Benefits and Downside Risks of Buying Manhattan Property

Posted by Wei Min Tan on May 11, 2020

Investors from all over the world have always been buying Manhattan property as a means of diversification. London and New York used to compete for foreign investment. However, since Brexit and the uncertainty of the GBP and property value in London, New York has become the main destination for global investors seeking capital preservation and consistent appreciation.

 

If you are a successful professional or business owner looking to buy Manhattan property for portfolio diversification and stability, you are amongst the many such individuals who we work with. Welcome to exploring this avenue!

 

Before taking the leap, here are benefits and risks to consider.

 

 

Contact:  tan@castle-avenue.com

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Manhattan, New York lights up at night.

Benefits of owning property in Manhattan

Value Stability: Property prices in Manhattan have stable appreciation. Historically during an upturn, Manhattan condo price appreciation ranges from 7 percent to 15 percent per year.  During a downturn, the decline ranged from 4 to 10 percent.  This is driven by inflation and demand, the latter comes from population growth and investors wanting a piece of this magnificent island. New college graduates and corporate professionals move here every year. People who live in other boroughs of New York City want to move to Manhattan. Living in Manhattan is a status symbol. Globally the newly rich want to own property in New York, the iconic city with skyscrapers, high finance and fashion. More specifically, “New York” is the island of Manhattan.

 

Limited Supply: This is an island that has been developed over the past 150 years. Whatever new development is but a very small percentage of total inventory. In a typical U.S. city (which is not an island), developers are constantly expanding the city by building further out of the core. But in Manhattan, there is no more space to build further. Yes, developers can build higher but there are two issues (i) zoning restrictions and (ii) very expensive land prices which means the resulting product has to be priced much higher, which makes it outside of the core price segment.

 

Owning a condominium is easy: Most property in Manhattan are apartments. Unless you intend to spend $7 million and above to buy a townhouse or mixed-use building, chances are you’d be buying a condominium apartment. With an apartment, you are essentially owning the airspace within the 4 walls of your apartment. There is a lot less headaches because you don’t have things like a roof, boiler, exterior wall to worry about.

 

Read our top rated Foreign Buyer Guide

 

 

Downsides and Risks of owning property in Manhattan

Lengthy eviction process: About 75 percent of Manhattan residents are renters. The court system here is more friendly to tenants than landlords. This means if eviction is necessary, it would take between 6 months to 9 months (vs 1 month in most other cities). Hence, proper screening of tenants is very important.

 

High entry point: This is a matter of perspective, but a 500 square feet studio apartment starts at $650,000. This means the down payment required is at least $260,000 plus closing costs. It’s capital that is tied up. For $650,000, you could get several houses in Texas or North Carolina.

 

Higher costs overall: Costs are higher overall in Manhattan compared to other U.S. cities. For example, labor cost is 4X to 5X the cost of material for renovation projects. This has to do with licensure requirements, permits and insurance, approvals, cost of (contractor’s) parking, limited use of elevator which extends renovation time, etc. When buying or renting out, the buyer and tenant have to submit a board package and that has various fees as well. Everything is just more expensive.

 

That’s the high level summary. If you still want to explore buying in Manhattan, feel free to email and we’d be glad to provide more reasons as to why you should (or should not) buy in Manhattan.

 

 

What We Do

Manhattan property broker focusing 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

 

 

Deal Examples

 

1) Halcyon (photo below) new development in Midtown East.  Represented clients who booked at the pre-construction stage.  Rented to high quality tenants upon condo completion.  The building is close to United Nations, Blackstone, Citigroup Center, BlackRock.

Benefits and risks of Manhattan property

 

 

2) 99 John Street (below), represented client in the purchase while building was being converted to condos and a few years later, at eventual sale.  Apartment has very rare 500 sqft terrace, commanding premium sale price.  Buying new launch condos, whether brand new or conversion, is an attractive strategy that we do with many clients.

 

 

3) Pre-war condo at Parc Vendome (photos below).  Parc Vendome is amongst the most famous pre-war condo buildings.  Detailed architecture and proximity to Central Park make this very attractive to both buyers and renters.  We identified a value buy that needed renovation, managed the renovation and totally transformed the apartment.  Rented out within 1 week after renovation completed.

 

After Renovation

 

Before Renovation

 

This article was updated May 11, 2020

 

 

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About Wei Min

  • Focuses on investors of Manhattan condominiums, interviewed by CNBC, CNN, Wall Street Journal, New York Times
  • Ex-Citibanker, managed $500 million portfolio
  • MBA, University of Illinois at Urbana-Champaign
  • Manhattan resident since 1999. Currently lives in Tribeca with wife and 2 kids
  • 352 burpees in 23 minutes, student of muay thai kickboxing

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About Wei Min


  • Focuses on investors of Manhattan condominiums, interviewed by CNBC, CNN, Wall Street Journal, New York Times
  • Ex-Citibanker, managed $500 million portfolio
  • MBA, University of Illinois at Urbana-Champaign
  • Manhattan resident since 1999. Currently lives in Tribeca with wife and 2 kids
  • 352 burpees in 23 minutes, student of muay thai kickboxing

Work With Wei Min

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