The world of condominium developers and the (very private) equity investors who finance them is a murky one. But I tend to think that some condo developers are better "alpha generators" for their investors than others. (More on real estate alpha here: privateinvestmentbrief.com/blog/alpha-in-…)....
One potential source of condo real estate alpha, it seems to me, is demoographic. If you could somehow segregate the condo-buying market to isolate those buyers who a) are willing to pay a lot for a new development condo and b) can be relied upon to do so, irrespective of...
...market conditions, the global macroeconomy, etc., then you've not only isolated the best pool of buyers, but you've also insulated yourself from competition from other developers. What you want, in other words, is to build for the "old money" pool of new condo buyers, in a...
...manner of speaking. In New York City, I think the top candidate for this particular niche is Zeckendorf Development. Maybe you have to live here and walk these mean streets to appreciate the subtleties, but a building like 520 Park just sends out a different vibe than the...
...other superhigh-end condo developments in midtown Manhattan. So it's not surprising to me that 520 Park has attracted a buyer such as Ken Moelis, who falls right into this demographic: wsj.com/articles/wall-…
(as do Sir James Dyson and Bob Diamond, also owners in 520 Park). I put it to you that a condominium unit that sells to the Ken Moelis' of the world for $62 million will generate more alpha on average than the unit in another building that sells to Saudi Prince X for $72 million.
Similar story for 15 Central Park West, another Zeckendorf Development development, which was actually the subject of a book: amazon.com/House-Outrageo…
Maybe another condo developer could copy the Zeckendorf style and go after the same small pool of buyers. But so far I haven't seen it.
