Published April 15, 2008

No economic slowdown for New York super-rich

Spending spree goes on with splurging on property, luxuries

(NEW YORK) Who said anything about a recession?

Many businesses that cater to the super-rich report that clients - many of them traders and private equity investors whose work is tied to Wall Street - are still splurging on multimillion- dollar Manhattan apartments, custom-built yachts, contemporary art and lavish parties.

Buyers this year have already closed on 71 Manhattan apartments that cost more than US$10 million, compared to 17 apartments in that price range during all of 2007. Last week, a New York art dealer paid a record US$1.6 million for an Edward Weston photograph at Sotheby's.

And the GoldBar, a downtown lounge, reports that bankers continue to order US$3,000 bottles of Remy Martin Louis XIII cognac.

'When times get tough, the smart spend money,' said David Monn, an event planner who is organising a black-tie party on May 10 for dignitaries and recent purchasers of apartments at the Plaza Hotel; the average price there was US$7 million. 'Short of our country going on food stamps, I don't think we're doing anything differently.'

Many extreme spenders say they have not cut back on their impulse Bentley or apartment purchases because they have made so much money in the good times from the Internet, stock market and real estate. Some have been able to move their money into investments like private equity that are only available to those with extensive capital. Some rationalise cars and home renovations as 'investments'. And some simply don't want to skimp on the weddings and anniversary parties that they see as milestone events.

'We're trying to spend on what we feel is important,' said Victor Self, an executive with a fitness company who, with his partner, is planning to spend US$100,000 on a commitment ceremony in St Barts and a dessert party for 200 to 300 guests at Jeffrey, a clothing retailer in the meatpacking district.

Many economists warn that the nation's financial troubles may spread far more widely and could, ultimately, touch even the wealthiest. The financial sector could lose as many as 20,000 jobs by the end of 2009, according to the Independent Budget Office of New York City. And at a March 18 policy meeting, Federal Reserve board members raised the possibility of a 'prolonged and severe economic downturn', recently released minutes show. That threat has undoubtedly caused plenty of affluent people to consider some degree of frugality.

But that still leaves plenty who are consuming away, and one of the things New Yorkers love to consume is real estate. Last October, Marc Sperling, the 36-year-old president of an equity-trading company, bought a new condo on the Upper West Side in a building where four-bedroom apartments like his cost more than US$4 million. When he moves into the completed building next year, he plans to hold on to his other two apartments in Murray Hill and Miami - each of which he values at about US$2.5 million apiece.

Sperling views the recession as a temporary problem, and is grateful that it has yet to affect him. 'I think if you have the means to ride it out, that's what you do,' he said.

His view of the sub-prime mortgage crisis seemed to reflect a sort of inverse class resentment.

'I don't want to sound harsh, but the people who were buying million-dollar houses with a combined household income of US$70,000 or US$80,000 were the ones who were chasing easy money,' he said. -- NYT