1.
May 27, 2016 [Edition 3, Volume 1}
Luxury Redefined
Global Impacts on New York’s Luxury Housing Market – New York City, North America
ERIC MORGENSTERN M.S. Candidate in Real Estate Finance
We all have just witnessed one
of the most explosive periods
of growth within New York
City’s luxury housing market,
which is defined by a
purchase price between $5M
and $100M according to
Property Markets Group
founder Kevin Maloney.
Unprecedented sell out figures
north of $4,000 per square foot
have been achieved by luxury
condo developers while
experiencing a near record-­‐‑
setting pace of sales. NYC’s
historically strong real estate
market, coupled with the
political stability and strong
currency offered by the United
States, has accelerated the flow
of foreign wealth into NYC’s
luxury housing market, an
attractive safety net for large
amounts of capital looking to
be deployed. According to The
Real Deal, an additional 6,000
condos are expected to come
online by the end of 2016 with
another 3,000 condos by the
end of 2017. To remain
competitive with one another
and ensure future project
success, luxury condo
developers are forced to
provide the most lavish
amenity packages and opulent
finishes imaginable, tailored to
attract their intended buyer.
As a result, with so much
international attraction from
buyers and developer’s alike,
NYC’s luxury housing market
segmented itself into different
strata loosely defined by
purchase price and buyer
profile. For example, some
luxury condo developers have
reworked condo offering plans
to include smaller units
targeting foreign and domestic
buyers with luxury product at
“NYC’s historically strong
real estate market, coupled
with the political stability and
strong currency offered by
the United States, has
accelerated the flow of
foreign wealth into NYC’s
luxury housing market”

2.
May 27, 2016 [Edition 3, Volume 1]
T H E G L O B A L D E A L
lower price points. They have
also become more generous
with incentives including the
payment of both Transfer and
Mansion Tax in order to keep
selling at their projected pace.
It still remains questionable
whether or not we can expect
the same demand absorption
rates going forward with the
anticipated oversupply of
luxury product, fluctuating
foreign currencies, and the
uncertainty of economic
conditions within Europe,
Latin America, and Asia.
Although this may be true, the
lower strata of New York
City’s luxury housing market
still appears to be firing on all
cylinders, even with reports of
demand softening within its
ultra-­‐‑luxury strata. Rising
concerns of a frothy market
have left cash heavy investors
waiting on the sidelines.
Luxury developers would be
wise to cautiously approach
new deals with more
conservative underwriting,
low leverage, and a
contingency plan in case their
floating debt obligation
exceeds their underwriting.
Metamorphosis of Mill Land in Mumbai
The Rebirth and Rising of the City’s Skyline – Mumbai, India, Asia
PARVARI PARALKAR M.S. in Real Estate Finance
Does the collapse of a city’s
textile mills mean doom and
wreck? Many, when taking an
historical perspective, would
say yes. Indeed, this is what it
meant for collapsed mills in
Mumbai. The employees lost
their jobs and thus their means
of livelihood. But it is only
from the ashes that a phoenix
ever rises, and this is exactly
what happened here when
these defunct mills were
reinvented and revived in
accordance with current times.
What is seen today is one of
the fastest growth rates of
urban development in a
metropolitan city with a
population of 20.7 million.
When textile mills were shut
down, what remained was a
building situated on prime
land in central Mumbai. Real
Estate is an asset type that can
be transformed in line with
changing times. Just as the
Highline Park in New York
remodeled itself by keeping
the original structure intact, so
did many of the textile mills in
Mumbai.
Many redevelopments of these
buildings have retained a large
part of the original structure
while altering its usage, while
others have conceded to mega
structures and super tall
skyscrapers with unparalleled
amenities and design
aesthetics. Today, these towers
are home to upscale
restaurants, luxury residences
(including World One, which
will stand at 1,450 feet upon
completion) and commercial
spaces, premium retail brands
and hotels. This previously
mill-­‐‑dominated neighborhood
in central Mumbai currently
has 10 out of 27 of the World’s
tallest under construction
buildings. This development
has been a catalyst in the
overall metamorphosis of
Mumbai’s skyline, with the
surrounding areas also
ushering in a change. This fast
paced expansion should
definitely be on the radar for
all real estate watchers around
the world.
