Was it the price? The state of the market? The baggage?
Offers on the Park Lane Hotel were due last week, but no buyers showed up willing to pay the $1 billion the property was expected to fetch.
The 47-story hotel overlooking Central Park was put on the market last year under an agreement reached between developer Steve Witkoffand the U.S. government, which is investigating one of the hotel’s current owners, Malaysian businessman Jho Low.
The current lack of interest reflects the state of the market, in which foreign buyers are no longer snapping up trophy properties with gusto. And the high-end condo market — not to mention Billionaires’ Row — faces an uphill battle. “I think it’s the world’s greatest site for development,” Jeffrey Davis, JLL’s director of the hotels and hospitality group, told the New York Times. “The problem was timing.”
Low’s involvement also complicates matters.
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Witkoff and Low paid $654 million for the hotel in 2013. Along with minority investors Harry Macklowe and Howard Lorber, they planned to turn the 605-key hotel at 36 Central Park South into a luxury condo designed by Herzog & de Meuron. Witkoff and his partners put up 15 percent with Low initially putting up 85 percent, including a $100 million deposit. Later, Low brought in Abu Dhabi’s Mubadala Investment Company, which took a 30 percent stake.
Last summer, the Justice Department sought to recover more than $1 billion in assets from Low, who allegedly stashed money stolen from a Malaysian development fund in art, jewelry and luxury real estate in New York and California.
His share of proceeds from the sale of the Park Lane would have been placed in escrow pending the outcome of the criminal investigation.
Experts told the Times that potential buyers were scared off by the government’s role, and by the changing market. “No one wants to be the last to buy a hotel in this cycle,” Chad Crandell of CHMWarnick said. [NYT]