New York, NY - Owners of land and developable sites earmarked for residential development may be in for a big surprise in 2007. Land in many of the city’s submarkets will drop by as much as 20% to 30%.

The chairman of Massey Knakal Realty Services, Robert Knakal said, that the factor fueling the fire in the prices of land is the City Council’s planned overhaul of the 421-a tax abatement program.
“The biggest issue the industry is currently facing is the proposed limitations on the 421-a program,” Mr. Knakal said. “This legislation will exacerbate the problem in building new construction rental projections, especially in the borough of Brooklyn.” “In today’s economics, even with the benefit of tax exemption, it’s extremely difficult to develop rental housings due to the construction cost environment.
The legislation, which impacts numerous Brooklyn neighborhoods, will make it impossible to develop rentals unless they have 80% market rate and 20% affordable components.

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