Julian Schnabel's venetian-red West Village palace is an emblem of New York's high-end real-estate boom. The gorgeous condo tower—designed down to every detail by the obsessive artist and director—commanded prices of up to $7,000 per square foot, a record for downtown Manhattan. Or at least that's the price Schnabel was banking on. The only real measure of the value of Palazzo Chupi is the 3,500 square foot apartment bought last year for $12m by Richard Gere. The Hollywood star tried to flip the property for a quick $6m profit; but it now looks like he'll be lucky merely to make his money back.

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