“[I]t is only from the ashes
that a phoenix ever rises, and
this is exactly what happened
here”

3.
May 27, 2016 [Edition 3, Volume 1]
T H E G L O B A L D E A L
Mediterranean Gate
A Project Paused, Cancelled, or On Hold? – Tunis, Tunisia, Africa
AMENI KABBOUDI M.S. Candidate in Real Estate Development
Tunisia is located at the
junction of the
Mediterranean’s Eastern and
Western basins. It is very
accessible, with flights of
between 2.5 to 3 hours to all
major cities in Europe, Africa
and the Middle East such as
London, Paris, Casablanca,
Istanbul and Beirut. Its
location is the primary reason
it was selected for this mega
project.
The Mediterranean Gate is a
mixed-­‐‑use project conceived in
2007. It stretches over 1,000
hectares on the lake of Tunis, a
natural lagoon. This project
was planned as an extension
of the city, with the aim to
integrate it within the
downtown area. The
development includes
commercial buildings within a
central business district, which
was needed to alleviate much
of the heavy traffic that
commuting employees faced
each day. It also includes a
seaside resort, golf course,
convention center and
shopping malls. It is expected
that, upon completion, it will
have the tallest commercial
tower in both Africa and the
Mediterranean region. This
development was estimated to
cost about $25 Billion, with a
scheduled completion over 14
phases.
The government of Tunisia
constructed a highway bridge,
in cooperation with Japan,
parallel to the canal built by
Japanese company Spilast
International, and fully
financed by Japanese banks.
This bridge linked the marina
of the Mediterranean Gate to
the sea, while also reducing
the traveling distance between
the northern part of the capital
and the southern side.
This project was launched in
2007, but was on hold for
years following the financial
crisis that hit the Dubai real
estate market in 2008. Further,
politics and corruption have
created problems, with
disagreements between both
the Tunisian government and
the International Real Estate
Investment arm of Dubai
Holding, Sama Dubai. A
combination of grinding
bureaucracy, corrupt demands,
and interference from the
family of the former president
Zein El Abidine Ben Ali have
been recurring issues.
Following the Arab Spring,
political instability has been
another factor discouraging
the development from
occurring.
Gulf investors historically
have not been actively
investing in Tunisia. Qatar,
which is the second largest
investing country by foreign
direct investment inflow in
2014, makes up only 9% of the
total amount of this
investment, while the UK and
France are on top. Foreign
investment in this real estate
sector makes up only 4.5%, but
there remain many massive
planned projects in both
tourism-­‐‑based and mixed-­‐‑use
developments.
With a progressive democracy
and more transparency,
rumors suggest that the
Mediterranean Gate will
restart the plan, and
construction will begin.
However, nothing has been
officially confirmed yet.
“[P]olitics and corruption have
created problems, with
disagreements between both the
Tunisian government and the
International Real Estate
Investment arm of Dubai
Holding, Sama Dubai”

4.
May 27, 2016 [Edition 3, Volume 1]
T H E G L O B A L D E A L
Struggles to Attract Luxury Hotel Developers
Challenges Associated with Investing in Vietnam – Danang, Vietnam, South East Asia
KHOA TANG M.S. Candidate in Real Estate Finance
Possessing some of the
planet’s most beautiful
beaches, Danang, Vietnam is
fast catching up with other
famous beach cities in South
East Asia such as Phuket, Bali
and others. During the first
two quarters of 2015, there
were over 2.2 million visitors
to Danang. The city is widely
regarded in the local, national
and international hospitality
industries as the next
“Destination on the Rise”.
Despite the fact that hundreds
of local hotels and resorts have
been built to accommodate the
growing demand for travel to
Danang, it sees very little hotel
development from the world’s
luxury brands such as the
Four Seasons and Mandarin
Oriental, or other large brands
such as Marriott and Starwood.
