> In Spending by the Very Rich, No Such Thing as a Slowdown > 14 April 2008 > The New York Times <javascript:void(0)> > Who said anything about a recession? Sometime between the government > bailout of Bear Stearns <javscript:void(0)> and the Bureau of Labor > Statistics report that America lost 80,000 jobs in March, Lee Tachman > spent roughly $50,000 last month on a four-day jaunt to Miami for > himself and three close friends. > The trip was an exercise in luxuriant male bonding. Mr. Tachman, who > is 38, and his friends got around by private jet, helicopter, Hummer > limousine, Ferraris and Lamborghinis; stayed in V.I.P. rooms at Casa > Casuarina, the South Beach hotel that was formerly Gianni Versace's > mansion; and played ''extreme adventure paintball'' with former agents > of the federal Drug Enforcement Administration. > Mr. Tachman, a manager for a company that executes trades for hedge > funds and the owner of ''a handful'' of buildings in New York, said he > has not felt the need to cut back. > ''I always feel like there's a sword of Damocles over my head, like it > could all come crashing down at any time,'' he said. ''But there's > always going to be people who are trading, and there's always going to > be a demand for real estate in New York.'' > He is hardly alone in his eagerness to keep spending. Some businesses > that cater to the superrich 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 > each cost more than $10 million, compared with 17 apartments in that > price range during all of 2007. Last week, a New York art dealer paid > a record $1.6 million for an Edward Weston photograph at Sotheby's. > And the GoldBar, a downtown lounge, reports that bankers continue to > order $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 organizing a black-tie party on May 10 for > dignitaries and recent purchasers of apartments at the Plaza Hotel; > the average price there was $7 million. ''Short of our country going > on food stamps, I don't think we're doing anything differently.'' > Some 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 available only to those with extensive capital. Some > rationalize 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 $100,000 on a commitment ceremony on St. Barts and a > dessert party for 200 to 300 guests at Jeffrey, a clothing store 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 in New York City by > the end of 2009, according to the city's Independent Budget Office. > 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 > some 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. In 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 $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 Beach -- each of > which he values at about $2.5 million. > Mr. Sperling views the nation's economic slump 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 subprime 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 $70,000 or > $80,000 were the ones who were chasing easy money,'' he said. > Days before the collapse of Bear Stearns <javscript:void(0)> , the > bank's chairman, James E. Cayne, paid $25 million for a 14th-floor > condo at the Plaza Hotel. > He, too, is invited to the May 10 party at the Plaza. It will feature > a dozen female string musicians made up to look like statues and > clothed in dresses of fresh flowers, like roses and gardenias. There > will be caviar and Cognac bars, as well as a buffet designed to > visually replicate 17th-century Dutch paintings from the recent > Metropolitan Museum of Art exhibit, ''The Age of Rembrandt.'' > Even high-end rentals are going fast. In just the three weeks since it > arrived on the market, a four-bedroom apartment at 15 Central Park > West, advertised for $55,000 a month, has gone to contract. The > broker, Roberta Golubock with Sotheby's International Realty > <javscript:void(0)> , said she showed the apartment to eight > financially qualified prospects. > Some New Yorkers defend their spending as investments or gifts to > themselves. In August, Karen Borkowsky and Robert Kennedy, a partner > in a law firm, were married at the Rainbow Room. The reception, which > the event planner, Shawn Rabideau, lavished with glass and calla > lilies, cost $150,000 to $200,000. But when Ms. Kennedy considered > that she had survived breast cancer and, at age 41, married a guy she > had dated in high school, the wedding's cost seemed less exorbitant. > Then, shortly after returning from their honeymoon, the couple started > a $400,000 project to combine and restore two apartments into a > three-bedroom, three-bath co-op on the Upper West Side. ''We are > investing in the longevity of the apartment,'' she said. > There are also some people who say they have not been hurt because > they have poured so much money into opportunities not available to the > Main Street investor. Paul Parmar, a 37-year-old investor in companies > specializing in health care, defense, media, luxury items and private > aviation, says he is living just as large as ever. > In recent months, Mr. Parmar, who lives in Colts Neck, N.J., said he > bought 140 acres in Mineola, Tex., and is spending $20 million to > begin building a refuge there for abused tigers. Since January, he > said he added to his car collection with a $110,000 BMW > <javscript:void(0)> 750 Li (for his girlfriend) and a Bentley Arnage > for himself, for about $300,000. He is leasing a Maybach through > Luxautica, an ''ultimate car club'' that has annual fees of about > $125,000. > ''On a spending level,'' Mr. Parmar said, speaking about a possible > recession, ''it doesn't affect me at all.'' That said, providers of > luxury goods reported anecdotal evidence of a widening gap between the > merely rich and the ultrarich. Clifford Greenhouse, who owns a > household-staff employment company, said he suspects that the merely > rich might be starting to lag behind their far richer counterparts, > and are trimming their budgets. He cited reduced demand for chauffeurs > -- a relatively small-ticket service -- yet ever-strong demand for > private chefs, butlers and ''household managers.'' > Darren Sukenik, a real estate broker with Prudential Douglas Elliman, > said that while business may be slower for clients with a mere million > to spend on apartments, none of his clients with budgets of more than > $2.5 million have stopped shopping. Seth Semilof, the publisher of > Haute Living, a luxury magazine, said that luxury car dealerships that > advertise with him are pushing Bentleys and Rolls-Royces at the > expense of less-extravagant cars like the BMW <javscript:void(0)> 5 > Series. > ''If you look at the $20 million-plus market, it's still strong as > ever,'' Mr. Semilof said. Some of the ultrarich are still willing to > pay above sticker price for things they want badly enough. Mr. Semilof > helped three buyers in the past two months acquire Rolls-Royce Phantom > convertibles for as much as $200,000 above the asking price of > $465,000. > And Eric Lepeingle, a yacht salesman for the Rodriguez Group > <javscript:void(0)> , said that since January, three New Yorkers > bought yachts worth $8 million to $35 million. Although the weak > dollar does give some pause to buyers considering Italian-built > yachts, Mr. Lepeingle said, they eventually give in. ''They want the > product anyway,'' he said. > All sorts of products, actually. > ''They want their Jeroboam, or Methuselah, or Nebuchadnezzar,'' said > Ronnie Madra, referring to the sizes of Champagne bottles served at > 1OAK, a lounge on West 17th Street where he is a part-owner. A > Nebuchadnezzar, weighing in at 15 liters, costs up to $35,000. > There would be no Nebuchadnezzar for Mr. Tachman and his friends in > Miami, but they soldiered on until the moment the wheels of their > private jet returned to the tarmac in New York. > There were hand-rolled cigars, massages, guided rides in racing boats > and fighter jets -- all arranged by In The Know Experiences, a travel > and concierge service in Manhattan. > ''It was just all out -- it was insane,'' said Mr. Tachman. ''I'm not > afraid to spend money like that.'' > ========================== >
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