POCKET FULL OF DREAMS

The world's richest man's new Manhattan mansion
Francesca Levy, Forbes · Thursday, Aug. 5, 2010

If you stand on the steps of the Metropolitan Museum of Art in New York and look across the street, you'll have a small chance of glimpsing the world's richest person.

Last month Mexican telecommunications tycoon Carlos Slim Helu, who is worth US$53.5-billion, bought the Duke-Semans mansion, a beaux-arts townhouse directly across from the Met, for US$44-million, public records show. That record-breaking price is the most paid for any New York home in nearly two years.

The mansion's seller, Tamir Sapir, famously ascended from taxi driver to billionaire by trading in oil and then investing in real estate. He bought the property from the descendants of its original owner, tobacco mogul Benjamin N. Duke, in 2006, paying US$40-million. That leaves him with a 10% profit —healthy, in a sluggish market.

Here's what's important to know about the sale, the home and how this transaction will change luxury real estate.

The Duke-Semans is one of a kind.

Location is critical in ultra-high end Manhattan real estate, and the Duke-Semans has a great one: The corner of Fifth Avenue and 82nd Street, on New York's vaunted "Museum Mile." But staking a claim to the right street (Fifth Avenue is the Holy Grail) isn't enough to qualify for greatness. Buyers measure prestige in feet — as in, how many of them a building occupies on a coveted block.

The Duke-Semans has everything going for it: It stretches up 82nd street for 100 feet (a luxurious distance, in this part of Manhattan), then turns the corner, occupying 27 feet on Fifth Avenue. The combination of its unusual length, Fifth Avenue visibility, and corner location can't be found in any other building. That uniqueness is what allowed Broker Paula Del Nunzio, of the firm Brown Harris Stevens, to originally price the home at US$50 million.

But it might be a fixer-upper.

Samir reportedly intended to renovate the 19,500-square-foot house in the four years he owned it, but never did. Although the exterior is breathtaking, the house needs some work on the inside — a fact that helps explain Helu's 12% discount off the asking price.

There's more evidence to suggest the mansion boasts a less-than-sparkling interior: Brown Harris Stevens only provided press and prospective buyers with detail shots of ornate moldings and period elegance, not the sweeping shots of ballrooms, stairways and terraces that are typical for these kinds of sales. The home may be in need of major work.

It was snapped up quickly.

Brown Harris Stevens put the Duke-Semans on the market in January. If it were a normal home, stagnating on the market for nearly seven months would bode very poorly for a sale. But in the rarified world of luxury real estate, where homes fetch US$10-million or more, it's expected that properties may languish on the market for two or three years. Only a few thousand people in the world can afford homes like this, so sellers expect to wait. The fact that the turnaround was comparatively quick indicates wise pricing, and perhaps growing demand in the luxury market.

The broker may not have gotten a cut.

After all her hard work representing the home, Del Nunzio may not have reaped the reward of a handsome commission. It has been reported that Helu and Sapir agreed to the deal privately. Del Nunzio told Forbes she could not discuss the details of the sale.

Even if she was sidelined, Del Nunzio's carefully calibrated pricing strategy may have been crucial to the home selling so quickly. Del Nunzio is known for reading the market extremely well, and pricing homes as close as possible to what buyers are willing to pay. As a result, she has logged US$620-million in sales of 40 townhouses since 2007, and her homes fetch an average 97% of the asking price. That's impressive in an era where unrealistically priced luxury homes have become notorious for slashing their prices as much as 40%.

In March she discussed her strategy for pricing homes with Forbes: "The right price is a matter of the temperature of the times, also the recent comp sales," she said. "Each one is a separate instance at a separate time. We price them to the highest level that we can, given the conditions of the market."

This is a sign that the high-end home market is stabilizing.

In the second quarter of 2010 the median sales price of a Manhattan luxury home (defined as homes above US$3-million) rose 12% from the previous year. Demand for these pricey abodes has ramped up, and inventory has tightened, according to a recent report by Prudential Douglas Elliman Real Estate.

But even outside of New York, the super-high-end home market comprises so few properties that just one sale can change the tide of the market. Aside from the Duke-Semans, two recent sales give luxury brokers hope for the future:

In late April billionaire Kelcy Warren bought the 3,000-acre Bootjack Ranch in Colorado for US$42-million, setting a price record for the year; just two months later, the Bel Air mansion Le Belvedere was sold for even more, to an unnamed European family.

"We see a stabilizing trend in the ultra-luxury segment, as high-net-worth buyers pursue the very best properties at opportunistic price points," says Bill Fandel of Peaks Real Estate Sotheby's International Realty, who handled the sale of the Bootjack Ranch, via an e-mail.

Del Nunzio agrees, calling the sale "a signal that for the property possessing the unique features a buyer wants, the buyer in today's market conditions will not only pay as much as yesterday's buyer, but even more."

What does that mean for the rest of us? Unfortunately, not too much. Trends in luxury real estate rarely correspond to the housing market at large, where foreclosure and price statistics remain discouraging. But even if you'll never be able to afford a treasure like the Duke-Semans mansion, take comfort that the museum across the street allows access to the trappings of great wealth and beauty — for as little as a penny.