European Buyers Snap Up New Condo Developments in New York City
New York City relatively unaffected by the US housing meltdown
photo credit: WTL photos
The sub prime issue and the looming recession are continuing to ravage the real estate market all over the US. This fact has been indicated yet again in a new report released by the US government in April which states that new home sales fell in March 2008 to their lowest level in more than 16 years. The report states that the median price of a new home sold in March was $227,600 which reflects a drop of 13.3% from the same period for 2007. The last time that the median new home price fell this sharply was in July 1970 when it fell 14.6%.
However, New York City seems to be bucking this trend. According to another report released by The Real Estate Board of New York this week, the real estate market in New York City is still going great guns and the average sale price of a New York City home has in fact jumped 28% to $853000 in the first quarter of this year as compared to $669,000 in the first quarter of 2007. This increase has been attributed to the rising sales in Manhattan apartments, both condos and cooperatives, where the average price has climbed 41% to a record $1.6 million compared with $1.1.million in the first quarter of the previous year.
Stephen Spinola, the President of the Real Estate Board of New York went on to add that the sales in the several new luxury condo developments was adding to this price increase as well as it was feeding the pent up demand for housing in a city which has limited space and which has just recently witnessed the construction of many new condos. Moreover many of these condo developments are high end developments which target the wealthy, who are relatively unaffected by the slowing economy. He also stated that the real estate market in New York City was also being further buoyed by foreign investors who currently find the market extremely appealing due to the favorable exchange rate caused by the rapidly weakening American dollar.
Number of foreign real estate investors in New York City growing in leaps and bounds
Pam Liebman, CEO and Vice President, of the real estate firm, the Corcoran Group confirms that Europeans currently make up 30% of all buyers in certain areas of New York City like Midtown West and the financial district where many of the new condo developments are currently being built. She adds that these European buyers are a welcome addition to the city’s legendary diversity and glamour.
While native New Yorkers worry about the slowing economy and their dwindling 2008 bonuses, Europeans who are coming to New York City in droves on week-end shopping sprees, are now adding a new apartment to their shopping lists, which previously included more mundane products like premium jeans and Apple ipods.
Radar Logic, the data and analytics business that analyzes residential real estate in major US metropolitan areas like New York City, states that the number of foreign investors participating in the New York real estate market has doubled in the last two years.
A large number of these foreign buyers are from France, Italy and Britain and they are eager to invest their Pounds and Euros in Manhattan’s real estate market. This investment has been further facilitated by the spate of new condo construction taking place in New York City currently.
New condo construction has facilitated this buying spree as well
Brokers from New York City’s leading real estate firms like Halstead property, Coldwell Banker Hunt and, Brown Harris Stevens say that without these foreign buyers it would be difficult to sell these new condo developments which are now regularly coming up for sale on the market. Condo sales have risen dramatically in Manhattan and have shown an increase of 22% from 2005 to 2006 and 66% from 2006 to 2007 according to a report on Radar Logic.
Five years ago the scenario was very different as foreign buyers were unable to buy into New York City’s real estate market which was until then largely dominated by cooperatives whose boards have been traditionally averse to foreign buyers. These European buyers who seem to be snapping up these new condo developments are thus protecting the real estate market in New York City from the housing slowdown currently being witnessed in other parts of the US.
Foreign buyers prefer new condo developments
In addition, foreign buyers seem to favor new condo developments for their many amenities and their flexible rules which allow these units in these developments to be easily rented out so that they give returns immediately (unlike cooperatives that don’t allow their units to be rented out). The foreign buyers have until now have tended to concentrate on the new condo developments located in Manhattan only even if they were not located in traditional ‘residential’ areas. However, now these buyers are even venturing out to the outer boroughs of New York City like Brooklyn and Queens.
Foreign buyers close the deal fast
New York City’s Realtors welcome these foreign buyers, who tend not to spend too much time on making up their minds and are likely to close the deal fast, as they seem to treat an investment in a New York City property akin to an investment in a stock or a bond.
The weak dollar has thus created a win-win situation for all concerned, for the European buyer, it presents an opportunity to pick up an investment property in the greatest city of the world at a discounted price, and for the developers and realtors in New York City, it has given them a ready market for their constantly increasing stock of new condo developments.
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