Why NYC continues to be a “safe haven” for global real estate investors

Where real estate is concerned New York has always been a world unto itself. When the crash of 2008 hit, New York was far less effected than the rest of the country and bounced back quickly. Now, while other parts of the country have been registering double digit increases over the last couple of year, Manhattan, particularly on the luxury side, have seen drops. And while Manhattan has dropped large swathes of Brooklyn, the Bronx and Queens have seen dramatic gains. Now, if the the latest numbers are anything to go by, Manhattan’s correction of the last 2-3 years could be on the wane.

The July 4th sales last month in Manhattan’s luxury market remained relatively strong at a time when they are usually sluggish with the week seeing 20 contracts signed at $4 million, extending the market’s 23-week run with more than 20 luxury deals in the borough. A recent report from sales and research firm, Ariel Property Advisors showed that NYC apartment sales increased 64 percent in the first half of 2018, with six properties trading for $100 million or more.

Coupled with this, multi-family units in NYC began their recovery in Q2 2017 with research indicating a 14 percent increase over the previous Q2.  Indeed, multi unit properties in New York are considered something of a sure bet by institutional investors.

While it might be overly optimistic to say that these are green shoots and the NYC real estate roller coaster is about to take us on another upward trajectory, it goes to show that even while it has undoubtedly been a challenging time, the market is resilient. It’s why Forbes recently used the term “safe haven” for a reason why investors, both globally and domestically look at New York as one of the most secure markets in which to plant their cash.

There are many factors at play which could be pushing New York towards recovery. Multi family, certainly seems to be gaining momentum. This could be due to millennials preferring to rent rather than own, baling at the prospect of a long term mortgage requiring a sizable down payment. Also, with a tax bill favoring landlords over homeowners, there’s a greater appetite for multi family owners to invest.

Proof that the luxury market is still alive and ticking came from high end purchases in Brooklyn last week (ending August 4th) where 16 contracts were signed, split between 11 houses and five condominiums with an average price of about $3 million.  The highest was for a multi unit townhouse in Park Slope at 934 President St. which sold for $4.95 million. These sales are an increase from the week before when 12 contracts were signed worth about $39.3 million.

As a recent Street Easy report stated, however, a surge in inventory, which is expected to go on through the fall could see house price increases stagnate in NYC. However, the lower numbers could as Forbes predicted, spur an increase in sales activity, spurring a recovery. One thing appears to be certain: while domestically, a malaise may still linger over Manhattan, international investors continue to buy huge chunks of prime commercial property. Surely residential cannot be too far behind?

 

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