of foreign buyers at 20 Pine was the product of a miscalculation. Leviev and his local partner originally bought the property, an old office building, during a speculative fever in the Financial District. Betting that its proximity would appeal to young bankers, they converted the building and mounted a nightclubby marketing campaign, complete with a 24-hour sales office that featured a fashion-style catwalk. The branding was the work of Michael Shvo, a marketer and pneumatic figure of the bubble era. While Leviev’s involvement in New York real estate ended unhappily, with price cuts, lawsuits, and an ongoing investigation by the state attorney general, Shvo has made a comeback as a developer. He’s now involved in several high-profile projects, including a high-rise development on Thames Street near the World Trade Center, and he says he is targeting the foreign market.

I recently visited Shvo—a perma-tanned Israeli with an action-figure physique—at his Fifth Avenue office, which is decorated with pieces from his art collection, including a Playboy bunny by Andy Warhol and a hanging noose by an artist whose name escaped him. He handed me the glossy “concept book” for one of his slated projects, a condo tower in Soho. Its opening read: “Target market: global citizens.” Inside the 400-page book were interviews with worldly apartment buyers like “Joao R.” and “Marco D.” “When you look at the newer money in the world,” Shvo said, “newer money wants to buy new product.”

This theory is driving an enormous amount of luxury development across New York, but it is based on fragile assumptions and subject to unpredictable external factors. Will other currencies maintain their strength against the dollar? Will recent shakiness in the Chinese and Brazilian economies worsen? Will Vladimir Putin force Russians to return their wealth to the motherland? Russian brokers say their clients went quiet during the Ukraine crisis.

“How deep is the market?” asks Michael Stern, who is building a 1,350-foot-tall tower at 111 West 57th Street, designed by SHoP Architects. “I don’t know, and neither does anyone else.” But while no one can discern the ceiling on pricing, there’s a hard reality to the floor. Stern says that once land and construction costs are figured in, the break-even point for ultraluxury towers such as his is around $5,000 a square foot. In other words: On average, every inch of these buildings must sell for 30 percent more than Manhattan’s most expensive penthouse did a decade ago.

Some brokers and lawyers who deal with foreign clients say they have seen a recent softening at the top end of the marketplace, as all these new buildings compete for a group of buyers who are canny about supply and demand. “I’m thinking that some of those properties are not worth $20 million or $30 million,” says Andrea Fiocchi. Sales at One57 have slowed lately. Though 432 Park’s development team claims it has moved more than half the building’s units, there are persistent whispers about overly ambitious pricing and underwhelming sales. The developer recently brought in an outside firm, Douglas Elliman, to assist with marketing. And by the time 432 Park is completed next year, Stern’s building and others should be coming in right behind to compete for the same fickle pool of buyers.

But the boom, and potential glut, at the billionaire end of the market obscures the broader trend, the one that has pushed up prices for everyone. New development in New York has only slowly regained its momentum since 2008, and sales inventory remains mired near a decade-low point. The relatively rare new developments that offer apartments in Manhattan’s “affordable” price range, like 400 Fifth Avenue near the Empire State Building, are the ones that have proved particularly popular with foreign investors (400 Fifth Avenue has a large population of Chinese buyers). As of January, there were around 12,000 apartments in Manhattan’s development pipeline, but they will probably not come rapidly enough to change the equation for the foreseeable future. Competition will continue to drive the wealthy—foreign and domestic—to Brooklyn and middle-class buyers to despair.

“Especially in the condo segment, there really isn’t much to show buyers,” says Corcoran broker Frederico Gouveia. He deals primarily with Brazilian clients, and he invited me to tag along while he showed the available options to a banker from Rio. The Brazilian—a laid-back fellow who nonetheless asked for anonymity—said he was looking for protection against market instability at home. “The prices are crazy down there,” he said. “For me, it’s a big real-estate bubble.” As we set out from his Park Avenue hotel, Gouveia gave him a detailed financial breakdown of the eight condos he’d be seeing.

The Brazilian was focusing on the Upper West Side, and he wanted to spend between $3 million and $6 million. Within his price range, there was an odd duplex apartment decorated entirely in silver and a three-bedroom above Lincoln Center with a stunning view in need of major renovation. Quickly, the banker began to feel a gravitational tug on his expectations. He loved a place at the Aldyn, a new building on the Hudson that has drawn many foreign buyers, which was priced at $5.8 million. By the time he visited the sales office of the building in construction next door, One Riverside, he was saying his budget started at $4 million. Under the persistent charm of a saleswoman, he ended up perusing the impressive floor plan for an $8 million unit.

Even for the global rich, the most desirable Manhattan apartment is often the one that sits just a bit out of reach. As of now, Gouveia says the Brazilian is still looking.

Additional reporting by Ionut Stanescu, Paul Radu, Margot Williams, Mar Cabra, Titus Plattner, and Pavla Holcova.


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