Investing in Vietnam is not a
straightforward exercise.
Regulatory issues, its legal
environment, and a lack of
infrastructure and a skilled
workforce are the top
challenges facing any foreign
investor.
Vietnam joined the World
Trade Organization in 2007.
Since then, many real estate
regulations have been
changed and are increasingly
uncertain. According to
Congress, land in Vietnam is
only for Vietnamese citizens,
and thus foreigners may not
buy and own land. Further, no
corporate entity may have
ownership of land. The
government, however, does
provide buyers the right to use
land, but the duration and
purposes are to be determined
by the state. Hence, for a
foreign company to obtain
land use rights, it must partner
with a Vietnamese national
who needs to contribute
capital in order to share in a
joint venture deal involving
the land. Otherwise, these
firms may rent land, but the
duration must be for less than
50 years. With ongoing policy
change issues, it is indeed
challenging for hotel
developers in this market,
especially as they plan to
spend millions of dollars on
these projects.
Although Danang
International Airport has
undergone some tremendous
renovations to accommodate
the growing demand from
visitors, it is simply not
enough. There is currently no
highway connecting Danang
to other parts of the country.
All sorts of road
transportation are still
dependent upon National
Route 1A, which was
constructed by French
colonists one century ago. This
is known as the “black spot”
because of the number of
accidents it experiences which
lead to death. Narrow roads
with a congestion of scooters,
cars, trucks and careless
pedestrians have made traffic
extremely dangerous.
Other similar destinations in
South East Asia had begun
developing their infrastructure
before they started becoming
popular. This is vital for a city
with threats of natural
disasters. Danang has to
ensure that the most basic
visitor requirements are met
before going above and
beyond to satisfy the more
sophisticated travellers in the
luxury segment. If these
concerns are not realistically
and honestly addressed,
investors will start looking to
invest elsewhere, where they
can guarantee a better return
on investment.
“Investing in Vietnam is not a
straightforward exercise”

5.
May 27, 2016 [Edition 3, Volume 1]
T H E G L O B A L D E A L
NYU SPS Schack Institute of Real Estate
The Global Deal
A Publication of REISA’s Global Real Estate Group
11 West 42nd Street, New York City, NY 10036
Contact: gre.reisa@gmail.com
Senior Editors:
Denham Apperley (denham.apperley@nyu.edu)
Felipe Kohn (felipekohn@nyu.edu)
Juan Carlos Ramos (jcramos@nyu.edu)
“The Global Deal” is not an official publication of New York University. All of the opinions belong to the authors of the articles.
If you are interested in contributing to The Global Deal, please respond by filling in the
linked form. Participants chosen will write an article of between 250-­‐‑300 words, covering
the most relevant real estate news of their chosen country or global issue.
Application Link: http://bit.ly/THEGLOBALDEAL
NOTE FROM THE EDITORS
It is with bittersweet gratitude that we present this final edition of The Global Deal. The time we
have shared at Schack over the last year and a half with each other and with our fellow students will
remain in our memories as our lives progress. In particular, we are thankful for the year we have
been Co-­‐‑Chairs of the Global Real Estate Group, where we have been able to contribute to the school
that has given us so much. As we embark on the first steps of our next chapters, at least we will
always have had our times at Schack and in New York. Thankfully, real estate is global, and
fundamentally we can apply our learned concepts anywhere on the planet. We have enjoyed
working with you, and we look forward to sharing our insights with future Schack students who will
be subjected to our ranting on various panels. We would also like to thank Jessica, and our faculty
advisor Professor Justin. We hope you enjoy the last Spring issue of the Global Deal. We are positive
that the next Global Real Estate Group will continue to grow this publication.
Indeed, as we type this, our keyboards are wet with our tears of immense emotion. But please don'ʹt
worry yourselves; we'ʹll be fine.
Happy reading,
Denham, Felipe and Juan Carlos