Strategy: Investing in an ultra luxury building for above market appreciation
Posted by Wei Min Tan on September 15, 2020
The objective of investing in ultra luxury buildings is usually to park funds and ride appreciation. Rental income is a low priority. The buyer client wants the best of Manhattan and feels the appreciation will exceed what he/she may get elsewhere. There is a rental market for ultra luxury buildings but since rental price is so much higher, the renter pool is small.
Super luxury towers on Billionaire’s Row
The world knows about Billionaire’s Row in Midtown Manhattan as the address with all the super towers. One 57 was the first super tower and billionaire’s building. Now we have a few more in the area such as 432 Park Avenue, Central Park Tower.
All neighborhoods have their own ultra luxury buildings. 111 Murray and 70 Vestry in Tribeca, 40 Mercer in Soho, 15 Central Park West in Upper West Side. Deciding on the right buy depends on whether one is living there, buying as investment and other factors.
Soho and 40 Mercer
40 Mercer above is an example of a super luxury building that is popular in Soho. The one-bedroom at 40 Mercer above, at $3 million when purchased, featured 14 foot ceilings and super large windows in a building designed by star architect Jean Nouvel. At that time, a luxury one-bedroom was $1.2 million. Hence this ultra luxury one-bedroom was more than double the price of a (mere) luxury one-bedroom. The objective was to benefit from above market appreciation because of the building’s star architect, Soho location and ultra luxury quality. While appreciation usually exceeds market rate during an up market, ultra luxury prices suffer more during a down market.
While the Billionaire’s Row 57th Street super towers may be desirable for the world’s super wealthy who just want to park money in a brand name building, local wealthy New Yorkers may prefer buildings that are less flashy and “super.” I feel there are ultra luxury buildings that locals buy and live in, and there are ultra luxury buildings where the apartments are mostly owned by out of town investors. In the latter, the building is usually dark at night as people don’t live in there.
What We Do
We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale
Notes: This article was updated Sept 15, 2020
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